MANAGEMENT INFORMATION

SYSTEM

VISION INSTITUE OF MANAGEMENT

SUBMITTED TO,
MISS MANYA MA’AM
SUBMITTED BY,
 MS ANAM FATIMA
1.MIS’ is a support to the management’ .explain in detail?

A management information system (MIS) is a computerized database of

financial information organized and programmed in such a way that it
produces regular reports on operations for every level of management in a
company. It is usually also possible to obtain special reports from the system
easily. The main purpose of the MIS is to give managers feedback about their
own performance; top management can monitor the company as a whole.
Information displayed by the MIS typically shows "actual" data over against
"planned" results and results from a year before; thus it measures progress
against goals. The MIS receives data from company units and functions.
Some of the data are collected automatically from computer-linked check-out
counters; others are keyed in at periodic intervals. Routine reports are
preprogrammed and run at intervals or on demand while others are obtained
using built-in query languages; display functions built into the system are used
by managers to check on status at desk-side computers connected to the MIS
by networks. Many sophisticated systems also monitor and display the
performance of the company's stock.
 Management information systems provide the owner and other decision-
makers at a business with the data needed to make informed decisions for the
company. A MIS provides background, current data and trend analysis so you
have ready information on all areas of the business. You can use this detailed
data on the company environment and finances to improve business
performance in the long- and short-term.
1.The Role of Management Information Systems in Decision-Making
2.Importance of Information Systems in an Organization
3.Business Systems Planning
Management information systems provide the owner and other decision-
makers at a business with the data needed to make informed decisions for the
company. A MIS provides background, current data and trend analysis so you
have ready information on all areas of the business. You can use this detailed
data on the company environment and finances to improve business
performance in the long- and short-term.
Managing Business Data
Business owners and managers need to be informed about the overall
operation of a company and key areas of responsibility. If the president calls
and wants to know how much sales have increased in each of the last four
years, the sales manager must provide the information. Management
information systems give you access to key data about your department and
about the company in general. If the manager needs reference information for
a bid or for regulatory purposes, management information systems are a good
source.

Informing Business Decisions

Decisions are only as valid as the information on which they are based.
Management information systems improve your decision-making, because
they provide information that is accurate, timely, relevant and complete. Self-
checking and cross-checking features in management information systems
reduce errors, and IT professionals design the systems to offer a complete
picture of a situation or highlight that specific information is missing.
Companies that use management information systems ensure that all
managers work from the same set of data and make their decisions based on
identical information.

Analyzing Business Trends

A key part of management's responsibilities is preparing forecasts for strategic
planning and budgets. Management information systems contain past data for
fundamental company functions such as sales, production and customer
service. They include information on revenue, expenses and investments,
broken down into separate components. You can search for trends by asking
the systems to project past performance patterns into the future.

Management information systems have sophisticated mathematical analysis

tools that can evaluate relationships and calculate probable future trends. You
can base accurate forecasts on such information.

Examining Strategy and Scenarios

Sometimes, the information and trends display an evolving situation that the
company wants to change. Management information systems can evaluate
different possibilities and all you to examine scenarios. What-if scenarios are a
powerful tool that help you decide on the best strategy for the company.
Management information systems calculate what happens based on their
collection of data on how the company operations performed in the past.

You can see what happens if the promotional budgets increase or staff levels
are reduced. With this knowledge, you can develop the optimal strategy for the
company.
 Core principle of MIS

Management information systems (MIS) are a valuable tool that executives

uses to gauge the effectiveness of their business operations. MIS can provide
valuable insight into a company's financial health, and assist managers with
making critical business decisions. The style and format of MIS have changed
throughout the years, but managers still rely on these systems to perform their
day-to-day activities.

The Facts
A management information system focuses on how and what information
should be retrieved so managers can make effective decisions. MIS reporting
also provides information regarding a company's major processes, such as
internal controls, operating procedures and audit preparation. With these
systems in place, managers can improve workplace safety, decreasing
expenses and maintain client relationships.
Internal Controls

Internal controls are specific guidelines that direct the operation of a division or
department. Employee responsibilities and work flow management are integral
components of a company’s internal controls. Additional internal controls also
are in effect in accounting departments, ensuring that all financial information
is properly analyzed and recorded. Publicly held corporations must have
strong financial internal controls in place to meet Securities and Exchange
Commission (SEC) requirements. Failure to adhere to these financial
guidelines may result in fines being issued by the SEC.

Operating Procedures

Operating procedures are the daily activities that involve company personnel
and resources. MIS provides guidelines, or standard operating procedures, for
personnel to follow when dealing with vendors, clients and government
agencies. MIS help protect a company from any legal actions that can arise
from daily operations. Department managers usually analyze and review the
MIS to ensure the company's mission is fulfilled and department goals are
being met.

Audit Preparation

There are two types of workplace audits: financial and operational. Financial
audits verify that companies are recording all financial information according to
Generally Accepted Accounting Principles (GAAP). This enables them to
assure investors and regulators of their financial stability. Operational audits
test the effectiveness of division guidelines on a company’s operations.
Management must ensure that employees are following policy when
conducting business and that no safety violations are occurring. Some
operational audits are required for government certifications.

Computerized MIS

Technology has greatly increased the functionality of traditional management

information systems. Companies now have access to all major divisions and
their reports in a shorter time span. This improves overall operations. In
addition, with a companywide MIS, managers have the capability of creating
reports quickly when a new division or process begins business operations.

LEVELS OF INFORMATION IN MIS

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 .

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.

Transaction Processing System (TPS)

Transaction processing systems are used to record day to day business
transactions of the organization. They are used by users at the operational
management level. The main objective of a transaction processing system is
to answer routine questions such as;

 How printers were sold today?

 How much inventory do we have at hand?
 What is the outstanding due for John Doe?

By recording the day to day business transactions, TPS system provides

answers to the above questions in a timely manner.

 The decisions made by operational managers are routine and highly

structured.
  The information produced from the transaction processing system is very
detailed.

For example, banks that give out loans require that the company that a person
works for should have a memorandum of understanding (MoU) with the bank.
If a person whose employer has a MoU with the bank applies for a loan, all
that the operational staff has to do is verify the submitted documents. If they
meet the requirements, then the loan application documents are processed. If
they do not meet the requirements, then the client is advised to see tactical
management staff to see the possibility of signing a MoU.

Examples of transaction processing systems include;

 Point of Sale Systems – records daily sales

 Payroll systems – processing employees salary, loans management,
etc.
 Stock Control systems – keeping track of inventory levels
 Airline booking systems – flights booking management

Management Information System (MIS)

Management Information Systems (MIS) are used by tactical managers to

monitor the organization's current performance status. The output from a
transaction processing system is used as input to a management information
system.

The MIS system analyzes the input with routine algorithms i.e. aggregate,
compare and summarizes the results to produced reports that tactical
managers use to monitor, control and predict future performance.

For example, input from a point of sale system can be used to analyze trends
of products that are performing well and those that are not performing well.
This information can be used to make future inventory orders i.e. increasing
orders for well-performing products and reduce the orders of products that are
not performing well.

Examples of management information systems include;

 Sales management systems – they get input from the point of sale
system
 Budgeting systems – gives an overview of how much money is spent
within the organization for the short and long terms.
  Human resource management system – overall welfare of the
employees, staff turnover, etc.

Tactical managers are responsible for the semi-structured decision. MIS

systems provide the information needed to make the structured decision and
based on the experience of the tactical managers, they make judgement calls
i.e. predict how much of goods or inventory should be ordered for the second
quarter based on the sales of the first quarter.

Decision Support System (DSS)

Decision support systems are used by senior management to make non-
routine decisions. Decision support systems use input from internal systems
(transaction processing systems and management information systems) and
external systems.

The main objective of decision support systems is to provide solutions to

problems that are unique and change frequently. Decision support systems
answer questions such as;

 What would be the impact of employees' performance if we double the

production lot at the factory?
 What would happen to our sales if a new competitor entered the market?

Decision support systems use sophisticated mathematical models, and

statistical techniques (probability, predictive modeling, etc.) to provide
solutions, and they are very interactive.

Examples of decision support systems include;

 Financial planning systems – it enables managers to evaluate

alternative ways of achieving goals. The objective is to find the optimal
way of achieving the goal. For example, the net profit for a business is
calculated using the formula Total Sales less (Cost of Goods +
Expenses). A financial planning system will enable senior executives to
ask what if questions and adjust the values for total sales, the cost of
goods, etc. to see the effect of the decision and on the net profit and find
the most optimal way.
 Bank loan management systems – it is used to verify the credit of the
loan applicant and predict the likelihood of the loan being recovered.

Artificial intelligence techniques in business

Artificial intelligence systems mimic human expertise to identify patterns in
large data sets. Companies such as Amazon, Facebook, and Google, etc. use
artificial intelligence techniques to identify data that is most relevant to you.

Let's use Facebook as an example, Facebook usually makes very accurate

predictions of people that you might know or went with to school. They use the
data that you provide to them, the data that your friends provide and based on
this information make predictions of people that you might know.

Amazon uses artificial intelligence techniques too to suggest products that you
should buy also based on what you are currently getting.

Google also uses artificial intelligence to give you the most relevant search
results based on your interactions with Google and your location.

These techniques have greatly contributed in making these companies very

successful because they are able to provide value to their customers.