MANAGEMENT INFORMATION SYSTEM

BMB-208

UNIT I – NOTES (BY MR. FAZ MOHD)

MIS - Basic Information Concepts

Information can be defined as meaningfully interpreted data. If we give you a number 1-212-290-
4700, it does not make any sense on its own. It is just a raw data. However if we say Tel: +1-212-
290-4700, it starts making sense. It becomes a telephone number. If I gather some more data and
record it meaningfully like −

Address: 350 Fifth Avenue, 34th floor

New York, NY 10118-3299 USA
Tel: +1-212-290-4700
Fax: +1-212-736-1300

It becomes a very useful information - the address of New York office of Human Rights Watch, a
non-profit, non-governmental human rights organization.

So, from a system analyst's point of view, information is a sequence of symbols that can be
construed to a useful message.

An Information System is a system that gathers data and disseminates information with the sole
purpose of providing information to its users.

The main object of an information system is to provide information to its users. Information
systems vary according to the type of users who use the system.

A Management Information System is an information system that evaluates, analyzes, and

processes an organization's data to produce meaningful and useful information based on which
the management can take right decisions to ensure future growth of the organization.

Information Vs Data

Data can be described as unprocessed facts and figures. Plain collected data as raw facts cannot
help in decision-making. However, data is the raw material that is organized, structured, and
interpreted to create useful information systems.

Data is defined as 'groups of non-random symbols in the form of text, images, voice representing
quantities, action and objects'.
Information is interpreted data; created from organized, structured, and processed data in a
particular context.

According to Davis and Olson −

"Information is a data that has been processed into a form that is meaningful to recipient and is
of real or perceived value in the current or the prospective action or decision of recipient."

Information, Knowledge and Business Intelligence

Professor Ray R. Larson of the School of Information at the University of California, Berkeley,
provides an Information Hierarchy, which is −
 Data − The raw material of information.
 Information − Data organized and presented by someone.
 Knowledge − Information read, heard, or seen, and understood.
 Wisdom − Distilled and integrated knowledge and understanding.
Scott Andrews' explains Information Continuum as follows −
 Data − A Fact or a piece of information, or a series thereof.
 Information − Knowledge discerned from data.
 Business Intelligence − Information Management pertaining to an organization's policy or
decision-making, particularly when tied to strategic or operational objectives.

Information/Data Collection Techniques

The most popular data collection techniques include −

 Surveys − A questionnaires is prepared to collect the data from the field.

 Secondary data sources or archival data: Data is collected through old records, magazines,
company website etc.
 Objective measures or tests − An experimental test is conducted on the subject and the
data is collected.
 Interviews − Data is collected by the system analyst by following a rigid procedure and
collecting the answers to a set of pre-conceived questions through personal interviews.

MIS - Classification of Information

Information can be classified in a number of ways and in this chapter, you will learn two of the
most important ways to classify information.
Classification by Characteristic

Based on Anthony's classification of Management, information used in business for decision-

making is generally categorized into three types −

 Strategic Information − Strategic information is concerned with long term policy

decisions that defines the objectives of a business and checks how well these objectives
are met. For example, acquiring a new plant, a new product, diversification of business
etc, comes under strategic information.
 Tactical Information − Tactical information is concerned with the information needed
for exercising control over business resources, like budgeting, quality control, service
level, inventory level, productivity level etc.
 Operational Information − Operational information is concerned with plant/business
level information and is used to ensure proper conduction of specific operational tasks as
planned/intended. Various operator specific, machine specific and shift specific jobs for
quality control checks comes under this category.
Classification by Application

In terms of applications, information can be categorized as −

 Planning Information − These are the information needed for establishing standard
norms and specifications in an organization. This information is used in strategic, tactical,
and operation planning of any activity. Examples of such information are time standards,
design standards.
 Control Information − This information is needed for establishing control over all
business activities through feedback mechanism. This information is used for controlling
attainment, nature and utilization of important processes in a system. When such
information reflects a deviation from the established standards, the system should induce
a decision or an action leading to control.
 Knowledge Information − Knowledge is defined as "information about information".
Knowledge information is acquired through experience and learning, and collected from
archival data and research studies.
 Organizational Information − Organizational information deals with an organization's
environment, culture in the light of its objectives. Karl Weick's Organizational
Information Theory emphasizes that an organization reduces its equivocality or
uncertainty by collecting, managing and using these information prudently. This
information is used by everybody in the organization; examples of such information are
employee and payroll information.
 Functional/Operational Information − This is operation specific information. For
example, daily schedules in a manufacturing plant that refers to the detailed assignment of
jobs to machines or machines to operators. In a service oriented business, it would be the
duty roster of various personnel. This information is mostly internal to the organization.
 Database Information − Database information construes large quantities of information
that has multiple usage and application. Such information is stored, retrieved and
managed to create databases. For example, material specification or supplier information
is stored for multiple users.

MIS - Quality of Information

Information is a vital resource for the success of any organization. Future of an organization lies
in using and disseminating information wisely. Good quality information placed in right context
in right time tells us about opportunities and problems well in advance.

Good quality information − Quality is a value that would vary according to the users and uses of
the information.

According to Wang and Strong, following are the dimensions or elements of Information Quality
−

 Intrinsic − Accuracy, Objectivity, Believability, Reputation

 Contextual − Relevancy, Value-Added, Timeliness, Completeness, Amount of
information
  Representational − Interpretability, Format, Coherence, Compatibility
 Accessibility − Accessibility, Access security

Various authors propose various lists of metrics for assessing the quality of information. Let us
generate a list of the most essential characteristic features for information quality −

 Reliability − It should be verifiable and dependable.

 Timely − It must be current and it must reach the users well in time, so that important
decisions can be made in time.
 Relevant − It should be current and valid information and it should reduce uncertainties.
 Accurate − It should be free of errors and mistakes, true, and not deceptive.
 Sufficient − It should be adequate in quantity, so that decisions can be made on its basis.
 Unambiguous − It should be expressed in clear terms. In other words, in should be
comprehensive.
 Complete − It should meet all the needs in the current context.
 Unbiased − It should be impartial, free from any bias. In other words, it should have
integrity.
 Explicit − It should not need any further explanation.
 Comparable − It should be of uniform collection, analysis, content, and format.
 Reproducible − It could be used by documented methods on the same data set to achieve
a consistent result.

MIS - Information Need & Objective

Information processing beyond doubt is the dominant industry of the present century. Following
factors states few common factors that reflect on the needs and objectives of the information
processing −

 Increasing impact of information processing for organizational decision making.

 Dependency of services sector including banking, financial organization, health care,
entertainment, tourism and travel, education and numerous others on information.
 Changing employment scene world over, shifting base from manual agricultural to
machine-based manufacturing and other industry related jobs.
 Information revolution and the overall development scenario.
 Growth of IT industry and its strategic importance.
 Strong growth of information services fuelled by increasing competition and reduced
product life cycle.
 Need for sustainable development and quality life.
 Improvement in communication and transportation brought in by use of information
processing.
 Use of information processing in reduction of energy consumption, reduction in pollution
and a better ecological balance in future.
 Use of information processing in land record managements, legal delivery system,
educational institutions, natural resource planning, customer relation management and so
on.
 Information is needed to survive in the modern competitive world.
  Information is needed to create strong information systems and keep these systems up to
date.

Implications of Information in Business

Information processing has transformed our society in numerous ways. From a business
perspective, there has been a huge shift towards increasingly automated business processes and
communication. Access to information and capability of information processing has helped in
achieving greater efficiency in accounting and other business processes.

A complete business information system, accomplishes the following functionalities −

 Collection and storage of data.

 Transform these data into business information useful for decision making.
 Provide controls to safeguard data.
 Automate and streamline reporting.

The following list summarizes the five main uses of information by businesses and other
organizations −

 Planning − At the planning stage, information is the most important ingredient in

decision making. Information at planning stage includes that of business resources, assets,
liabilities, plants and machineries, properties, suppliers, customers, competitors, market
and market dynamics, fiscal policy changes of the Government, emerging technologies,
etc.
 Recording − Business processing these days involves recording information about each
transaction or event. This information collected, stored and updated regularly at the
operational level.
 Controlling − A business need to set up an information filter, so that only filtered data is
presented to the middle and top management. This ensures efficiency at the operational
level and effectiveness at the tactical and strategic level.
 Measuring − A business measures its performance metrics by collecting and analyzing
sales data, cost of manufacturing, and profit earned.
 Decision-making − MIS is primarily concerned with managerial decision-making, theory
of organizational behavior, and underlying human behavior in organizational context.
Decision-making information includes the socio-economic impact of competition,
globalization, democratization, and the effects of all these factors on an organizational
structure.

In short, this multi-dimensional information evolves from the following logical foundations −

 Operations research and management science

 Theory of organizational behavior
 Computer science −
o Data and file structure
o Data theory design and implementation
o Computer networking
o Expert systems and artificial intelligence
 Information theory
Following factors arising as an outcome of information processing help speed up of business
events and achieves greater efficiency −

 Directly and immediate linkage to the system

 Faster communication of an order
 Electronic transfer of funds for faster payment
 Electronically solicited pricing (helps in determining the best price)

MIS Need for Information Systems

Managers make decisions. Decision-making generally takes a four-fold path −

 Understanding the need for decision or the opportunity,

 Preparing alternative course of actions,
 Evaluating all alternative course of actions,
 Deciding the right path for implementation.
MIS is an information system that provides information in the form of standardized reports and
displays for the managers. MIS is a broad class of information systems designed to provide
information needed for effective decision making.

Data and information created from an accounting information system and the reports generated
thereon are used to provide accurate, timely and relevant information needed for effective
decision making by managers.

Management information systems provide information to support management decision making,

with the following goals −

 Pre-specified and preplanned reporting to managers.

 Interactive and ad-hoc support for decision making.
 Critical information for top management.

MIS is of vital importance to any organization, because −

 It emphasizes on the management decision making, not only processing of data generated
by business operations.
 It emphasizes on the systems framework that should be used for organizing information
systems applications.

Contemporary approach to Management Information Systems (MIS)

A contemporary approach to Management Information Systems (MIS) recognizes

the evolving landscape of technology and its integration with business practices. It
emphasizes a multidisciplinary perspective, combining technical expertise with
behavioral and social insights to optimize system design, implementation, and
management. Key aspects include leveraging technologies like Business
Intelligence, cloud computing, big data analytics, and AI, while also addressing
cybersecurity, data privacy, and the integration of IoT and Edge Computing.
Here's a more detailed look at the key elements of a contemporary MIS approach:

1. Multidisciplinary Perspective:
 A contemporary MIS approach recognizes that information systems are not
solely technical entities but are also influenced by organizational culture,
human behavior, and social dynamics.
 It requires insights from fields like computer science, management science,
operations research, and even sociology to understand the complex interplay
of technology and the human element.

2. Embracing Emerging Technologies:

 Business Intelligence and Analytics:

Modern MIS leverages BI tools to analyze data, identify trends, and make
informed business decisions.
 Cloud Computing:
Cloud-based MIS solutions offer scalability, flexibility, and cost-effectiveness,
enabling businesses to adapt to changing needs.
 Big Data Management:
MIS professionals must be adept at handling and analyzing massive datasets to
uncover valuable insights and improve decision-making.
 AI and Machine Learning:
AI and ML technologies are increasingly used to automate tasks, predict
outcomes, and personalize experiences.
 IoT and Edge Computing:
MIS is increasingly concerned with collecting and analyzing data from a wide
range of IoT devices, processing this data at the edge (closer to the source) to
reduce latency and improve efficiency.

3. Focusing on System Design and Implementation:

 User-centered design:

Modern MIS prioritizes the needs and preferences of users when designing and
implementing systems.
 Agile methodologies:
Agile development approaches allow for flexibility and iterative development,
enabling MIS professionals to respond to changing requirements.
 Change management:
Effective change management strategies are crucial to ensure the successful
adoption of new technologies and processes.
 4. Addressing Emerging Challenges:
 Cybersecurity and Data Privacy:

In the age of increased cyber threats and data privacy concerns, MIS
professionals must prioritize security and compliance.
 Data Governance:
Establishing clear policies and procedures for data management and usage is
essential to ensure data quality, accuracy, and accessibility.
 Ethical Considerations:
MIS professionals must consider the ethical implications of technology,
ensuring that systems are used responsibly and in a way that benefits society.

5. Focusing on Business Value:

 Return on Investment (ROI):

MIS professionals need to demonstrate the value of their work by measuring

the ROI of their projects and initiatives.
 Strategic Alignment:
MIS must be aligned with the overall business strategy, supporting the
achievement of organizational goals.
 Competitive Advantage:
MIS can be a source of competitive advantage by enabling organizations to
improve efficiency, innovate, and respond to market changes more effectively.

MIS as an instrument for the organizational change

What is Organizational Change?

Organizational change refers to the process of transforming an organization’s structure,

strategy, operations, culture, or processes to achieve goals, adapt to market changes, or
improve performance.

Role of MIS in Organizational Change

Management Information System (MIS) plays a critical role in enabling and supporting
change within organizations by:

1. Providing Accurate and Timely Information

o Supports informed decision-making.
o Reduces uncertainty and improves response to change.
2. Enhancing Communication
o Connects departments and facilitates seamless communication.
o Promotes transparency and collaboration during change.
 3. Facilitating Strategic Planning
o Provides data analysis tools for long-term planning.
o Assists in identifying areas that need change or improvement.
4. Automating Processes
o Streamlines repetitive and manual tasks.
o Encourages digital transformation and increases efficiency.
5. Supporting Change Management
o Helps track change implementation progress.
o Provides feedback through performance reports.
6. Improving Decision Making
o Analytical tools help managers choose the best course of action.
o Scenarios and simulations aid in change impact assessment.

🔹 Examples of MIS Supporting Change

 ERP Systems (Enterprise Resource Planning): Integrate departments like finance,

HR, and inventory into one system to improve efficiency.
 CRM Systems (Customer Relationship Management): Help organizations change
the way they manage customer relationships.
 HRIS (Human Resource Information Systems): Help redesign HR functions like
recruitment, payroll, and performance management.

🔹 Benefits of MIS in Organizational Change

 Faster adaptation to market/environmental shifts

 Improved resource utilization
 Higher productivity and innovation
 Better employee involvement and feedback

Information technology Characteristics and emerging trends

Information technology (IT) is characterized by rapid innovation and evolution,

with emerging trends like AI, cloud computing, and cybersecurity shaping the
industry. These trends impact various aspects of business, from automation and
data analysis to security and digital transformation.
Characteristics of IT:
 Rapid Innovation:

IT is constantly evolving, with new technologies and methodologies emerging

frequently.
 Data-Driven:
IT relies heavily on data for analysis, decision-making, and the development of
new solutions.
 Digital Transformation:
 IT plays a crucial role in helping businesses adapt to the digital landscape and
improve their operations.
 Global Reach:
IT technologies can be accessed and utilized worldwide, facilitating global
collaboration and business.
 Security Concerns:
The use of IT raises concerns about data security, privacy, and the prevention
of cyberattacks.
Emerging Trends in IT:
 Artificial Intelligence (AI) and Machine Learning:

AI is transforming various industries with applications in automation, data

analysis, and predictive modeling.
 Cloud Computing:
Cloud computing offers scalable and flexible IT solutions, enabling businesses
to access resources on demand.
 Cybersecurity:
With increasing cyber threats, cybersecurity is a major focus for organizations
to protect their data and systems.
 Big Data Analytics:
Businesses are leveraging big data to gain insights, improve decision-making,
and personalize customer experiences.
 Internet of Things (IoT):
The IoT connects devices and systems, enabling real-time data collection and
automation across various applications.
 Blockchain Technology:
Blockchain provides secure and transparent solutions for various applications,
including supply chain management and financial transactions.
 Robotic Process Automation (RPA):
RPA automates repetitive tasks, freeing up human employees to focus on more
strategic work.
 Virtual and Augmented Reality (VR/AR):
VR/AR technologies offer immersive experiences for training, entertainment,
and other applications.

IT capabilities and their organizational impact

IT capabilities have a significant impact on organizations, enhancing various
aspects of their operations and overall performance. These capabilities,
encompassing the ability to leverage IT resources, improve operational efficiency,
empower decision-making, and strengthen competitive position. They also
contribute to enhanced customer experience, increased agility, and improved
organizational resilience.
Here's a more detailed look at the impact of IT capabilities:
1. Enhanced Operational Efficiency:
 IT enables automation of routine tasks, streamlining workflows, and
reducing manual errors.
 This leads to improved productivity, reduced costs, and increased speed of
operations.
2. Empowered Decision-Making:
 IT capabilities provide access to data and analytics, enabling data-driven
decision-making.
 This leads to better insights, informed strategies, and improved outcomes.
3. Strengthened Competitive Position:
 IT allows organizations to innovate, develop new products and services, and
adapt to market changes.
 This can lead to a competitive advantage and a stronger market presence.
4. Enhanced Customer Experience:
 IT facilitates personalized communication, self-service options, and online
interactions.
 This can improve customer satisfaction, loyalty, and retention.
5. Increased Agility and Adaptability:
 IT enables organizations to respond quickly to changing market conditions
and customer needs.
 This allows them to remain competitive and maintain a strong market
position.
6. Improved Organizational Resilience:
 IT capabilities help organizations detect and analyze market opportunities
and threats.
 This enables them to proactively adapt to changing environments and
maintain their competitive advantage.
7. Impact on Organizational Structure and Culture:
 IT can influence organizational structure through centralisation and
decentralisation, impacting decision-making processes and communication.
 It can also foster more open and innovative cultures by facilitating
information flow and collaboration.
In essence, IT capabilities are crucial for modern organizations to thrive in a
dynamic and competitive environment. They enable businesses to optimize
operations, improve decision-making, enhance customer experience, and adapt to
change, ultimately leading to improved performance and a stronger competitive
position.

Information Technology Enabled Services (ITES)

Information Technology Enabled Services (ITES) encompass the outsourcing of

processes that rely on information technology for tasks like data management,
customer service, back-office operations, and data processing. ITES essentially
integrates IT with business processes to enhance operational efficiency and
effectiveness.
Here's a more detailed breakdown:
What ITES Involves:
 Outsourcing:

ITES involves delegating tasks to external providers who have expertise in IT-
enabled services.
 Data Management:
ITES includes the processing, storage, and management of large amounts of
data.
 Customer Service:
ITES can encompass customer support, technical assistance, and handling
customer inquiries.
 Back-office Operations:
ITES can cover administrative, financial, and logistical tasks that support the
core business functions.
 Data Processing:
ITES involves tasks like data entry, analysis, and reporting.
 Integration of IT:
ITES focuses on leveraging IT to improve efficiency and effectiveness in
various business processes.
Types of ITES Services:
 BPO (Business Process Outsourcing): Outsourcing various business
processes like finance, HR, or customer service.
 KPO (Knowledge Process Outsourcing): Outsourcing knowledge-
intensive tasks like research, analysis, or legal support.
 LPO (Legal Process Outsourcing): Outsourcing legal tasks like document
review, e-discovery, and contract management.
 GPO (Game Process Outsourcing): Outsourcing gaming-related tasks like
game development, testing, or localization.
  Call Centers: Providing customer support and other communication
services through call centers.
 Back-Office Operations: Handling administrative, financial, and logistical
tasks.
 Logistics Management: Managing the flow of goods and information.
 Data Centers: Providing infrastructure and services for data storage and
processing.
 Application Development: Developing and maintaining software
applications.
Examples of ITES in Action:
 A company might outsource its customer service operations to a call center
that specializes in IT-enabled services.
 A financial institution might outsource its data processing and reporting
tasks to an ITES provider.
 A legal firm might outsource legal document review and e-discovery to a
provider specializing in LPO.
Benefits of ITES:
 Cost Reduction: Outsourcing IT-enabled services can reduce operational
costs.
 Improved Efficiency: ITES can streamline business processes and improve
efficiency.
 Access to Expertise: Companies can tap into the expertise of IT specialists
without the need for in-house IT departments.
 Scalability: ITES providers can scale their services to meet changing
business needs.
 Focus on Core Business: By outsourcing IT-enabled services, companies
can focus on their core business activities.

Transaction processing system characteristics and its importance:

Transaction Processing Systems (TPS) are crucial for businesses, characterized

by rapid, reliable, and standardized processing of data transactions, ensuring data
integrity and operational efficiency. Their importance lies in supporting core
business functions, enabling real-time operations, and facilitating efficient data
management.
Here's a more detailed explanation:
Characteristics of Transaction Processing Systems:
 Rapid Response Time:
 TPS must process transactions quickly, with minimal delays, as response times
are critical for effective operations.

 Reliability and Data Integrity:

TPS must be reliable, ensuring data accuracy and preventing corruption,
especially when dealing with multiple users accessing the same data.
 Standardized Procedures:
Transactions are processed in a consistent manner, ensuring accuracy and
preventing errors.
 Real-Time Processing:
TPS aims to process transactions and data transfers in real-time, providing
immediate updates and responses.
 Controlled Processing:
Transaction data is handled according to a predefined order, ensuring data
integrity and operational efficiency.
 Concurrency Control:
Mechanisms are in place to ensure that concurrent transactions are processed
correctly, preventing interference and ensuring data consistency.
 Security:
TPS needs to have robust security measures to protect sensitive data and
ensure that only authorized personnel can access the system.
 Modular Growth:
The system should be designed to allow for incremental growth and updates
without requiring a complete replacement.
 Ease of Use:
TPS should be user-friendly, especially for casual users, allowing them to
easily enter and correct data.
 Focus on Data Transactions:
TPS primarily focuses on data transactions, such as gathering, storing,
modifying, retrieving, and processing information.
Importance of Transaction Processing Systems:
 Supports Core Business Functions:

TPS is essential for managing a company's business transactions, supporting

fundamental operations like order entry, inventory management, and financial
transactions.
 Enables Real-Time Operations:
 TPS enables businesses to operate in real-time, providing immediate responses
and updates to customers and internal users.

 Facilitates Efficient Data Management:

TPS ensures that transaction data is stored securely and is easily accessible,
which is crucial for decision-making and reporting.
 Improves Operational Efficiency:
By automating and streamlining transaction processing, TPS improves
operational efficiency, reduces errors, and saves time and resources.
 Enhances Customer Satisfaction:
Quick and accurate transaction processing leads to improved customer
satisfaction and loyalty.
 Provides Historical Data:
TPS generates information based on past transactions, providing a historical
record for analysis and reporting.
 Foundation for other systems:
TPS is a foundation on which management oriented information systems rest.