Management information systems or computer information systems (CIS) consists of five related components—hardware, software, people, procedures, and collection of data.
It is a general name for the academic discipline that deals with the application of people, technologies, and procedures, collectively known as information systems, to solve business problems.
MIS is different from regular information systems as it is used to analyze other information systems applied in operational activities in the organization.
However, before going into further details, it is essential to understand the meaning of management, information, and system. MIS tries to handle the organisation’s information system through a computer. It offers vital information to managers so that they can carry out operational control, management control and strategic planning successfully.
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Learn about:-
1. What is Management Information System 2. Evolutions of Management Information System 3. Meaning 4. Definitions 5. Categories 6. Roles 7. Sources
8. Need 9. Design 10. Guidelines 11. Management Science and Management Information System 12. Reasons for Success and Failure 13. Problems 14. Emerging Trends.
Management Information System: Evolution, Meaning, Definitions, Categories, Roles, Sources and Emerging Trends
Contents:
- What is Management Information System
- Evolution of Management Information System
- Meaning of Management Information System
- Definitions of Management Information System
- Categories of Management Information System
- Roles of Management Information System
- Sources of Management Information System
- Need for Management Information System
- Designing Management Information System
- Guidelines for the Effective Design in Management Information System
- Management Science and Management Information System
- Reasons for Success and Failure in Management Information System
- Problems with Management Information System
- Emerging Trends in Management Information System
What is Management Information System?
Management requires complete information relating to a problem or issue in right time in order to make effective decisions. The proper collection, handling and providing the right information to the right manager in right time not only reduce the risk of wrong decisions but also work as an effective controlling technique. Complexities involved in business and economic activities and voluminous government regulations create the need for supply of right information to the right manager in the right time.
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Management Information System (MIS) is defined as, “a formal method of making available to management accurate and timely information necessary to facilitate the decision-making process and enable the organisation’s planning, control and operational functions to be carried out effectively.”15 “The system provides information on the past, present and projected future and on relevant events inside and outside the organisation.”
Generally, an organisation’s MIS consists of a series of information systems of varying degrees of complexity, competence and scope.
They are:
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(i) Transaction processing and inquiry response;
(ii) Management information for operational planning, decision-making and control;
(iii) Management information for tactical planning and decision-making; and
(iv) Management information system for strategic planning and policy planning and decision-making.
An organisation’s information system must provide the various types of information required by managers at the various levels of organisational hierarchy with different levels of operational responsibilities, operational control, management control and strategic planning.
The number of computer based information systems in private and public sector organisations has grown exponentially during the past two decades. To build computer based information systems new computer products and service industry has developed to supply the tools necessary.
While a large number of people are employed to design and operate information systems, many more individuals are involved as users or “consumers” of information systems. Users include individuals from a broad spectrum of occupations ranging from workers in a factory to the top management of a corporation.
Use of an information system includes the receipt of a report, the submission of input for a system and the operation of a terminal or a similar activity. Most individuals encounter these systems in other activities, in addition to work experiences with computer based information systems. Credit and users of a bank, travellers making reservations and many other confront computer based systems directly or indirectly.
In today’s complex society, knowledge of computer based information systems is vital for an educated individual, particularly for the professional manager. It has been estimated that 1/3rd or 1/2 of the gross national income of the United States is currently attributed to the production and distribution of information.
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This trend is a departure from a traditional economy based on the production and distribution of tangible goods. This clearly shows that we are entering an “Information Age.” For most organisations in the future if not already the determining factor in competition, will be the processing and analysing of information.
Management Information System – Evolution
Various systems for processing information have been in use by organisations for years. As it was typical in the past, the small country store was owned and operated by one man. The owner was both president and chief executive undertaking all the functions required to operate the store including sales promotion, market research, accounting, inventory control, public relation and so on.
The owner personally gathered all the information necessary to carry out various functions, either using it as it was gathered or storing the information in his memory for later retrieval. Once a decision was made, the owner usually undertook the necessary action himself.
Within the confinement of a small operation, the owner operated information system was often very efficient. It made use of highly integrated information system of the owner himself. Information was expressed and stored in that system in a form that was readily understood by all the components of management.
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The owner operated information system could also be expected to be efficient if more than one person worked in the organisation, provided those involved were relatively closed in their experience and knowledge. The similarity of purpose and experience of the individuals in such circumstances usually allow a close communication between them and facilitate the interaction between their respective stores of information.
In more recent times, an increasing proportion of our affairs have been conducted by large organisations. Many of the smaller enterprises have been superseded by large corporation or incorporated into them. Private business and industry have grown in the size and scope of the national economies of the leading industrial nations has expanded.
The development of modern economies has a number of effects on the organisations involved in both public and private sectors. In the first place, the growth of organisation has made it much more difficult for one man to control and direct the activities of an enterprise in the manner as the owner of the country store can do.
As the staff of an organisation increased, the amount of authority that must be delegated naturally increases too. Responsibility for routine activities and the accompanying decisions is delegated to managers at the middle and lower levels of the organisation. Senior management concerns itself with the less routine activities of planning and policy making.
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A necessary counterpart of delegation of authority in the reporting of the results of the activities that have been assigned, Delegation of authority must, therefore, be accompanied by the establishment of a communicative channel through which these results can be reported and discussed. The greater the degree of delegation, the larger is the number of communication channel needed as part of the information system.
A second effect of the growth of an organisation is that the breadth of experience and knowledge of individual members of the organisation tend to decline. In the early stages of expansion, the owner, president or director of a small organisations usually does the hiring himself normally choosing person with whom he can communicate easily and readily.
As the organisation grows, however, the hiring process itself is delegated. The delegation of authority usually resulted in the hiring process of individuals with a wider range of characteristics. It is quite common that individuals with different back ground placed different interpretation upon information that has been acquired.
This diversity of view point often is a source of strength to an organisation. It can, however, be a cause of misunderstanding. For this reason, greater attention to communication between individual members is needed when the organisation grows in size. This needs a particularly acute if the expansion of the organisation involves geographic dispersion of units.
Another factor with which modern origination must contend is the greatly increased complexity of the activities in which they are involved. This complexity is due in most part to the pace and pattern of modern life and has led to an increased degree of specialization by those who are in organisation.
Increased specialization tends to decrease the amount of knowledge and experience common among members of an organisation. In addition, specialization encourages communication between those with similar backgrounds and decreases passage of information between individuals with different interest and specialization.
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The complexity of external environment in which modern organisation operate has greatly increased the amount of information that must be processed within organisation. The nature of the modern environment has also increased the complexity of the necessary information handling. A striking example of this increased complexity is the administration of a company payroll.
The owner of the propriety shop usually paid an employee a previously agreed upon the amount withdrawn directly from the cash register. The owner than charged the amount to cost. A modern payroll system has the same basic function. However, modern social conditions require that a payroll system also incorporate a large number of other features.
Modern payroll system are usually required to make deduction from the gross pay for some of the following income-tax, health care programme, dental care programmes pension schemes, charitable donation, taxable allowances and benefit union dues, parking fees, payroll saving plan, garnishment, disability, insurance, and numerous other social and administrative functions.
As a result, a modern payroll system is very large and complicated operation usually requiring computer support to accomplish the necessary data processing tasks. Organisation has met the demand of the increased complexity of their activities by diverting an increase proportion of their effort and resources to administrative task and information system.
In the early twentieth century, the information gathering activities were devoted almost entirely to reporting the financial condition of the organisation. As managerial skills developed in economies were introduced under the general headings of management accounting for evaluation of the efficiency of subcomponents of the organisation in a market oriented economy.
The early information system was oriented exclusively towards the financial and managerial accounting functions. It is note-worthy that the main initial effect of the introduction of the computer in organisation was an increase in the amount of routine clerical and data manipulating capacity available to the accounting function.
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Design and implementation of information system was often entirely in the hand of accountants. The concept of an information system designed to serve a wide range of managerial function was often given little attention. Primary emphasis at the time was often given to the work involved in introducing the new computer supported financial and accounting system.
The idea of information system to guide management decisions predates the use of computer which has extended the organisation capabilities for implementing such a system. Evolution of MIS concept can be summed up by four major areas of system development. There are Managerial Accounting, Management Science, Management Theory and computerisation. Indeed the concept of MIS can be viewed as substantial extension of there concepts.
Management Information System – Meaning
The first step towards an understanding of the application of information technology to solve business problems is to learn and know about management information systems (MIS). All of us might have an experience of using computer and software for something or the other. However, use of computers is just one small component of MIS.
Management information systems or computer information systems (CIS) consists of five related components—hardware, software, people, procedures, and collection of data. It is a general name for the academic discipline that deals with the application of people, technologies, and procedures, collectively known as information systems, to solve business problems.
MIS is different from regular information systems as it is used to analyse other information systems applied in operational activities in the organization. However, before going into further details, it is essential to understand the meaning of management, information, and system.
Management is the act of setting, coordinating, conducting, and supervising the various processes of production. Information is the collection of facts on the basis of which decisions and conclusions may be made. System is a group of independent but interrelated elements comprising a unified whole.
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Thus, MIS may be defined as an organized and holistic system of processing data by using suitable hardware and software. It enables managers to take decisions to achieve well-defined goals and objectives.
It broadly refers to a computer-based system that provides managers with the tools and techniques for collecting, organizing, and evaluating information and using the same for efficient and effective running of their departments.
To provide past, present, and future information, an MIS can include software that helps in decision-making, relevant databases with regard to the particular problem in hand, the hardware resources pertaining to the system, decision support systems, people and project management applications, and other computerized processes that help the department to run efficiently.
Academically, the term MIS is also commonly used to refer to the various information management methods linked to the automation or support of human decision-making such as decision support systems, expert systems, and executive information systems.
It is a computer system that uses a mainframe or minicomputer, designed to provide management personnel with timely and up-to-date information on different aspects of organization’s performance such as territory-wise sales, profit or product, inventory of finished goods and raw materials vis-a-vis sales, and in comparison to competitors.
The system’s output information should be in a format that can be used by managers at all levels of the organization—strategic, tactical, and operational. A good example of an MIS report brought out by a mutual fund is a monthly magazine giving details on various mutual fund schemes for existing and prospective investors.
Management Information System – Definitions by Murdick and Ross, Paul Siegal and Walter J. Kennevan
According to Murdick and Ross. “The MIS operating system by exchange of information, management information system is designed to take advantage of modern tools and techniques. But MIS is neither refers to a traditionally data processing nor to the sophisticated computer system.”
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According to Paul Siegal, “An MIS is not a sophisticated computer system, a communication network, a generalised data base management system, an accounting system; the MIS is philosophy, an approach a point of view, a way of seeding the organisation as a whole. It is at the core of an hierarchy of system.”
The organisational system provides product and service for the environment system, the organisation information system provides all the data and information needed by the organisational system and the management information system provides the management oriented information to the organisation information system. Carl Hayel says “Management Information System is planned and organised approaches to supply executive with intelligence aids that facilitate the managerial process.”
From the analysis of the above views, we can infer that the management information system is a systematic approach to furnish timely, adequate, accurate information to the proper person in the hierarchy with a view to assist him in taking such decision as optimise the interrelationship of man, material machines and money to attain organisational goals effectively.
The objective of MIS is to provide information for decision making on planning, initiating, organising and controlling the operations of the subsystems of the firm and to provide a synergistic organisation in the process.
Walter J. Kennevan explained MIS presenting the following Diagram 8.
The diagram shows business organisation does not exist in a vacuum. It exists in a world of concrete places and things, natural resources, important obstructions and living persons. The sum of all these factors and forces is called the organisational environment. All the organisations have internal and external data which effect internal and external environment.
The internal data are aimed at identifying a company’s strength and weakness when viewed in the perspective of the general business environment and in the light of competitive activity should help management to shape its future.
External environment may be classified in various ways, such as local, national, international, or past, present and future or economic or non-economic. The determinates of economic environment are fiscal policy, monetary policies, industrial policy, income policy etc. and the determinants of non-economic environment refers to social, political, legal, educational, cultural, physical and technological factors affecting business.
This diagram also shows that strategic informations are needed at top level for strategic decision maker, technical information are needed at middle level for technical decision maker and operational informations are needed at operational level for operational decision maker.
Thus, a well-designed management information system is likely to have following characteristics:
1. MIS is a system; it is a logical grouping of distinct and interdependent components of information, element assembled for furnishing and generation of information.
2. It may involve use of manual devices put in frequently manual mechanical and electro mechanical devices. Often MIS is said to be associated with the use of computers.
3. The role of MIS is basically that of generating and packaging of information in the useful quantum of knowledge. The design of management report embodying such MIS is very important and crucial.
4. MIS is related to organisational levels i.e. it is need based. At top level the information required is summary in a “Flesh form”. At the lower and middle levels it is more detailed for exercising day to day control. The frequency of information furnished will be decided by the need of the management. The frequency of information is higher at middle and low levels. Besides it is internally focused “at the lower and middle level whereas external’ directed at the top level”.
5. It is associated with the establishment of data bank in a central unit that computer data close to its origin and connects their input into management information.
6. Information communication is wide horizontal and vertical, throughout the requisition. It is necessary therefore, to employ in use sophisticated communication decision devises.
7. The information supplied is “Exception oriented” showing the level at which action is required. There are in fact exceptions which decide when to report.
8. Information supplied is futuristic i.e. predictive. It primarily aims at giving a fed for the developed and the trend there of. An effective MIS craves for “before the fact reporting.”
9. It must involve complete commitment of the executives. There should be periodical review of the system as the organisation grows or decays.
10. Management get a steady flow of information on a regular basis the right information for the right people, at the right time and cost.
11. The system is composed of a collection of sub-system with varying degrees of integration among the parts.
Management Information System – Categories: Informal Information System, Computer-Based Information System and Management Information System
There are three categories of information related to managerial levels and the decisions managers make:
1. The first level is strategic information which relates to long-range planning policies that are of direct interest to upper management.
2. The second level of information is managerial information. It is of direct use to middle management and department heads for implementation and control.
3. The third information level is operational information, which is short-term, daily information used to operate department heads for implementation.
It is an employee based system design to meet personnel and vocational needs and to help solve, work-related problems. It also funnels information upward through indirect channels. In this respect it is a useful system because it works within the framework of the business.
Computer-Based Information System:
The computer is now a required source information systems analysis relies heavily on computers for problem solving. This suggests that the analyst must be familiar with computer technology and have experience in handling people in an organisational context.
Management Information System:
The computer has had a significant impact on the techniques used by management to operate a business.
MIS is a person-machine system and a highly integrated grouping of information processing functions designed to provide management with a comprehensive picture of specific operations.
It has different features which are following:
1. It is a combination of information system.
2. To do the job, it should operate in real time.
3. Helpful in decision making.
4. It is helpful in file maintenance, updating, transaction and inquiry processing.
5. A single transaction can simultaneously update all related data files in the system.
Transaction Processing System:
Transaction processing system record and process the data, resulting from business transaction. It should emphasize to produce the specific information that can be used by managers. Transaction processing systems also produce a variety of information products for internal use. For example, they produce customer statements, employee paycheck sales receipts, etc.
Transaction process system process transaction in two basic ways:
1. Batch Processing- Transaction data is accumulated over a period of time and processed periodically.
2. Real Time Processing- Data is processed immediately after a transaction occurs.
Attributes of Information:
There are different kinds of information and various ways of describing an entity object or situation for the moment however, let’s focus on the general attributes of information both for an item of information are as follows-
1. Unambiguous- It should carry the same meaning and convey the same to everyone.
2. Precision- Information should not carry too much details.
3. Form- Distinctions of form are qualitative and quantitative, numerical, graphical, summarize and detailed.
4. Frequency- Frequency is measure of how often information is needed, collected or produced.
5. Breadth- Breadth of information defines its scope. Some information may be broad in scope covering a large area of interest. Other information may be very narrow in scope.
6. Origin- Information may originate from sources inside the organisation or outside it.
7. Accuracy- Information may be true or false, accurate or inaccurate some time inaccurate information treated as an accurate which is harmful in organisation.
8. Promptness in availability- There is a famous quotation Information delayed is information denied means there is no use of that information which is received after the need of that is over.
9. Completeness- Complete information is that which cover all the key issues and is sufficient to support the decision making without omitting any critical issue.
10. Validity- Information should be valid, then only it will be effective.
11. Reliability- Reliability means the information is accurate without any error. Reliable information can be collected from an authentic source only.
12. Consistency- The information must relate to a consistent base or a pattern.
13. Mode and Format of Representation- In business the mode of representation of information is either visual verbal or in written form.
Management Information System – Role: Support of Business Operation, Support of Managerial Decision Making, Support of Strategic Competitive Advantage
Information system performs three vital roles in any type of organisation:
1. Support of business operation
2. Support of managerial decision making
3. Support of strategic competitive advantage.
An information system is the basis for interaction between the user and the analysis. It provides instructions, commands and feedback. It determine the nature of the relationship among decision makers.
A business has several information systems each is designed for a purpose and works to accommodate data flow, communication, decision making control and effectiveness.
The major information systems are formal, informal and computer based.
Formal Information System:
A formal information system is based on the organisation represented by the organisation chart. The chart is a map of positions and their authority relationship. It is concerned with the pattern of authority, communication and workflow.
Management Information System – Sources: Old Files, Observation, Mass Media of Communication, Library Research, Government Agencies and a Few Others
The information used in business organisation is collected from different sources. They may be primary or secondary, internal and external.
1. Old Files/History Records- The main source of getting internal information is old files of the organisation past performance, financial position can be easily known these files.
2. Observation- The first hand respond can be taken by this method. An accuracy of observation will decide the response.
3. Mass Media of Communication- Nowadays there are so many mass media of communication, e.g., radio, T.V., newspaper journals are available to give information.
4. Library Research- Library is place where one gets all type of reference books, research publication, magazines journals and government publication, etc., under one roof.
5. Government Agencies- Government agencies like chamber of commerce, tax authority of India releases their publication, etc.
6. Meetings, Seminars, Shops and Conferences- Large business houses, universities often conduct national and internal seminars. They invite experts in various fields and share experience and knowledge with other.
7. Interviews- Information can be gathered through personal interviews but interview is very costly and time consuming method.
8. Survey- Survey can be conducted to collect the information.
9. Internet- It now offers access to latest information on all subjects.
Management Information System – Need: Operational Control, Middle Management and Top Management
MIS tries to handle the organisation’s information system through a computer. It offers vital information to managers so that they can carry out operational control, management control and strategic planning successfully.
i. Operational Control:
For ensuring operational control, MIS offers highly accurate and detailed information on a daily or weekly basis. A production supervisor, for example, has to know if materials wastage is excessive, if costly overruns are expected, or if the machine time for a job has expired. MIS offers a high volume of timely and detailed information derived from daily operations.
ii. Middle Management:
Middle-level managers need information on matters affecting their units such as sudden sales declines, increased demand for a particular product line, large-scale problems with suppliers, etc. MIS offers summarized data on these matters from within the organisation as well as from sources outside the organisation.
Providing vast data in itself is not helpful; in most cases, it may even confuse the decision maker. The essential merit in MIS it that if offers data in a comprehensive manner so that timely, informed and sound decisions can be taken.
iii. Top Management:
For top managers, MIS provides information for strategic planning and management control. For strategic planning, external sources are (economic environment, changes in technology, competitive changes, etc.) looked into closely and analysed in a detailed way. This information is difficult to computerize because the supporting data are generally beyond the control of the organisation.
For ensuring top management control, MIS offers data on overall financial performance of the organisation- such as information on quarterly sales, profits, inventory management inventory, movement, etc.
Irrespective of the level where it is being put to use, the basic objective of MIS remains the same providing managers with the information they need to carry out their tasks effectively. The value of information supplied by an MIS depends on the information’s quality, quantity, timeliness and relevance to management action. The cost of obtaining the information must be balanced against the information’s benefits.
Management Information System – 4 Step Design Model: Problem Definition, Conceptual Design, Detailed Design and Final Implementation
Robert G. Murdick developed a model for designing MIS after scanning through a number of books and articles.
The model is built around four steps:
1. Problem Definition:
Initially a task force is created to design MIS. The team starts by making a thorough assessment of the organisation’s capabilities and strategic goals, as well as an assessment of any external factors relevant to organisation’s functions.
From this assessment a definition of the information system the organisation needs can be decided upon, and the determination of informational, operational and functional objectives can be achieved.
2. Conceptual Design:
A thorough analysis of current information system would reveal alternative MIS designs with specific performance requirements. These alternatives could be evaluated against organisational objectives, capabilities and requirements.
This evaluation leads to an initial, selected project plan. Now the tasks can be delegated, information on the task force’s study may be communicated to employees and the plan for a training programme conceived.
3. Detailed Design:
Once a conceptual plan is decided upon, performance specifications of the new MIS can be established. Components, programming, flow charting, data base can be designed. A model of the system is created, tested, refined and reviewed until it meets the specific level of performance.
4. Final Implementation:
The formal needs of the new MIS can now be decided. The logistics of space allocations, equipment additions, and forms design may be worked out and enacted. The training programme starts now. Design and testing of software for the MIS are completed, and the organisation’s data bases are entered into the system.
After a series of final checks, the MIS is ready for implementation. It should be noted here that creation of an MIS is a long-term task that demand the skills of a variety of specialists. In fact, the design and implementation of an MIS might require a major effort by managers and information system analysts over a period of two or three years.
Management Information System – Guidelines for Effective Design: User Participation, Cost-Benefit Analysis, Relevant Information and a Few Others
In order to design an MIS and implement the same in an effective manner, the following guidelines must be kept in mind:
1. User Participation:
MIS must receive inputs from actual users. There must be close cooperation between operating managers and system designers. Users know what information they need, when it is needed and how it will be used for managerial action and decision making.
According to Arnold Barnett, unless operating managers have a decisive voice in the design of the MIS, the information system may fail to provide needed information while simultaneously overloading them with useless information.
2. Cost-Benefit Analysis:
MIS must pay in the long run. To keep the MIS on track and within the sanctioned budget limits, designers must carefully evaluate the cost and benefits involved in developing and implementing the system.
3. Relevant Information:
MIS must guarantee enough information for an informed decision. There is no use loading managers with unnecessary, unwanted details. For example, instead of supplying sales management with voluminous monthly printouts of sales results, the MIS department can supply information on all sales people who exceed 10 per cent plus or minus the sales quota.
The MIS must filter and provide most relevant information to the appropriate manager. It must condense information so that relevant information can be absorbed by users quickly. The information should also provide top-level managers with data on critical factors and changes related to organisational effectiveness.
4. Present the System before Installation:
MIS can be installed in four different ways:
i. Crash or direct installation where the new system replaces the old entirely. Since the new system is installed overnight, extensive pre-tests must be carried out.
ii. Parallel installation where the new system is implemented and operated side by side with the old one. After comparing the outputs from these systems, adjustments can be made and the old systems may be allowed to die. However, this is a costly proposition if the organisation has to live with two systems.
iii. Pilot installation where the MIS is used by a small part of the organisation. Problems can then be discovered before total installation.
iv. Phased installation where the organisation goes ahead with MIS in a phased manner, allowing for operational testing and debugging before moving on to the next segment. These alternatives may be examined thoroughly before a final decision is taken. However, pre-testing must be ensured so that omissions and bugs that come up during the test period can be rectified.
5. Training and Documentation of Operators:
Training and written instructions to operating people must be provided so that they are able to understand the information needs of managers at various levels clearly. Operators must know what they are doing, for whom they are doing it and why. Perhaps most important, managers need to understand how the MIS operates so they can control it, rather than letting it control them.
Management Information System – Management Science and Management Information System
Before classifying the relationship between Management Science and MIS first of all we would discuss concept of management science. The application of Management Science to MIS represents a tremendous advance over the disorganized collection of information and management by experience based on “feel.”
Management Science requires managers to define their problems and assumptions carefully, usually in term that may be quantified and measured, so that they may achieve better problem definitions. Speaking to the layman, management science is a scientific approach to the solutions of operational problems.
It is concerned with providing management with decision aids or decision rules derived from:
(a) A total system
(b) Scientific methods of investigation
(c) Model of reality, generally based on quantitative measurements and techniques.
Dannenbring and Star are of the opinion that management science is concerned with the application of scientific methodology to managerial decision problems. In other to make more effective decisions, models are developed that attempt to explain and predict the impact that decisions have on organisational performance.
These explanations and predictions can than; be used to aid and assist the manager in carrying all his tasks. After classifying the concept of management science, it would be worthwhile to have a look at the relationship between management science and MIS. Dannenbring and Star are of the opinion that management science and MIS are closely related and design and implementation of one influence the other.
This influence or interaction occurs in several ways. One of the most important dependencies is that both are concerned with the data base i.e. both are primarily based on a specific set of data to be provided. For instance, a typical inventory control model would need data concerning anticipated demand, ordering cost, holding cost, real time and so on. To implement this model requires a data base capable of providing this information.
Danneubring and Star feel that such shared data requirements can influence the design of both the information system and the management science model. If the current data base does not provide the data necessary for implementing the management science model, either the information system will have to be redesigned to use what information is available.
The best choice will depend on the relevant costs of modifying the data base and of using and adjusted mode. Another relationship that occurs between management science and MIS relates the decision making requirements. If the MIS is to be used to aid the decision making process for a particular problem, a number of options usually exist, these options can be examined by considering the roles to be played in the decision making process by decision maker.
The potential roles to be filled include the provider of the data, the generation of the alternatives, the analyser of the alternative, the selection of decision and the implements of decision. Dannebring and Star have shown the relationship between management science, MIS and decision maker in general decision making process as in Table 1.
The table shows that in category one, all the steps from data gathering to decision implementation are carried out by the decision maker. Since no support is provided by the information system or a management science model. We refer to this role assignment as completely unsupported. Category two shows that the decision maker draws information from the data base maintained by the information system.
This information can be obtained in a variety of ways, such as standard report or from specialized non periodic reports. In this case the model is used in a descriptive or what if, model of provide quick and accurate analysis for the use of the decision maker in electing and implementing a decision.
The role of management science model is expended in category four to include automatic generation of alternatives. The alternatives can be generated exhaustively (e.g. by completely enumeration) or selectively (e.g. by the use of heuristics). The burden of decision selection and implementation rests with the decision maker. Such an approach is particularly useful for problems with multiple objectives or with an explosively large number of alternatives.
The role of management science model is expanded again in category five allowing the model to select the best decision. This category would include the use of optimising approaches such on linear programming. The decision maker’s role has been reduced to that of implementation, although the decision maker often has the authority to overrule the model.
Category six, represents those situations in which automatic decision rules are used for decision-making. Thus, the management science model, using data provided by the information system, generation and evaluates alternatives and selects decision which is automatically implemented by information system. This category requires no external intervention by the decision maker.
An example of such a system would be an automated inventory system. Once a reordering situation has been recognized, the order quantity would be determined by an appropriate management science model. The information system can then implement the decision by preparing a purchase order from that item. The roles of decision maker and the management science model are somewhat under stated by the categorisation in the Table 1.
Management plays a major role in the decision, and development of the information system and the management science model. Furthermore, management science models can be used in non-automatic situation. Recall that the first category (completely unsupported) assigns the decision maker all tasks from data gathering to implementation.
In practice the decision maker may rely on manual use of management science models to help in the analysis or decision selection process. An example here would be the use of decision trees to assist in an otherwise unsupported decision situation. We can say that there are two friends related to the relative roles of management science, MIS and management. One is the use of more automation in the decision making process as represented by the lower categories in the Table 1.
The second is the sub situation of more complexes and sophisticated management models at all the levels. In fact, there are three factors accounting for these trends. The continuing improvement in computers and information system has played an obvious part. Phenomenal increase in speed and memory capacity continues to be accompanied by a rapid decline in cost.
The second factor is the confined development of management science methodology. This includes the development of new models to meet new decision situations, better models to meet the old situations and more sufficient procedure for finding solutions. The third factor is the recognition by management of the advantages that can be obtained by the use of computerised management science models.
This recognition has come about because managerial receptivity to computer based technology has increased and because of the ineffectiveness of traditional decision making approaches in dealing with the increasing complexity of decision problems.
Management Information System – Top 5 Reasons for Success and Failure in MNCs
Information system and techniques have become a vital component of successful business and organisation. They, thus, constitute an essential field of study in business administration and management.
“Transformation of data into information is an information system.”
Data → Processing → Information
Top Five Reasons for Success of MIS:
1. User involvement
2. Executive management support
3. Clear statement of requirement
4. Proper planning
5. Realistic expectation
Top Five Reasons for Failure of MIS:
1. Lack of user input
2. Incomplete requirement and specification
3. Changing requirement and specification
4. Lack of execution support
5. Technological incompetence.
Management Information System – Problems with MIS
It is remarked ‘no tool has ever aroused so much hope at its creation as MIS, and no tool has proved so disappointing in its use’. Business Week commented that ‘for all the talk about the Information Age, most computers are still just workhorses- churning out payrolls, reports, numerical analyses’.
Several reasons account for this disappointment:
1. Development of an integrated report to aid managerial decision making is not easy. Management makes decisions that cut across several areas such as production, quality control purchasing or accounting. Unless the reports take into account cost, performance considerations of various specialities, they are of marginal value in helping managers evaluate the tradeoffs typically involved in top level decisions.
2. Often MIS is designed by computer specialists. Operating managers take a back seat, thinking that specialists know more about systems design. In the absence of inputs from users, current information systems developed by computer specialists may not be put to meaningful use.
3. People may resist the design and implementation of MIS as it threatens their position in the organisation. Other sources of anxiety for managers include the fact that a computerized MIS tends to allow far more centralised decision making which makes it easier for top managers to increase their control over operating managers.
Also, there is the possibility that a computer based MIS will eliminate or substantially alter some first-line and middle-management jobs.
More problems are likely to follow if MIS disrupts departmental boundaries, if it disrupts the informal communication system and if the system is installed without the participation of people at various levels. Managers need to look into these problem areas more closely before designing and implementing the MIS in the organisation.
Proper communication, user participation, user-orientation and other steps aimed at clearing the fog surrounding the implementation of MIS will go a long way in translating the rhetoric into concrete action.
Management Information System – Emerging Trends: Manual Reporting System, Cetralised Batch Processing System and a Few Others
Information system in an organisation is like the nervous system in the human body that integrates the various components of the organisation in a single whole. Recently because of rapid change in the management system, information systems have undergone rapid developments such as-
In Manual Reporting System, this flow is in the form of periodical progress reports from the lower levels in the organisation to the higher levels and the communication of decisions from the higher to the lower levels. The reports received from the operational levels are consolidated and summarised at each higher level. The main purpose of these reports is to ensure accountability and work productivity.
Often, targets of work are assigned to the operational staff and the report highlights the comparison of actual performance with the assigned targets. In this way it may also provide the basis for measurement of performance of the operational staff. Despite a number of draw backs in this process the periodical reports may be used for long term trends and general awareness on the part of the operational system at lower levels.
2. Centralised Batch Processing System:
The widespread use of second generation computers during the sixties brought about centralisation of information processing. The centralisation brought about by the computer was not due to any advantage of centralisation but to take advantage of the economies of scale associated with the computer processing.
In this process the documents from various departments were to be lend to a central information system department and the processed on computer to generate detailed because it was not possible to afford computer at every level.
It is based on periodicals information from lower levels, retained the basic character of manual system i.e. the periodic flow of information computer helped in availability of information in shorter time. It made the quick use of information in decision making and preparing plans and programmes of long term nature.
Unfortunately, this system has a number of demerits such as transforming process of documents from various sets to the central computer and their verification there requires a lot of time. This results in delay in taking decisions on the basis of the results of this process.
i. Real Time System:
Real time system became possible with developments in Computer system by way of reserving the informations in reserve memory. All the relevant data files and a complete set of programmes are stored in the central computer. The terminal operators have, to sue only a simple command language which selects the appropriate modules of computer program.
The program module located the relevant data on the file and makes it available to the operators. The two basic operations, performed from the terminal are ‘Query’ and ‘Update’. While the query operation involves the reference to an item of data in file, the update involves a change in the status of that data.
It is an effective and prompt method mainly used in the west for operations, such as, banking insurance, marketing, production, planning and control, railway, reservation etc. In practice, both batch processing and real time system use files of data separate for each application stored on computer media. While batch processing basically requires the sequential access of records, real time systems used facility of random access of an isolated record from the file.
ii. Data Base System:
A data system is a collection of interrelated data which are independent of application program and which can serve many applications, present and future. It may contain all the data items otherwise stored separately in the employee file, department file and the project file without redundancy.
The data items are organised into a logical structure called ‘Schema’. This structure defines the logical relationships between entities. For example, an employee must belong to one and only one department but he may be working in one and more projects simultaneously.
A department may have more than one employee and the salary of each employee in the department comes from the department budget. These logical relationships are known to the data base system software and they are not just treated as isolated data items as in the file system.
Data base system provides an integrated view of data which is particularly useful for higher levels of management. It can handle unplanned queries, provides a logical view of data which is consistent with the physical reality and eliminates the frequent needs of change in the application programmes due to changes in the organisation of data, Dynamic Restructuring of data base is possible as new types of data and new applications are added independent of existing application program. This system is proved to be useful for the large corporations.
3. Decentralised Processing System:
Decentralised Processing system was evolved to take advantage of data base technology and economy of scale in data storage on the one hand and inexpensive processing devices on the other hand. National Information Centre of the Govt. of India is one such system in the country. The main large computer is used at top and a number of small mini and micro computers have been installed at various department of the Govt. of India. The central computer would maintain data bases of interrelated data originating from more than one department.
4. Distributed Processing System:
In the Distributed Processing System, the information processing in the organisation is distributed amongst various functional departments, each having its own independent computer.
There is a need among these computerised centres to share the computing as well as information resources. One department may like to refer to the files maintained by another department. One of the centres may have a specific programme which the other may like to use occasionally.
Therefore, they need to be connected in a suitably designed network. Corporate method of distributed processing designed for specific applications in business and governments are different from sources sharing network. This network may have vertical distribution, horizontal distribution or some combination of vertical and horizontal distribution.
5. Distributed Data Base System:
In Distributed Data Base System, data are physically distributed among processing centres but are structured in an integrated logical frame work or schema. In a traditional data base system programmer or user refers to a logical record or files. The data base software derives that record from the physical records.
The same is true in a distributed data base system, but now the data might be in a distant location and the system has to find them. The user does not want to know where the data are stored. He merely refers to a logical record and expects it to be provided. The distribution and networking should be completely invisible to them. Distributed data base may consist of a local data base and global data base software at each location.