Chapter 1: INTRODUCTION TO MANAGEMENT INFORMATION SYSTEMS

Topics covered: MIS Concepts Definition of MIS Role of MIS Impact of MIS & the user Management as a control system Support to the management Management Effectiveness & MIS Organi ation as a system Organi ation effectiveness Management Information System (MIS): Concept
The elementary convictions of MIS !ere to process data from the organi ation and present it in the form of reports at regular intervals" This conviction !as altered !hen a distinction !as fa#ricated #et!een data and information" Information is an outcome of processed data$ data #eing a set of values" This conviction !as further altered$ that%s the system should present the information in such a form and format that is creates an impact on its user$ provo&ing decision$ an action and an investigation" It !as later reali ed that some sort of selective approach !as necessary for analy ing and reporting$ hence the concept of e'ception reporting !as im#i#ed in MIS" (lso$ the need arose$ for &eeping all data together so that it can #e accessed #y any#ody and can #e processed according to their needs in different !ays" This gave rise to the concept of D(T()(SE$ !hich proved to #e much effectual" Over a span of time$ the concept of end*user computing using multiple data#ases emerged$ !hich unveiled a fundamental transition in MIS" This transition !as the decentrali ation of the system" +hen this #ecame actuality$ the notion of MIS changed to decision*ma&ing system" The foundation of MIS is the principle of management and its practices" MIS uses the concept of management control in its design and relies heavily on the fact that the decision*ma&er or manager is a human processor of information" It relies on the system theory that offers solutions to handle comple' situations of the input and put flo!s using theories of communication"

I,-ORM(TIO,

S.STEMS )/SI,ESS 0O(1S (,D MISSIO, (221IC(TIO, O- 2/RE (,D SOCI(1 SCIE,CES (221IC(TIO, O- 2RI,CI21ES (,D 2R(CTICES O- M(,(0EME,T /SE O- D(T()(SE (,D 3,O+1ED0E )(SE COM2/TERS (,D I,-ORM(TIO, TEC,O1O0. FIG: CONCEPTUAL VIEW OF AN MIS

EIS )/SI,ESS I,-ORM(TIO, S.S.EMS MISSIO, CRITC(1 (221IC(TIO,S -/,CTIO,(1 I,-ORM(TIO, S/)S.STEMS D(T()(SES (,D 3,O+1ED0E )(SE D(T( 2ROCESSI,0 (,D (,(1.SIS S.STEMS O1T2$ D(T( (,D 4(1ID(TIO, S.STEMS

FIG: PHYSICAL VIEW OF AN MIS Therefore$ MIS is an art and science of gathering$ collecting$ storing$ analy ing and disseminating information for managerial decision ma&ing !ith due regard to the people of the organi ation"

MIS: Definition

MIS is prevalently demystified as the Information System$ the Information and Decision System$ the Computer*#ased Information System" The MIS has more than one definition$ some of !hich are given #elo!: The MIS is e!i"e as the s#ste$ that pr%&i es i"!%r$ati%" s'pp%rt !%r e(isi%" $a)i"* i" the %r*a"i+ati%", The MIS is e!i"e as a" i"te*rate s#ste$ %! $a" a" $a(hi"e !%r pr%&i i"* the i"!%r$ati%" t% s'pp%rt the %perati%"s- the $a"a*e$e"t a" the e(isi%" $a)i"* !'"(ti%" i" the %r*a"i+ati%", The MIS is e!i"es as the s#ste$ .ase %" the ata .ase %! the %r*a"i+ati%" e&%/&e !%r the p'rp%se %! pr%&i i"* i"!%r$ati%" t% the pe%p/e i" the %r*a"i+ati%", The MIS is e!i"es as a C%$p'ter0.ase I"!%r$ati%" S#ste$,

Role of Management Information System

The role of MIS is an organi ation that can #e compared to the role of heart in the #ody" The system ensures that an appropriate data is collected from various sources processed$ and then further sent to individuals$ group of individuals or the management functionaries: the managers and the top management" It satisfies diverse needs through a variety of systems such as 5uery Systems$ (nalysis Systems$ Modeling Systems and Decision Support System" MIS contri#utes to Strategic 2lanning$ Management Control$ Operational Control and Transaction 2rocessing" It helps Clerical personnel in the transaction processing and ans!ers the 6ueries on the data pertaining to the transaction$ the status of a particular record and references on a variety of documents" It helps 7unior management personnel #y providing the operational data for planning$ scheduling and control$ and helps in decision ma&ing at an operational level to correct an out of control situation" It helps Middle*1evel management in short term planning$ target setting and controlling the #usiness functions" It helps Top management in goal setting$ strategic planning and evolving the #usiness plans and their implementation" It plays an important role in information generation$ communication$ pro#lem identification and helps in the process of decision ma&ing Thus$ MIS plays a vital role in the management$ administration and operations of an organi ation"

Impact of Management Information System

Ma"a*e$e"t F'"(ti%"s MIS facilitates effective management of mar&eting$ finance$ production and personnel" It eases the trac&ing and monitoring of the functional targets" The

functional management is informed a#out the progress$ achievements and shortfalls in the activity and the targets" It helps in forecasting and long*term perspective planning" The manager8s attention is #rought to a situation that is in e'ception in nature$ inducing him9her to ta&e an action or a decision in the matter" U" ersta" i"* 1'si"ess MIS uses the dictionary of data$ entity and attri#utes" Respectively$ designed for information generation in the organi ation" Since all Information Systems use the dictionary$ there is common understanding terms and terminology in the organi ation delivering clarity in the communication and a similar understanding of an event in the organi ation" S#ste$i+ati%" %! .'si"ess %perati%"s MIS leads to streamlining the operations$ !hich complicate the system design" It improves the administration of #usiness #y #ringing a discipline in its operations$ as every#ody is re6uired to follo! and use systems and procedures" This #rings a high notch of professionalism in the #usiness operation" Dire(ti"* t%2ar s *%a/s It helps indirectly to pull the organi ation in one direction to!ards the corporate goals and o#:ectives #y providing relevant information to the people in the organi ation" Ma"a*e$e"t E!!i(ie"(# The fund of information motivates an enlightened manager to use a variety of tools of the management" It helps him to resort to such e'ercises as e'perimentation and modeling" Re '(ti%" %! $a"p%2er %&erhea Since MIS !or&s on the #asic systems such as transaction processing and data#ases$ the drudgery of clerical !or& is transferred to the computeri ed system$ relieving the human mind for #etter !or&"

MIS and the User

Every person in the organi ation is the user of MIS" The people in the organi ation operate at all levels in the hierarchy" MIS caters to the needs of all" C/er) The main tas& of a cler& is to search the data$ ma&e a statement and su#mit it to the higher level" ( cler& can use the MIS for 6uic& search and reporting the same to the higher level" Assista"t

(ssistant has the tas& of collecting and organi ing data$ and conducting a rudimentary analysis of it" MIS offers user tools to perform such tas&s" O!!i(er Officer has a role of integrating the data in different systems and disciplines to analy e it and ma&e a critical comment if necessary" E3e('ti&e E'ecutive plays the role of decision*ma&er and a planner" ;e is responsi#le for achievement of targets and goals of an organi ation" MIS provides facility to analy e the data and offers the decision support system to perform the tas& of e'ecution" MIS provides an action*oriented information" Ma"a*er Manager has the responsi#ility and accounta#ility for #usiness results" ;e9She is a strategist and a long*term planner$ a person of foresight and analytical" MIS provides information in a structured or unstructured format to ta&e actions" MIS caters to his changing needs of information" Through MIS$ the information can #e implemented as a strategic !eapon to ledge the threats to #usiness$ ma&ing #usiness more competitive$ #ringing a#out the organi ational transformation through integration" ( good MIS also erects an organi ation seamless #y removing communication #arriers"

Management as a Control System

( definition of control is the process through !hich managers assure that actual activities conform to the planned activities$ leading to the achievement of the stated common goals" The control process measures a progress to!ards those goals$ and ena#les the manager to detect the deviation from the original plan in time to ta&e corrective actions #efore it is too late" Ro#ert 7 Moc&ler defines the points out the essential elements of the control process" The #asic steps of the control process are given in the figure$

Esta#lish Standards of 2erformance

Measure 2erformance

(ctua l 4s Std

Corrective (ction

,o (ction

The management is a systematic effort$ * To set the performance standards in line !ith the performance o#:ectives * To design the information feed#ac& systems * To compare the actual performance !ith the predetermined standards * To identify the deviations from the standards * To measure its significance and to ta&e corrective actions in case of significant deviations" This systematic effort is underta&en through the management control system"

( relia#le and effective control system has the follo!ing features" EARLY WARNING MECHANISM This is a mechanism of predicting the possi#ility of achieving the goals and the standards #efore it is too late and the allo!ing the manager to ta&e corrective actions" PERFORMANCE STANDARDS The performance standard must #e measura#le and accepta#le to all the organi ation" The system should have meaningful standards relating to the !or& areas$ responsi#ility$ managerial functions and so on" STRATEGIC CONTROLS In every #usiness these are strategic areas of control &no!n as the critical success factors" The system should recogni e them and have controls instituted on them" FEED1AC4 The control system !ould #e effective$ if it continuously monitors of the performance and sends the information to the control center for action"

ACCURATE AND TIMELY The feed#ac& should #e accurate in terms of results and should #e communicated in time for corrective action" REALISTIC The system should #e realistic to that the cost of control is far less than #enefits" Sufficient incentive and re!ards are to #e provided to motivate the people" THE INFORMATION FLOW The system should have the information flo! aligned !ith the organi ation" Structure and the decision*ma&ers should ensure that the right people get the right information for action and decision ma&ing" E5CEPTION PRINCIPLE The system should selectively approve some significant deviations from the performance standards on the principle of management #y e'ception"

MIS: A support to the Management

The management process is e'ecuted through a variery of decisions ta&en at each step of planning$ organising$ staffing$ directing$ coordinating and control" The MIS aids deciion ma&ing suita#ly" De(isi%"s i" Ma"a*e$e"t Steps in Management Decision 2lanning ( selection from various alternatives*strategies$ resources$ methods$ etc"$ Organi ation ( selection of a com#ination out of several com#inations of the goals$ people$ resources$ method$ and authority Staffing 2roviding a proper manpo!er complement Directing Choosing a method from the various methods of directing the efforts in the organi ation Coordinating Choice of the tools and the techni6ues for coordinating the efforts for optimum results Controlling ( selection of the e'ceptional conditions and the decision guidelines

Management Effecti eness ! MIS

8,egandhi Estafen8 provides a good model <-ig a= for the analysis of management effectiveness$ !hich generates an enterprise effectiveness in achieving goals and o#:ectives" The model is puts a lot of emphasis on the management philosophy and the environment factors on !hich the effective ness is dependent" The environment factors provide the opportunities to survive and gro! !ith certain constraints$ !hile the management philosophy sets the guidelines for deciding the management practices to run the enterprise" +hile environment factors are difficult to control$ it is left to the management to change its philosophy to!ards the various players in the #usiness$ vi "$ the employees$ the consumers$ the suppliers$ the government$ the community and the shareholders" If the attitude is to treat the employees as #usiness partners$ !e empo!er them and create a sense of #elonging to the organi ation" Such an attitude !ill have an impact on the management practices !here the employee !ill play a decisive role" It !ill affect the organi ation structure #y reducing its si e and the reporting levels"

Environment Management 0oal Setting

2 1 ( , , I , 0

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Information Support

MIS

If the attitude to!ards the consumer is changed to fulfill the e'pectations giving rise to a higher satisfaction$ then the management practices in the product design$ manufacturing and mar&eting !ill undergo a significant change" The product life cycle !ill #e then a short$ and more features and functions !ill #e added to the product fulfilling not only the functional needs #ut also the service needs of the consumer" The management practices therefore emerge out of the management philosophy and the environment in !hich it operates" The management effectiveness !ill largely depend on #oth these factors" The MIS design !ould$ therefore$ #e different depending upon the management practices follo!ed #y several organi ations in the same industry" Such design improves the management effectiveness leading to an improvement in the enterprise effectiveness. FIG a: NEGANDHI ESTAFEN MANAGEMENT EFFECTIVENESS M(,(0EME,T 2;I1OSO2;. (TTIT/DE TO+(RDS EM21O.EES$ CO,S/MERS$ S/221IERS$ 0O4E,RME,T COMM/,IT.$ S;(RE;O1DERS E,4IRO,ME,T -(CTORS SOCI(1 ECO,OMIC(1 ED/C(TIO,(1 2O1ITIC(1 1E0(1 MODEL FOR ANALYSIS OF

M(,(0ERI(1 2R(CTICES 21(,,I,0 OR0(,ISI,0 ST(--I,0 DIRECTI,0 COORDI,(TI,0 M(,(0EME ,T

E,TER2RISE E--ECTI4E,ESS

"oals# $%&ecti es ! 'argets

The process of management begins with setting of goals, objectives and targets. The goals are long-term aims to be achieved by the organization; objectives are relatively short-term milestones to be accomplished, while targets generally refer to physical achievements in the organization's business. The setting of goals, objectives and targets is a top management function. It has its implications on the business operations and profits. It considers social, technological, political, educational, economical changes e pected to occur in five to si years. The setting of goals, objectives and targets helps to pull the resources of the organization in one direction and solve. It helps build strategies, frame policies and set the rules of conducting the business. It provides an effective measure to monitor the managerial process. The people in the organization can have a common understanding of the purpose of managerial process and business operations. The goals, objectives and targets become reference points for strategic planning and operation planning. It further helps the management to identify !ey areas of business and management attention. The performance appraisal of the manager become impersonal and unbiased as it is done with reference to achievement of goals, objectives and targets. Its advantage is that it stimulates the development of people and provides motivation

$rgani(ation as a System
Each employee has needs !hich$ if congruent !ith the goals and o#:ectives of the organi ation$ should lead to high levels of performance and :o# satisfaction" +hen individual needs and organi ational goals are not congruent$ poor performance$ resistance$ and other dysfunctional conse6uences can result" The introduction of an information system can alter the relationship #et!een individual needs and organi ational o#:ectives" This section descri#es an approach to vie!ing organi ations from #oth the individual and overall organi ational perspective called Socio*technical approach$ it is useful for dealing !ith the effects of ne! information systems" The 1eavitt model descri#es the organi ation as consisting of four interrelated components: >" Tas& ?" Technology @" Structure A" 2eople The significance of 1eavitt%s model for understanding organi ational change is that$ #ecause of the strong interdependence$ a change in one component inevita#ly has effects$ planned or unplanned$ on the others" The implicit approach of most system designers is to focus on the tas& and technology su#systems and completely ignore their effects on people and structure" Technology refers here generally to all tools used in tas& accomplishment" T(S3S

2EO21E

STR/CT/RE

TEC;,O1O0 .

C/1T/RE

AN ALTERNATE MODEL OF ORGANI6ATIONAL SU1SYSTEMS MODIFIED FROM THE LEAVITT MODEL TO INCLUDE CULTURE

MIS: $rgani(ation Effecti eness

Management Information System <MIS= should #e designed vie!ing the organi ation as discussed earlier" MIS plays a very important role in creating organi ation #ehavior !hich in turn sets the goals for achievement" Technology & people decide the organi ation structure and style of the management

0O(1S TEC;,O1O0. T(S3S 2EO21E OR0(,IS(TIO, STR/CT/RE Creates ;elps to achieve OR0(,IS(TIO, )E;(4IO/R Modifies OR0(,IS(TIO, MOTI4(TIO, OR0(,IS(TIO, 1E(R,I,0 OR0(,IS(TIO, C;(,0ES

M(,(0EME,T ST.1E

C/1T/RE

;elps MIS

Or*a"i+ati%"a/ 1eha&i%r 7 Ma"a*e$e"t I"!%r$ati%" S#ste$