`Unit-II(Management Information System)

What is MIS?

MIS is the use of information technology, people, and business processes to record, store and process data to
produce information that decision makers can use to make day to day decisions. The full form of MIS is
Management Information Systems. The purpose of MIS is to extract data from varied sources and derive insights
that drive business growth.

The need for MIS

The following are some of the justifications for having an MIS system

 Decision makers need information to make effective decisions. Management Information Systems
(MIS) make this possible.
 MIS systems facilitate communication within and outside the organization – employees within the
organization are able to easily access the required information for the day to day operations. Facilitates
such as Short Message Service (SMS) & Email make it possible to communicate with customers and
suppliers from within the MIS system that an organization is using.
 Record keeping – management information systems record all business transactions of an organization
and provide a reference point for the transactions.

Objectives of MIS :

 Data Capturing : MIS capture data from various internal and external sources of organization. Data
 capturing may be manual or through computer terminals.
 Processing of Data : The captured data is processed to convert into required information. Processing of
 data is done by such activities as calculating, sorting, classifying, and summarizing.
 Storage of Information : MIS stores the processed or unprocessed data for future use. If any information is
 not immediately required, it is saved as an organization record, for later use.
 Retrieval of Information : MIS retrieves information from its stores as and when required by various
 users.
 Dissemination of Information : Information, which is a finished product of MIS, is disseminated to the
users in the organization. It is periodic or online through computer terminal.
Characteristics of MIS:

1) System approach: MIS is based on the System approach. It is a step by step approach to the study of system and its
performance. Performance is made in the light of the objective which has been constituted for that purpose.

2) Management oriented: Under MIS, necessary information is provided to each manager at the right time, in
right form and a relevant one, which is required by the management by providing information in taking
effective managerial decision.

3) Future oriented : MIS is designed and developed keeping in view the future position of the business. Therefore, MIS
should provide useful information on the basis of projections based on which future action can be taken.

4) Integrated: MIS is designed in taking a comprehensive view or looking at the complete picture of the
interlocking sub-systems that operate within the company. It considers all aspects of production,
marketing, accounting, financing, management etc.

5) Common-data followed: MIS deals with the common data that are available in the business. Because, MIS
provides data and information for taking effective managerial decision, which must select the real picture of
the business.

6) Long term planning: MIS is prepared for long term planning of the business. So, the designer should avoid the
outdated data and information in designing and developing time of MIS. The designer should consider the present
situation and future trend of the business activities, when MIS is designed.

7) Control database: Another important characteristic of MIS is that it always based on centralised data and
information. It is because of this fact that MIS is to supply data and information in such a way so that the
management can take its important decision.

Role of MIS:
A management information system (MIS) plays an important role in business organizations.
What is MIS role: There are many roles of MIS and some of the important MIS role are discussed below:

1. Decision making: Management Information System (MIS) plays a significant role in the decision-making
process of any organization. In any organization, a decision is made on the basis of relevant information which
can be retrieved from the MIS.

2. Coordination among the department: Management Information System satisfy multiple need of
an organization across the different functional department.

3. Finding out Problems: As we know that MIS provides relevant information about every aspect of
activities. Hence, if any mistake is made by the management then MIS, information will help in finding out
the solution to that problem.

4. Comparison of Business Performance: MIS store all past data and information in its Database. That why
the management information system is very useful to compare business organization performance.

5. Strategies for an Organization: Today each business is running in a competitive market. An MIS supports
the organization to evolve appropriate strategies for the business to assent in a competitive environment.

Components of MIS

MIS is a system or process that consists of people, machines, procedures, data methods and database as the
elements of the system. Different components of

1) Hardware: The hardware component of MIS means all the input and output devices that help the feeling and
displaying the information as per requirement. Different input devices are keyboard, scanners and mouse etc. The
output devices are monitor, printer, network devices etc. Hardware devices are the physical parts of MIS. These
can help in maintaining the data of business.

2) Software: Software are the programs and applications which convert machine into readable language. Different
software generally used for processing the information of an organization are ERP, ERP is software package that
combines all data and processes of an organization. In order to achieve the integration, it uses multiple
components of computer software as well as hardware.
3) Procedures: Procedure implies a set of sales and guideline, which are established by an organization for the
use of a computer based information system, Procedure depends on the nature and purpose of the organization. So
procedures are different for different organizations. Moreover, it may vary from one department to another
department according to requirement.

For example, production department requires information on raw materials, quality of goods etc. But the sales
department requires information on quality of goods to be sold, the expenditure of sale etc. So, different
departments have to set their procedures in different ways so that the MIS can help in retrieving the information as
per requirement of a particular department.

4) Personnel: Different personnel of MIS are computer experts, managers, users of computer based information
system. Majority of the personnel use the computer based information for preparing plans and programs, rules and
regulations, and for taking different decisions.

5)Data – the data that the information system records

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Merits of MIS

Following are the merits of MIS

I) Helps in formulation of planning: With the help of MIS, the management can formulate correct planning
because, preparation of planning requires various data and information, which can be systematically supplied
by the process of MIS.

II) Provides coordination: Under this system of MIS, data and information are collected from each sub-system of
the organization, through unifying the concept of each Sub-System. So, the MIS can provide the facility of
coordination.

III) Systematic decentralization: MIS also provides systematic decentralization in the organization. Under the
process of MIS, different middle and lower level officers and managers are authorized to supply their
information. So, by implementing MIS, the authority can be distributed among various officers and managers of
middle and lower levels without the loss of control. It also provides a system for monitoring performance.
Likewise, the MIS can help in decentralization.

V) Help in control system: To be an effective control system, it should be based on relevant data and information.
On the other hand, relevant data and information can be provided regularly in a systematic manner by the MIS. So,
MIS can help in taking proper control.

V) Increase Speed in Operation : In order to increase the speed of operation of a business, data and
information should be supplied at the right time at the right place. Because, without data and information no
operation can be done in a proper way.

By supplying necessary data and information, MIS can increase the speed of the operation of a business.

VI) Reduce duplication of efforts : Under the Process of MIS, various data and information are stored in a
scientific manner. So, the managers can take the help of these data and information before and at the time of
performing their activities. Thereby, the MIS can prevent unnecessary duplication of efforts likely to be done by the
managers. Generally, duplication of effort happens owing to the lack of sufficient data provided timely to the
managers.
Disadvantages

1. Highly sensitive requires constant monitoring

2. Budgeting of MIS extremely difficult
3. Quality of outputs governed by quality of inputs
4. Lack of flexibility to update itself
5. Effectiveness decreases due to frequent changes in top management
6. Takes into account only qualitative factors and ignores non-qualitative factors like morale of workers
attitude of workers etc.

1. Expensive:

Installing a management information system can be expensive for a company. Information technology while
cheaper today than previous years can represent a significant expense, especially for larger organizations. These
systems may also require ongoing support or upgrade fees, which can represent future fixed cash outflows.
Companies must create a budget to pay for these items to ensure the information system stays current with
business technology.

2. Maintenance:

Companies may need to hire maintenance individuals to help keep an electronic information system running
smoothly. Individuals often need experience in computer science functions and other business topics. Business
technology can change frequently, creating an environment where companies must have trained individuals who
can properly maintain computers, websites, servers and other equipment in use by the management information
system.

3. Ineffective:

Management information systems have the potential to become ineffective in a company’s operations. As with all
computer systems, the management information system is only as good as the programmer. Gathering
unimportant or non-essential information can delay business decisions because managers must request additional
input. Spending too much time reprogramming or correcting issues can also increase the time spent in the
decision-making process.

4. Unemployment:

While information technology may have streamlined the business process it has also created job redundancies,
downsizing and outsourcing. This means that a lot of lower and middle-level jobs have been done away with
causing more people to become unemployed.

5. Privacy:

Though information technology may have made communication quicker, easier and more convenient, it has also
bought along privacy issues. From cell phone signal interceptions to email hacking, people are now worried about
their once private information becoming public knowledge.

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Implementation, Evaluation and Maintenance of Information System

After the design & development process of an information system, comes it implementation. By implementation, it
means to put the system to work.There are 4 basic methods of implementation of MIS:

These ares-

1. Install the system in a new operation or organization.

2. Cut off the old system and install the new
This produces a time gap during which no system is in operation
3. Cut over by segments
This method is also referred as” phasing in” the new system. Small parts or subsystems are substituted for
the old. In the case of upgrading old systems, this may be a very desirable method.
4. Operate in parallel and cut over.
The new system is installed and operated in parallel with the current system until it has been checked
out, then only the current system is cut out

Steps/ Tasks in Implementation

The major implementation tasks consist of-

1. Planning the implementation activities

2. Acquiring and laying out facilities and offices
3. Organizing the personnel for implementation
4. Developing procedures for installation and testing
5. Developing the training program for operating personnel.
6. Completing the system’s software
7. Acquiring required hardware
8. Generating files
9. Designing forms
10. Testing the entire system
11. Completing cutover to the new system
12. Documenting the system
13. Evaluating the MIS
14. Providing system maintenance (debugging and improving)

Implementation Plan

 It is the series of action-oriented steps planned for making the implementation smooth. It normally
involves the following steps:

1. Creating a master schedule of the implementation activities

2. Setting timelines for critical and non-critical activities
3. Identifying major bottlenecks and their solutions
4. Communication of the plan.

Organizing the personnel for implementation

As the implementation tasks have been defined, management usually assigns a project manager to guide the
implementation.

The purpose of the MIS is to increase the amount and quality of their contributions, the system is their system.

Top management must make the middle managers for their involvement in implementation.
Developing procedures for installation and testing
After organizing the personnel for implementation the next task is to develop or prepare the procedures for
implementation. As the project leader has the network plan for proceeding with the implementation, this leader
calls the key people in the project to prepare more detailed procedures for system installation.

Developing the training program for operating personnel

A program is developed keeping in mind to impress management and support. After developing the program, it is
necessary to train operating personnel in their new duties. They must have a thorough understanding of what the
new MIS is like and what it is supposed to do. They must learn how it will operate. They are faced with many
changes in their work and have to obtain acceptance of changes.

Completing the system’s software

As the software is developed internally or under contract, in both cases, the software development must take
in mind the nature of the hardware required.

Acquiring required hardware

This acquisition is usually the limiting factor in getting am MIS implementation. These tasks should be
started during the design stage.

The decision is to be needed, whether to buy or lease the hardware. Capital expenditure analysis is only one of
many factors involved in this decision. Others are prestige, usage etc.

Generating files

In the implementation stage, the actual data must be obtained and recorded for the initial testing and operation of
the system. This requires format of the data, storage form and format and remarks to indicate when the data have
been stored.

Designing forms

For controlling the marketing, a salesperson has to fill out the forms summarizing the day’s activities. The
form ensures the right information to be supplied for computer storage.

Forms are required not just for input and output but also for transmitting data at intermediate stages.

Testing the entire system

As the total system is installed, tests should be performed with the test specifications and procedure. A test
during installation stage consists of component tests, subsystem tests and total system acceptance tests.

completing cutover to the new system

Cutover is a point at which the new component replaces the old component to the new system replaces the
old system. This involves old forms, old files and old equipment being retried.
The debugging proves associated with the cutover to the new system may extend for several months.

Documenting the system

Documentation of the MIS means preparation of written descriptions of the scope, purpose, information flow
components, and operating procedures of the system.

Evaluating the system

After the MIS has been operating smoothly for a short period of time, an evaluation of each step in the design and
of the final system performance should be made.

Providing system maintenance

 Control and maintenance of the system are the responsibilities of the line managers.
 Control of the systems means the operation of the system as it was designed to operate.
 Maintenance is closely related to control. Maintenance is that ongoing activity that keeps the MIS at the
highest levels of effectiveness and efficiency within cost constraints.

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Systems Development Life Cycle (SDLC) in Management Information System

SDLC stands for "Systems Development Life Cycle". SDLC refers to some steps/phases. As its name implies, if an
expert develops a system through SDLC phases then the life of a developed system will be long.

It's a common phenomenon that any organization who wants to create a new system like machine, tool, logical or
physical system, they create the system in such a way so that it will have its long life. To create a new system with
its long life, an expert member (system analyst) follows some phases, these phases are known as SDLC phases.

The SDLC phases are as follows

1. Problem identification
2. Requirement analysis
3. System design
4. Implementation
5. Testing
6. Deployment
7. Maintenance

Following figure shows the phases architecture of system development life cycle –
The detailed description of the SDLC phases is as follows –

1) Problem identification

This is the first and initial phase of SDLC. In this phase, the analyst, identify the actual problem for which they
want a solution or create a system. The main concern of this phase is to recognize the real problem, if the problem
is significant then the solution will be useful otherwise the solution will not be fruitful or it will be useless. If the
experts work on the unrealistic problem then the solution is a waste of time, efforts, costs, etc. So, the problem
must be realistic. To identify the problem, the analyst pays more attention to it.

2) Requirement analysis

After getting the problem identification, the next step is to work on requirement analysis. In requirement
gathering, the analyst thinks about the solution to a problem. The requirement analysis is a detailed analysis which
includes the answer to different questions like –

 What is the problem?

 What is the solution?
 Is solution feasible?
 How much time required solving the problem?
 How it will be resolved?
  How many resources will be required?
 Do we have sufficient resources to solve the problem?
  What kind of environment required by solution?

These are the few key questions for which an analyst finds real solutions. It shows the proper planning to get all
solutions in our hands before solving the actual problem. Without proper planning or without knowing the actual
problem to work upon its solution or implement a system always fails.

3) System design

System design is a blueprint of the solution. It is similar to before making a car the designers make a sketch of the
car and then connect all parts of the car according to its predefined design.

The process follows the steps i.e. first creates logical design and gets design confirmation by top management or
decision-makers of the company. During the designing process, if any changes required, analysts redesign it. The
changes are easily done because the logical design reflects on papers. So, it is good to make the required changes
on papers rather than the physical system. Changes in the physical system always make losses to the company in
terms of wastage of time, resources, money, etc. So, logical design is the most important concept of designing. Once
they confirm the logical design then the analyst looks after on its physical design.

Physical designing shows the proper connection of different components of the system according to its logical
system.

4) Implementation

The implementation shows the final integration of the system. Implementation describes how the product will get
converted it into its final form. There are different components associated with the system and during the
implementation process, all parts of the system are linked with one another according to a proper plan so that they
can work properly and fulfill the objective of the system.

5) Testing

Testing is a process to validate the objective of the system through various steps. It is a mechanism that makes sure
that the system is working properly or not. After the implementation of the system, it is tested on different aspects.
Different inputs are given and test the output accuracy. The system is also tested on different parameters like
accuracy rate, system feasibility, system performance, load balancing, etc.

The testing phase is one of the most important phases of SDLC. Once, experts are 100% sure about the system’s
smooth-running process, performance, accuracy, etc then only they forward it on the next phase.

6) Deployment

After successful testing of the developed system, it is deployed to the concern candidate or company for which it
has designed. Deployment is a process to deploy the new one designed system at clients/customers end.

7) Maintenance

Maintenance is the last and one of the most important phases of SDLC. Maintenance of the system gives long life to
the new system. After the successful deployment of the system at clients end, it is compulsory to maintain it from
time to time. As, if any system maintains properly then the life cycle of the system increases and the organization
can utilize the system for a long time which will be profitable to the companies.

MIS Systems Development Life Cycle (SDLC)

The system development life cycle refers to the processing of planning, creating, testing, and deploying an
information system. The main objective of system development life cycle is to produce high-quality information
systems that meet or exceed the expectations of the users within the stipulated budget and time frame.

SDLC uses a number of development methodologies to achieve this objective.

Waterfall Model
The waterfall model uses a sequential design model. The next stage starts only after the completion of the previous

stage. The first

stage is usually drawn on the top and the subsequent stages below and to the left bottom. This forms a waterfall
like structure, and it's where the name came from.

The main objective of the waterfall model is

 Planning
 Time scheduling
  Budgeting and
 Implementing an entire system at once
The waterfall model is ideal when the user requirements are clearly understood and are not expected to change
radically during the development of the information system. The waterfall model is ideal in situations where a
project has a fixed-scope, fixed time frame, and fixed price.

The biggest challenge of the waterfall model is adoption to change. It is not easy to incorporate new user
requirements.

Prototyping

A prototype is a semi-functional simulation model of the actual system to be developed. Prototyping development
methodologies make use of prototypes. Prototypes allow both developers and users to get feedback early.

Prototyping makes it easy for users to specify their requirements and developers understanding the requirements
of the users because of the prototypes. A prototyping methodology stands with identifying the basics system
requirements especially the input and output from the system. These requirements are then used to create a
simulation model that users can interact with and provide feedback. The user feedback is used to enhance the
prototype and make other important decisions such as project costing and feasible time schedules.

The following diagram illustrate the stages of prototyping

SUCCESS and FAILURE OF MIS

If MIS is to be success, then it should have all the features listed below:

1. MIS is integrated into the management function. It sets clear objectives to ensure that MIS focuses on the
major issues of the business.
2. An appropriate information processing technology required to meet the data processing and analysis needs
of the users of MIS
3. The MIS is oriented, defined and designed in terms of the user's requirements and its operational viability
is ensured.
4. The MIS is kept under continuous surveillance, so that its open system design is modified according to the
changing information needs.
5. MIS focuses on the results and goals, and highlights the factors and reasons for non achievement.
6. The MIS is easy to operate and, therefore, the design of the MIS has such features which make up a user-
friendly design.
7. MIS recognizes that the information needs become obsolete and new needs emerge. The MIS design,
therefore, has a basic potential capability to quickly meet new needs of information.
8. The MIS concentrates on developing the information support to manager critical success factors. It
concentrates on the mission critical applications serving the needs of the top management.

Factors Contributing to Failures

Many a times MIS is a failure. The common factors which are responsible for this are listed as follows:

1. The MIS is conceived as a data processing and not as an information processing system.
2. The MIS does not provide that information which is needed by the managers but it tends to provide the
information generally the function calls for. The MIS then becomes an impersonal system.
3. Underestimating the complexity in the business systems and not recognizing it in the MIS design leads to
problems in the successful implementation.
4. Adequate attention is not given to the quality control aspects of the inputs, the process and the outputs
leading to insufficient checks and controls in the MIS.
5. Lack of training and appreciation that the users of the information and the generators of the data are
different, and they have to play an important responsible role in the MIS.
6. A belief that the computerized MIS can solve all the management problems of planning and control of the
business.
7. Lack of administrative discipline in following the standardized systems and procedures, wrong coding and
deviating from the system specifications result in incomplete and incorrect information.
8. The MIS does not give perfect information to all the users in the organization.

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What is Information?

Information is a set of data which is processed in a meaningful way according to the given requirement.
Information is processed, structured, or presented in a given context to make it meaningful and useful.

It is processed data which includes data that possess context, relevance, and purpose. It also involves
manipulation of raw data.
 Characteristics of Information:

 The parameters of a good quality are difficult to determine for information.

  Quality of information refers to its fitness for use, or its reliability.
 Following are the essential characteristic features :

i) Timeliness : Timeliness means that information must reach the recipients within the prescribed
timeframes. For effective decision-making, information must reach the decision-maker at the right time, i.e.
recipients must get information when they need it. Delays destroys the value of information. The
characteristic of timeliness, to be effective, should also include up-to-date, i.e. current information.

ii) Accuracy : Information should be accurate. It means that information should be free from mistakes,
errors &, clear Accuracy also means that the information is free from bias. Wrong information given to
management would result in wrong decisions. As manager’s decisions are based on the information
supplied in MIS reports, all managers need accurate information.

iii) Relevance : Information is said to be relevant if it answers especially for the recipient what, why,
where, when, who and why? In other words, the MIS should serve reports to managers which is useful and
the information helps them to make decisions.

iv) Adequacy : Adequacy means information must be sufficient in quantity, i.e. MIS must provide reports
containing information which is required in the deciding processes of decision-making. The report should
not give inadequate or for that matter, more than adequate information, which may create a difficult
situation for the decision-maker. Whereas inadequacy of information leads to crises, information overload
results in chaos.
 v) Completeness : The information which is given to a manager must be complete and should meet all his
needs. Incomplete information may result in wrong decisions and thus may prove costly to the
organization.

vi) Explicitness : A report is said to be of good quality if it does not require further analysis by the
recipients for decision making.

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COMPONENTS OF AN INFORMATION SYSTEM

 An information system is a system that accepts data resources as input and processes them into
 information products as output.
 An information system depends on the resources of

1. people (end users and IS specialists),

2. hardware (machines and media),
3. software (programs and procedures),
4. data (data and knowledge basis), and
5. networks (communications media and network support) to perform input, processing, output, storage, and
control activities that convert data resources into information products

Components/Resources of Information System:

1. People Resources:

 People are required for the operations of all information system. These people resources include:

a. End Users:

End users are also called users or clients. They are the people who use an information system or the
information they produce. They can be customers, salespersons, engineers, accountant, clerks, etc. Most of the
end-users in business are knowledge workers that are people who spend most of the time communicating and
collaborating in team and workgroup and creating, using and distributing information.

b. Information System Specialists:

 They are the peoples, who develop and operates information system. They include system analyst, software
developer and other managerial and technical information system personnel.

2. Hardware Resources:

 The concept of hardware resources includes all physical devices and materials used in information
processing. It mainly includes:

a. Machines:

 It means computers and other peripherals used for input, processing and outputs including different types
of computers, handheld devices and various input and output equipment.
b. Media:

A media is used for the storage of data and programs. Different types of media like Magnetic Media (Floppy
Disk, Magnetic Disk, Magnetic Tape, and Hard Disk), Optical Media (CD, DVD, and Blu-Ray), Flash Media (Pen-
Drive, Memory Card, Etc.).

3. Software Resources:

 Software resources include all kinds of information processing instructions. It mainly includes:

a. Programs:

 Programs or software program includes a set of instruction for performing specific task software program
may be as system software and application software. System software is that software, which supports the
operation of a system such as operating system, device driver, language processor, etc. Application
software programs used for processing data and providing results and solving problems like payroll
software, word processing software, etc.

b. Procedure:

 They are operating instruction for people who will use an information system such as instructions for using
a software package.

4. Network Resources:

 Telecommunication technologies and networks like the internet, intranet and extranet have become
essential to the successful e-business and e-commerce operation of all types of organization and for their
computer-based information system. It mainly consists of:

a. Communication Media:

 It is the medium used for data transmission over the network. It may be as, Cable Media like Twisted Pair
Cable, Coaxial and Optical Fiber and Wireless Media as, Micro-wave, Radio-wave, Infrared wave, Bluetooth,
Communication Satellite.

b. Network Support:

 It includes many hardware and software necessary to support the operations and use of computer
network. The various hardware devices may be like router, hub, switch, bridge, gateway, etc. and software
like different types of protocols, network operating system, etc.

5. Data Resources:

 Data are vitally important for any organization and the main objective of an information system is to
capture, process, store and distribute data and information in a systematic way. Data can be in many forms
like traditional alpha-numeric data, images, audio, video, animations, etc. To manage the data resources in a
database we use any suitable DBMS software. These resources should manage database and
knowledgebase. A database is the organized collection of logically related data, whereas a knowledge base
holds knowledge in a variety of form such as facts, rules and knowledge mainly gained through experience.
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Types of Information System:

The following diagram illustrates the various levels of a typical organization.

Operational management level

The operational level is concerned with performing day to day business transactions of the organization.

Examples of users at this level of management include cashiers at a point of sale, bank tellers, nurses in a hospital,
customer care staff, etc.

Users at this level use make structured decisions. This means that they have defined rules that guides them while
making decisions.

For example, if a store sells items on credit and they have a credit policy that has some set limit on the borrowing.
All the sales person needs to decide whether to give credit to a customer or not is based on the current credit
information from the system.

Tactical Management Level

This organization level is dominated by middle-level managers, heads of departments, supervisors, etc. The users
at this level usually oversee the activities of the users at the operational management level.

Tactical users make semi-structured decisions. The decisions are partly based on set guidelines and judgmental
calls. As an example, a tactical manager can check the credit limit and payments history of a customer and decide to
make an exception to raise the credit limit for a particular customer. The decision is partly structured in the sense
that the tactical manager has to use existing information to identify a payments history that benefits the
organization and an allowed increase percentage.
Strategic Management Level

This is the most senior level in an organization. The users at this level make unstructured decisions. Senior level
managers are concerned with the long-term planning of the organization. They use information from tactical
managers and external data to guide them when making unstructured decisions.

1. Transaction Processing System (TPS):

 Transaction Processing System are information system that processes data resulting from the occurrences
 of business transactions
 Their objectives are to provide transaction in order to update records and generate reports i.e to perform
 store keeping function
 The transaction is performed in two ways: Batching processing and Online transaction processing.

 Example: Bill system, payroll system, Stock control system.
 The main activities involved in transaction processing are:

 1. Data Entry and Validation:

 The transactional data may be collected using different medium such as Bar Code Reader (BCR), PoS
terminal, Credit card reader, etc. The proper reading and editing of data is the primary requirement of TPS
to provide quick and correct information.
 2. Data Processing:
 A TPS can process data in two different ways as:
 a. Online Processing:
 In online or real-time processing data are processed immediately after the occurrence of the transaction
such processing must have quick response time. For example, a banking system, inventory management
 system, railway management system, etc.
  b. Batch Processing:
 In batch processing transactional data are accumulated over some time and processed in a group or batch.
Such a system may have a very slow response time but the ability to process a large volume of data. For
 example payroll system telephone billing system, etc.
  3. Database Maintenance:
 An organization’s database must be maintained by TPS so that it is always correct and up to date. So, a TPS
updates corporate databases to reflect the changes resulting from day to day business operations.
  4. Documents and Reports Generations:
 TPS produces a variety of documents and reports such as purchase order, sales receipts, invoice, customer
statements, etc. These documents and reports should be available when users require and generally
available in pre-specified format either in softcopy or hardcopy form.
 5. Enquiry Processing:
 TPS allow the users to make enquiry and receive responses using simple database query language or by
using simple data entry forms. Typically results are displayed in a variety of pre-specified format on the
screen.

 Major Characteristics of TPS:

1. Process a large amount of data.

2. Need high processing speed due to the large volume of data.
3. Process information on regular bases.
4. Collect and monitor data generated during business activities.
5. Input and output are structured and formatted in a pre-specified format.
6. High level of detail is required especially in the input.
7. Low calculation complexity, it means simple arithmetic and statistical calculations.
8. Need a high level of accuracy, consistency and security.
9. Requires high processing reliability interruption due to any reason is not acceptable.
10. Ability to query files and database.

2. Management Information System (MIS):

 Management Information System is designed to take relatively raw data available through a Transaction
Processing System and convert them into a summarized and aggregated form for the manager, usually in a
 report format. It reports tending to be used by middle management and operational supervisors.
 Many different types of report are produced in MIS. Some of the reports are a summary report, on-demand
 report, ad-hoc reports and an exception report.
 Example: Sales management systems, Human resource management system.

3. Decision Support System (DSS):

A decision support system processes data to assist in management decision-making. It stores and gathers the
information required for management to take the proper actions at the correct time. For example, a bank
manager can use a DSS to assess the evolving loan trends to determine which yearly loan targets to meet.

Decision models are programmed into the IS to analyze and summarize large quantities of information and put it
into a visual that makes it understandable.

Because a DSS is interactive, management can easily add or delete data and ask important questions. This provides
the evidence required for mid-management to make the right choices that will ensure the company meets its
targets.

 Example: Financial planning systems, Bank loan management systems.

4. Executive Support System

Executive support systems are similar to a DSS but are primarily used by executive leaders and owners to optimize
decision-making.

An expert system helps enterprise leaders find answers to non-routine questions so they can make choices that
improve the company's outlook and performance. Unlike a DSS, an executive support system provides better
telecommunication functionality and a bigger computing functionality.
Graphics software is integrated within an ESS to display data about tax regulations, new competitive
startups, internal compliance issues, and other relevant executive information. This allows leaders to track
internal performance, monitor the competition, and pinpoint growth opportunities.

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Data processing –

 The data processing means the series of actions or operations, which convert data into useful information.
It can be defined as the manipulation of data in computer is known as data processing. It includes the
conversion of raw data to machine-readable form, flow of data through the CPU and memory to output
 devices, and formatting or transformation of output.
 In the information system, data acts as the back – bone and helps in keeping the various components of the
information system glued to each other. Data is actually in unstructured form consisting of the data in the
 complete isolation in order to be used as the raw material of or for the information system.
 Data can be easily expressed in the form of the numerals and can also be expressed in alphabetic, alpha –
 numeric, images, special characters, symbols etc.
 The processing of the data consists of a large number of the activities or the operations and these
operations are very much similar to those in a manufacturing unit. The basic process involved in data
 processing is of the conversion of the basic raw material – data – into a finished product – information.
 Data processing helps in carrying out a number of the data operations – and these can be illustrated as the
follows –


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Discuss the three approaches of MIS development

 For developing MIS, three approaches are used, viz., Top down approach, Bottom up approach and
Integrative approach. Each of these is described below:

Top down approach

 The development of MIS under top down approach starts with the defining of the objectives of the
organization, the kind of business it is in, and the constraints under which it operates. The activities or
functions for which information would be required are also identified. The crucial strategic and tactical
decisions are also defined and the decisions necessary to operate the activities are specified. From the
activities or functions and the decisions to be made, the major information requirements are as certained.
This approach develops a model of information flow in the organization, which acts as a guide for designing
the information system. By using the model of information flow, various information sub-systems may be
defined. Each sub-system comprises of various modules. The selection of a module for developing system is
made on the basis of the priority assigned to it.

(II)Bottom-up approach:

 The development of information system under this approach starts from the identification of life stream
systems. Life stream systems are those systems, which are essential for the day-to-day business activities.
The examples of life stream systems include payroll, sales order, inventory control and purchasing etc. The
development of information system for each life stream system starts after identifying its basic
transactions, information file requirements and information processing programs. After ascertaining the
data/information requirements, files requirement and processing programs for each life stream system,
the information system for each is developed. The next step is towards the integration of data kept in
different data files of each information system. The data is integrated only after thoroughly examining
various applications, files and records. The integrated data enhances the share ability and evaluability of
 the database. It also ensures that all programs are using uniform data.
 The next step under bottom up approach may be the addition of decision model and various planning
models for supporting the planning activities involved in management control.

(III)Integrative approach:

 This approach can overcome the limitations of the above two approaches when used objectively.
Integrative approach permits managers at all levels to influence the design. Top management identifies the
 structure and design of MIS suitable to the concern.
 This design is further presented to lower level to suggest changes, additions or deflections and return the
 design with their suggestions to the top level for approval.
 The revised design is down and evaluated by the top level and sent down again in a modified form for
further consideration, if required. This evaluation, modification and approval process continues until a final
design is achieved that is satisfactory to all levels.

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