The concept of ‘Management Information System’ which is being used here is somewhat different, than the ‘information’ as ‘present’ ‘collected’ ‘assembled’ and ‘processed’ in most of the private and public concerned.
The various activities of the firm which involve collecting, processing, storing and reporting of information can usefully be considered as a system.
Learn about: 1. Introduction to Management Information Systems 2. Definitions and Scope of Management Information System 3. Concept 4. Characteristics 5. Types of Information Systems 6. Objectives and Goals
7. Stages of MIS Development 8. Planned and Unplanned MIS 9. Approaches 10. Timescale 11. Transaction Processing 12. Different Levels 13. DSS 14. Packages 15. Evaluation.
What is Management Information System: Definitions, Objectives, Approaches, Evaluation, Characteristics, Concept and Scope
What is Management Information System – Introduction
Business Organisations occupy a pivotal position in the Indian economy and have built up an impressive infrastructure within a period of 51 years of achieving independence. These enterprises cover a wide range of infrastructural inputs out of which computers and their related information technology are the most recent entrants.
In fact it is during the last decade of so that more and more organisations have become increasingly interested in information management and computers. This trend would accelerate much faster in future. Owing to the policy changes accounted by the Government, Industrial climate has undergone a perceptible change.
The liberalization and opening up of the Indian economy has ushered a new era of globalization and market economy. It is because of this reason that the multinationals are now wanting to become the business partners in the burgeoning Indian market.
Consequently, vertical and horizontal integration of business and individual business enterprises have necessitated to have efficient, effective and speedier information flow, so as to evolve corporate strategies which are relevant in time and space matrix.
The overall factors responsible for growing importance of computer-based MIS are:
1. Increased volume of work, due to grown size and complexity of business operations, which necessitate the use of computers.
2. Geographically distributed organisations make use of computers and communications technology for the purpose of providing integration to the organisation. The compatibility of computer hardware with communication devices has facilitated this.
3. The enormous capability of computers to store, process, analyze and disseminate information.
4. Data Base Management System (DBMS) integrates MIS by providing a common centralized database of an organisation.
5. Possibility to program routine structured and time consuming decisions which take most of the organisational time.
6. Increased availability of complex but capable software packages applicable in different functional areas.
7. Greater levels of precision and accuracy required in monitoring operation in technology areas.
The term Management Information System in computer applications refer to the data, equipment, computer programs and manpower that are used to develop information for management use. Although the organisations have always had some type of information system, the concept of MIS places a special emphasis on the efficient and effective management of information resource in an organisation.
The preference of an organisation both financial and physical depends to a large extent on the performance of its Management Information System. There are number of organisations which have gained competitive advantages due to the computer based MIS and yet there are others whose MIS cannot be by any standards called satisfactory. It calls for a need to evaluate MIS function of an organisation so that corrective measures can be taken accordingly.
“A computer system or related group of systems which collects and presents management information to a business in order to facilitate its control” – CIMA – Computing Terminology
“A system to convert data from internal and sources into information and to communicate that information, in an appropriate form, to managers at all levels in all functions to enable them to make timely and effective decisions for planning, directing and controlling the activities for which they are responsible.” – Lucey – Management Information Systems.
“A system which may perform routine commercial processing functions, but which is designed so that such processing will also produce information that will be presented to management, including top management, to assist in decision making. The implication is that the results will be produced speedily…to enable management to ascertain the progress of the organization in terms of satisfying its major objectives.” – Penguin Dictionary of Computers
What is common to these definitions is that information is presented to management. However, this is not the only function of an organization’s information systems.
A number of tasks might be performed simultaneously:
(a) Initiating transactions (e.g. automatically making a purchase order if stock levels are below a specified amount).
(b) Recording transactions as they occur
(c) Processing data
(d) Producing reports and its summaries
(e) Responding to inquires
For decision making, the information must be required by the decision makers from the various levels of the organization. So MIS must be in the organization which is just like the nervous system of the body. The achievement of managers is directly related to the quality and timeliness of information provided to them. Thus development of a proper MIS has become essential for each organization.
The key steps in identifying management’s information needs are:
(i) Analysis of objectives, constraints and environments
(ii) Determination of activities
(iii) Identification of decisions and action for each decisions
(iv) Identification of information needs for each action
One of the major roles of managers in organization is processing information and making decision. Information systems are developed to help the managers in their decision making process. The process of MIS is to support and assist management in the company’s business. Looking at various studies made to identify parameters responsible for successful information system projects.
The following key factors can be identified:
(a) Involvement of top management in the development of information systems
(b) Active participation of operating management
(c) User satisfaction to be used as the evolution criteria for information systems
The scope of an MIS, is to satisfy all the information needs of management. A good MIS will provide good information to those who need it. Whether this is possible will depend to some degree on the nature and type of information provided. An MIS is good at providing regular formal information gleaned from normal commercial data.
For example- an MIS relating to sales could provide management with information about:
(i) Gross profit margins of particular products
(ii) Success in particular markets
(iii) Credit control information (e.g. payments)
It may be less efficient at presenting information which is relatively unpredictable, or informal, or unstructured. So, For example- an MIS could not provide information relating to the sudden emergence of a new competitor into the market.
While an MIS may not, in principle, be able to provide all the information used by management. It should however, be sufficiently flexible to enable management, to incorporate unpredictable, informal or unstructured information into decision-making processes. For example- many decisions are made with the help of financial models (e.g. spreadsheets) so that the effect of new situations can be estimated easily.
What is Management Information System – Concept
The concept of ‘Management Information System’ which is being used here is somewhat different, than the ‘information’ as ‘present’ ‘collected’ ‘assembled’ and ‘processed’ in most of the private and public concerned. The various activities of the firm which involve collecting, processing, storing and reporting of information can usefully be considered as a system.
In actual practice, these activities take place in separate parts of an organizations as subsystem, to the extent that information function has common goals, resources and resource management, it can be viewed as one system. Basically, the information system comprise- (i) data collection and its recording, (ii) Processing, and (iii) Processed data generates meaningful reports.
The reports could be periodical reviews, analytical reports can control or action statements, the characteristics of a good information system are that its records are as detailed and accurate and possible and the flow of information into the out of the system takes place automatically within appropriate time spans.
The system should be able to process the information and provide meaningful reports for decision making at different levels of the division to the degree of detail required by such level. A well designed information system is able to perform these functions automatically, besides it also automatically monitors the transaction and activities by comparing results with established criteria.
In examination of collection assembling and dissemination of data in some of the public and private sector units shows that there is not much systematic approach’. The data does not flow on continuing basis and the reports prepared with the help of inadequate data are difficult to analysis. No care is taken to draw reports to suit the special managerial needs for different levels of management.
The reports are required of different levels of management for different purposes. Operational control has almost a day-to-day emphasis while planning needs are best met by choosing a time span long enough to throw up trends. It is also a characteristic of the control process that the shift from operational control to planning simultaneously involves shift in terms of management reporting from internal (organizational) data to external (environmental) data and from financial to nonfinancial information.
An examination of the contents of the reports of the public sector units show that no such distinction is made. The same set of information which if furnished to the ministry is also presented to the board and is circulated among all the divisional heads. Repetition of the same information in different forms of reports is generally made.
There are two very important features of these reports. Firstly, they are too many and secondly, they are too bulky. Generally they contain a large number of details in comparison to minor nature and often the most significant and critical figure is lost in those voluminous details.
The long narrative reports as they are at present, prepared result in shifting the focus from significant to minor details. To a certain extent the ministries themselves are responsible; they often call information for ad hoc purposes, which does not fall in the area of the functions defined above.
In this connection it is necessary that the authority seeking information must be clear about its role and prepare a system of information that should be based on a proper and realistic examination of the information requirement of the users and must be related to their management objectives.
Time factor is the most important consideration of these reports. There are instances where the reports are sent after too much lags and by the time the information is received, the report becomes out of date and quite irrelevant to a particular situation.
The study team on public undertakings set up by the administrative Reforms Commission pointed out, among others the following defects in the present reporting system in public enterprises insofar as these relate to the government-
(i) A rational and up-to-date system of reporting is yet to be designated for providing the government with timely information about the true picture of the enterprises;
(ii) In many cases, an unduly large number of reports and returns are being obtained from the public enterprises and at too frequent intervals;
(iii) The form and contents of the reports need to be modified to cut out nonessential information and concentrate on important items of information that the government requires for exercising control at key points; and
(iv) Adequate experts’ cells do not exist in the controlling ministries or at a central point in the government for processing the reports and returns and for taking follow up action on them.
What is Management Information System – Characteristics
1. Management information system support structured and semi-structured Decision at the operational and management control levels. They are also useful for planning purpose of senior management staff.
2. Management information, systems are generally reporting and control oriented. They are designed to report on existing operation and therefore to help provide day-to-day control of operations.
3. MIS rely on existing corporate data and data flows.
4. MIS have little analytical capability.
5. MIS generally aid in decision-making using past and present data.
6. MIS are relatively inflexible.
7. MIS have internal rather than an external orientation.
8. Information requirements are known and stable.
9. MIS require a lengthy analysis and design process.
10. Provides reports with fixed and standard format: Hard copy and soft copy reports.
11. Uses internal data stored in computer system.
12. Requires formal requests from users.
What is Management Information System – Types
Like any other system which consists of subsystems, performing different types of functions to achieve the system’s objectives, a well-integrated information system has different types of subsystems in the form of various types of information systems. Though information systems may be classified into different types, a more usual classification includes transaction processing systems, management information systems, decision support systems, executive information systems, and expert systems.
A brief discussion of these systems is presented here:
1. Transaction Processing Systems:
A transaction processing system, also known as data processing system, provides base to other information systems. Transaction processing system is applied for conversion, manipulation, and analysis of raw data into a form that is more meaningful to users. Data are streams of raw facts representing events occurring in organization or physical environment before they are organized and arranged into a form that users can understand and use.
Transaction processing systems’ main tasks are data gathering, data manipulation, data classification, data storing, calculation, and summarization. Before the large scale use of computers in business, transaction processing systems used to be operated manually. Now-a-days, organizations which have integrated information systems use computer-based transaction processing systems to ensure speed and accuracy in data processing.
2. Management Information Systems:
Management Information Systems (MIS) provide information in the form of reports and displays to managers and other professionals in the organization. For example, a finance manager can get reports from management information systems about how the funds have been used. Management information systems provide information in structured form based on the present and past data. Usually, such information is useful for making structured and semi-structured decisions at the operating management level, more particularly for short-term planning and operational control.
Management information systems put emphasis on internal data, that is, about how the organization is functioning, rather than external ones as information requirements are pre-determined. Therefore, reporting capability of a management information system determines its effectiveness.
3. Decision Support Systems:
Decision Support Systems (DSS) are information system applications that assist in decision making. These combine data, sophisticated analytical models, and user-friendly software to make semi-structured and unstructured decisions. The basic use of decision support systems is in the areas of planning, analyzing alternatives, and search for solutions. Though management information systems also provide information for decision making, these systems differ from decision support systems.
The basic difference between the two is that management information systems provide information in structured form based on internal data; decision support systems have external orientation and combine internal data with external data to arrive at decisions.
4. Executive Information Systems:
Executive information systems (EIS) are information systems at the strategic management level of an organization designed to address unstructured decision making through advanced graphics and communication. They provide information to top-level managers in interactive format through their access to critical success factors of an organization. Users of executive information systems can have such information on demand.
The use of EIS is primarily in the areas of strategic planning and strategic control. Executive information systems differ from decision support systems in the sense that executive information systems are designed to make decisions that aim at integrating various organizational units and functions while decision support systems are designed for making decisions relevant to specific business units and functions.
5. Expert Systems:
Expert systems are knowledge intensive computer programs that use artificial intelligence. Artificial intelligence is an activity of the computers that displays behaviour which may be regarded as intelligence. Unlike natural intelligence, artificial intelligence is man-made and does not think the way as human beings do. Thus, expert systems capture the expertise of a human being in limited domain of knowledge and experience.
Expert systems provide information, tools, and methods for decision making in specific areas such as systems that generate competitive bids, support loan approval, support training in specialized areas where experts are in scarcity, and so on. The users of expert systems are the people who are involved in value-added work which requires a special skill or expertise.
In an organization, managers at different hierarchical levels perform different types of functions and, therefore, require different types of information systems.
The mission of the management information system (MIS) is to provide data processing support and enhance an electronic infrastructure to optimize delivery of services to the user departments. In an organization goals and objectives are inter-related to each other.
Improve efficiency in all aspects of services provided by MIS.
Objective 1 – Establish an Information Technology (IT) Advisory Board to develop priorities leading to accomplishment of country goals and objectives.
Objective 2 – Interconnect all data functions-
(i) Converge satellite data centres at the MIS data center.
(ii) Centralize Geographical Information System (GIS).
(iii) Acquire the high-speed fiber connections between all offices required to efficiently pass large data packets across geographic boundaries.
(iv) Centralize criminal justice name and address data and one database.
Objective 3 – Reduce number of hardware platforms and centralize administration of backups, storage management, security functions, and scale upward as increased capacity is required.
(i) Upgrade mainframe to Multiprise server for internet and internal uses.
(ii) Licence Virtual Machine (VM) operating system to run multiple platforms indepently.
Objective 4 – Standardize and implement automation tools to contain technique services support costs.
(i) Promote use of Local Areas Networks (LANs) and networks computers to replace stand alone PC’s to speed device configuration and software distribution, secure data backup functions, and maximize data sharing in unit works groups.
Objective 5 – Implement and Maintain Disaster Recovery plan for country data. Equip alternate data center. Conduct regular data recovery tests.
Plan business application systems that meet business needs and country goals.
Objective 1 – Ensure application systems meet business needs.
(i) Assess strengths and weaknesses of all systems on an ongoing basis.
(ii) Submit project plans to IT board review process.
Objective 2 – Plan for comprehensive data presentation systems which include data, text, images, voice, and multimedia systems.
Deliver business applications quickly.
Objective 1 – Organization should buy applications tools if they are cost-effective.
Objective 2 – Select best platform for application considering functionality and supportability.
Objective 3 – Deliver 3-month work unity segments to keep users and developer aligned.
Objective 4 – Use industry-standard methodologies for development. Avoid specialized tools requiring non-standard training.
Objective 5 – Form partnerships with users to best accomplish project completion and satisfaction.
(i) Promote use of cross-functional participation on projects.
(ii) Establish clear, written goals and role guidelines for each project member. Communicate to define clear service level expectation for each project.
What is Management Information System – Top 3 Stages of MIS Development: Planning, Structure and Implementation
Various factors to be considered for MIS assessment, as given by the authors, can be grouped under the following three-stages of MIS development namely:
1. Planning for MIS
2. Structure for MIS,
3. Implementation of MIS
Stage # 1. Planning for MIS:
According to Anthony (R4) there are three levels of organisational planning and control-operational, managerial and strategic. As the organisation becomes more sophisticated in its use of MIS, emphasis shifts to strategic planning and control from that of operational. Manifestation of this shift is the MIS function serving as a corporate utility.
The stages of EDP growth developed by Nolan provide a valuable insight into the evolution of MIS planning. In the initial stages of MIS the transaction applications are the focus of planning efforts. As MIS activities grow in an organisation the emphasis shifts towards the strategic use of information technology. For strategic planning of MIS, therefore, a steering committee is usually created to oversee the MIS function.
The steering committee reviews the project portfolio, approves those projects which can be beneficial, and assigns relative priorities. The approved projects can be mapped into a development schedule usually for 1-5 years’ time period. This schedule becomes a basic for determine MIS support requirements financial requirement, for hardware, software, personnel and facilities. There are four stages in MIS planning.
The factors which ought to be considered while evaluating overall planning are given:
I. Strategic Planning:
a. Whether there exists a short range, long range MIS plan?
b. Existence of corporate policy for MIS?
c. Top Management’s interest in MIS?
d. Existence of a steering committee?
II. Information Requirement Analysis:
a. What project an organisation is emphasizing on for computerization in next 2-5 years.
b. What projects an organisation is emphasizing on for computerization in next 1-2 years.
c. What is the priority of application development?
d. Whether the projects have been ranked in order of importance.
III. Resources Allocation:
a. Does the organisation have resource requirement plan?
b. Is there a hardware plan.
c. Is there a software plan.
d. Is there a data communication plan.
e. What is the method used for allocating scarce resource to various applications whether (i) ROI, (ii) change over method, (iii) steering committee method, or (iv) End and Means Analysis.
a. Does MIS department make use of Project Planning and control Techniques.
b. Is the MIS department making use of other OR Techniques?
This is the second stage of MIS development in which the structure of an MIS system can be best describe in terms of following components:
(i) Operation Systems.
(ii) Decision Support Systems.
(iii) Management Activity.
(iv) Organisation Function.
In MIS structure, the operating systems are an important area for evaluation.
There further consists of physical components like:
(iii) Files (Database) and
(iv) Operating Personnel etc.
There are certain characteristics which distinguish between large and small computers. The type of computers used would depend upon its application. Large computers are best suited for time sharing environment whereas, smaller computers suit limited input/output environment, word processing and small business systems.
As the organisation moves towards implementing advanced information systems the hardware and software environment becomes complexes.
The advanced hardware facilities can be categorised as under:
a. Transaction Input hardware
b. Communication process facilities.
c. Control process facilities.
Transaction input hardware includes both off-line and online transaction input devices. The key disk system and the off-line intelligent terminals are required for the former and the programmable terminals, logic terminals; visual display terminals are required for the latter. Communication hardware includes both the communication facilities and the user’s hardware for communication. The control process must have hardware capability to support advance systems.
The advent of smaller computers like micros has facilitated decentralization and distribution of data processing facilities.
To evaluate the status of hardware, the following factors need to be considered:
i. Is the hardware state of art?
ii. Does it have expansion potential without major conversion efforts?
iii. Is the technology level consistent with company’s philosophy?
iv. How is the computer resources distributed in an organisation?
v. Details about hardware installed in an organisation.
Software is yet another important component of MIS organisation. It has been emphasized that it is more important for the user-managers to understand software than hardware. Firstly, the software maintenance takes 50 to 70 per cent of all personnel activity in most computer centres. Secondly, the software provides the interface between users and computer system.
Manager, therefore, must understand some aspects of software in order to utilize and further develop information systems. Software can be divided into two generic types i.e., systems software and application software. The development in hardware generations could be categorized by differences in computer software.
The choice of the language by a particular organisation is governed by certain features like:
(a) Availability of the language,
(b) Ease of use,
(c) Portability of System.
(d) Functional Versatility,
(e) Conciseness, simplicity and user friendliness.
(iii) Files (Database):
The fact that whether the organisation has centralised or decentralized database/s would depend upon the sophistication of its MIS. Most organisations are in the fourth stage of MIS when they think in terms of integrating organisational data into one or more databases.
During the third stage of EDP growth most organisations establish an MIS steering committee composed of top level managers. Since the top managers represent the point where an organisation is physically integrated, the managers at this level can best direct the proper data integration of organisation.
The concept of a database being centrally controlled is very important. This allows for non-redundant non-duplicated structures to hold and store data. Such data records are organised and stored so as to promote sharability, availability, evolvability and integrity.
The main question which needs to answered while adjudging the strength of an organisational database is:
A. Whether centralized or decentralized?
B. Degree of integration of data files?
C. Level of user interaction with databases?
D. User’s satisfaction level?
The operating procedures are physical components available in physical form such as manuals, instruction booklets etc. The three types of procedures which are required to furnish an operational system are user’s instructions, instructions for input preparation and operating instructions for EDP personnel. The usefulness of procedures can be evaluated in both-quantitative and qualitative terms.
(iv) Operating Personnel:
The personnel which operate the MIS function in an organisation include computer operators, programmers, system analysts and the managers. The staff need should be assessed by considering the requirements to operate existing systems and the further plans of growth in new application areas.
It is extremely important to have selected MIS manpower for successful operation of MIS function in an organisation. Also the firm should acquire higher and higher level languages so as to give more responsibility for systems to the users. The manager can prepare its people to accept technology by making it widely available and easily under standable.
The relevant factors for evaluating personnel function are as given:
A. Total EDP manpower available?
B. Manpower envisaged in near future 4-5 years hence?
C. Training imparted to MIS manpower and end-users.
D. Who conducted the training programmes?
E. Motivation and Morale of EDP manpower, their accountability etc.
The processing function of MIS in an organisation is identified by evaluating various alternatives available and thus choosing the best one for implementation. The alternatives could be divided into three broad groups that represent point on a continuum.
At one extreme is completely centralized processing with all systems analysis and design being performed by central group and all the equipment being operated centrally. R8. On the other extreme is complete decentralization where all the equipment is dispersed at different local sites with their own staff for analysis and design. Distributed data processing occurs where local sites are tied together in some type of communication network.
The challenge of a centralized system is to make it responsive and that of decentralized and distributed system is to make it co-ordinated. The management has to trade off the benefits perceived by users in having centrally controlled processing function against the overall co-ordination of the organisation.
Centralized vs Decentralized:
a. Provides economies of scale.
b. Lower cost per transaction.
c. Ideal for managerially centralized organisations.
d. Ease of control over data processing system.
e. Provides simplicity of structure.
f. Lesser Involvement of users/managers across organisation.
a. Expensive to implement.
b. Higher cost per transaction.
c. Suitable for decentralized and coordinated management.
d. Difficult to control over data processing system.
e. Complex structure.
f. Improved Morale and participation of people across organisation.
Stage # 3. Implementation of MIS:
Implementation of MIS refers to the entire change effort associated with a new system. It implies replacing existing information processing procedures with new improved system of information. This is a difficult stage involving behavioural changes since people are expected to change their information processing activities. Implementation is accomplished as soon as the user starts utilizing the output of MIS. The cost of successful implementation of MIS is often comparable to MIS design.
For evaluating the success of implementation two alternatives are available viz (i) Cost/benefit study and (ii) Level of user satisfaction. Former involves weighing the costs increased in developing a system as against the resulting money benefit from it. There are some practical difficulties in this approach. Latter one involves measuring the user satisfaction in terms of quality of service, timeliness, accuracy of information and quality of the schedule for operation.
The basic objective of MIS is its extensive use and high degree of satisfaction.
Implementation of MIS consists of some important activities as given below:
(i) Planning for implementation,
(ii) Personnel Education and Training,
(iv) Equipment and Software Installation,
(v) File conversion,
(vi) Use of new system and acceptance,
(i) Planning for Implementation:
The success of planning for implementation depends upon the fact that how well the relationships among various tasks are established. The quantitative techniques like PERT, GANTT charts are effective instruments for visualizing and scheduling a plan.
(ii) Personnel Education and Training:
The education and training programmes are required at two ends viz (i) the MIS personnel and (ii) the users across the organisation. Such programmes are essential for successful implementation of the system. The training aspects of MIS personnel include input/output operations and procedures, I/O formats, information requirements, frequencies and destinations etc.
Whereas, the training aspects for users include understanding a computer language and or a user friendly package. For the purpose of imparting training to them, they may be classified as developers vs. non-developers, novices vs. experts and frequent users vs. occasional users. The training programmes should aim at catering to the need of all types of users. The effectiveness of training would depend upon the level of user awareness and satisfaction.
There are two options available for meeting the software requirements of the organisation to develop software internally or to buy software from outside. The former is best suited to organisations which very specialised and complicated requirements, whereas the latter is feasible for organisations which are small and buy packages for cost considerations. However in most organisations a judicious mix of two is available.
For the purpose of MIS assessment the application areas could be divided into three categories:
(i) Applications that have been already developed and implemented. The outputs of these systems are being continuously used by the users.
(ii) Applications that are being developed and are at some stage of systems analysis and design.
(iii) Applications proposed for development in next few years. This time span generally ranges from 1-5 years.
For the overall assessment of the quality of already implemented application systems, the user’s responses related to the appropriateness of report content, timeliness and accuracy are important.
(iv) Equipment and Software Installation:
Equipment and software installation is yet another important stage in implementation. This stage involves decisions which have financial implications for the organisation. There can be two alternatives viz. to have internal services or to get services from the external sources.
For using internal services the organisation can choose one of the various alternatives viz. purchase a computer system or acquire computer system on lease basis etc. Software alternatives include developing new applications from the beginning or using packages as building blocks.
The process of file conversion involves replacing manual files with computer based files, format and structure. Computer programs are available that facilitate the conversion process. One of the most important concepts associated with file conversion is that of database system. This enables management to focus attention on data which is a resource of critical importance rather than just managing hardware and software systems.
The database concept provides several advantages in terms of efficiency of storage, elimination of redundancy and improved processing of data files. Data base could be centralized or decentralized. Centralized database is a common “Pool” of all organisational data files.
The users and the application programmes interact with the database through the database administrator. Whereas, decentralized databases are those which are designed and maintained by users and application programmers themselves as per their requirements.
There is however problems associated with both centralized as well as decentralized databases. The former involves complex technology and well-conceived plan governing the development and use of database, whereas, the latter involves problems related to redundancy and inconsistency of data.
The quality of database developed and maintained by an organisation, would definitely throw light on the level of management information system operating in an organisation.
(vi) Use of System and Acceptance:
From amongst the various variables that can be used for measuring implementation success, the use of system is the central variable. The high levels of use and user’s satisfaction are indicators of successful implementation. An information system could be categorised as voluntary or mandatory on the basis of its use.
For the information system whose use is voluntary, high level of systems use could be the indicator of successful implementation and for the system whose use is mandatory like on-line production control systems, the user’s satisfaction in terms of quality of service, timeliness, accuracy can serve as indicators of successful implementation.
It comprises of all written material that would explain the technical characteristics and operations of the system. Documentation could be divided into two main categories viz. program documentation and user documentation. The former comprises of flow diagrams, program codes and listings etc. Whereas, the latter comprises of general description about how a system is to be used by user manager. The quality of user documentation and system documentation are important factors in assessment of MIS.
In fact the quality of user documentation results in following:
(i) Increased user satisfaction,
(ii) Positive attitude towards MIS
(iii) Higher user operating Milieu and morale,
(iv) Better awareness among users about the system capabilities.
Various types of documentation that could be maintained by an organisation for operating application packages are:
(i) Training material,
(ii) Operational manuals
(iii) User’s manuals, and
(iv) Systems manuals
Most management information systems are not designed, but grow up informally, with each manager (depending on his drive and initiative) making sure that he gets all the information he thinks he needs to do his job. It is virtually taken for granted that the necessary information flows to the job, and to a certain extent this is so.
Much accounting information, For example- is easily obtained, and managers can often get along with frequent face-to-face contact and cooperation with each other. Such an informal system works best in small companies, but is inadequate in a large company, especially one which spreads over several industries, areas or countries.
The consequences of a poor MIS might be dissatisfaction amongst employees who believe they should be told more, a lack of understanding about what the targets for achievement are and a lack of information about how well the work is being done. Some information systems are designed, i.e. planned, often because the introduction of computers has forced management to consider its information needs in detail.
This is especially the case in large companies. Management should try to design the management to consider its information needs in detail. This is especially the case in large companies. Management should try to design the management information system for their enterprise with care.
If they allow the MIS to develop without any formal planning, the MIS will almost certainly be inefficient because data will be obtained and processed in a random and disorganized way and the communication of information will also be random and hit-and-miss.
For example- without formal planning and design of the MIS –
(a) Some managers will prefer to keep data in their heads and will not commit information to paper. When the manager is absent from work, or is moved to another job, his successor will not know as much, as he could.
(b) Not all data is collected and processed that ought to be, and so valuable information that ought to be available to management would be missing from neglect.
(c) Information is available but not communicated to the managers who are in a position of authority and so ought to be given it. The information would go to waste because it would not be used. In other words, the wrong people would have the information.
(d) Information is communicated late because the need to communicate it earlier is not understood and appreciated by the data processors.
Whether a management information system is formally or informally constructed, it should have certain essential characteristics:
(i) The functions of individuals and their areas of responsibility in achieving company objectives should be defined.
(ii) Areas of control within the company (e.g. cost centres, budget centres) should also be clearly defined.
(iii) Information required for an area of control should flow to the manager responsible for it.
What is Management Information System – Approaches for the Development of MIS: Bottom-Up Approach and Top-Down Approach
The two common approaches for the development of MIS are bottom-up approach and top-down approach.
In the bottom-up approach, initially the transaction processing modules are created and later models for planning, control, strategic planning etc. are added. The system group in response to the increased needs of the users.
In this approach, the system group in response to the real needs of users. The main disadvantage is that integration or synthesis of various modules may not be done efficiently and might turn-out to very costly. Various sub-systems may need to be redesigned due to the changing requirements and new interfaces with other sub-systems.
On the other hand the basic advantage of the top-down approach is that it forces from the beginning on the integration of various subsystem. This avoid the redesigning of various modules. The main disadvantage is that it is usually difficult to make such large scale plants. The top-down approach begins with organization objectives and performs successive analysis which result in a MIS design.
The main emphasis in this approach is a thorough understanding of the major decisions managers make at various levels. These decisions, type of information required is determined and basic design parameters of the system are identified.
The bottom-up approach starts with the organizations data base, set of programs and functional systems. In this approach, managers are asked to their information needs and accordingly the system is designed. Here the system designer reacts to the manager’s stated information needs. He does not explicitly link the rationale of the information request to effective achievement of the organizational objectives.
Thus bottom-up approach starts with the existing computer systems and the system architect is ‘buffered’ from linking informational requirements to key management decisions and linking these decisions to organizational objectives. The control of the MIS design in this case is indirect. Usually in practice, a mix of the two approaches is used.
Information can be collected and stored for future use, although presumably there will be a limit to its useful life.
(a) Some information might have been gathered several years previously and field away for future use. Eventually, it will be associated with more current information so as to analyze past trends in order to predict the future. In other words, forecasting the future is often based on an analysis of historical information.
(b) Information which is several years old might also be used to compare past and current performance – e.g. to compare today’s return on capital employed and profit/sales ratio etc. with what was being achieved a few years before. Comparisons of this sort are useful for control purposes because they help to identify possible weakness in current performance.
(c) Information used by junior managers and supervisors usually has a short life span. Supervisors need to know what is going on now. What happened some years before is more likely to be of interest to their superiors and not to them.
An MIS should, therefore, address this issue.
Transactions processing systems could be said to represent the lowest level in an organization’s use of information systems. They are used for routine tasks in which data items or transactions must be processed so that operations can continue. Handling sales orders, purchase orders, payroll items and stock records are typical examples.
Transactions processing systems generally contain at least two categories of files:
(a) A file (or files) of master records; and
(b) A file of transactions to be used in updating the master records.
Consider a bank-the master records would consist of some identification data, historical transactions and the current balance for all the accounts; the transactions file would consist of a day’s transactions file would then be used to update the master file records of customer accounts. A ‘file’ of transactions could start off as a pile of forms on a clerk’s desk, e.g. a pile of invoices from suppliers.
These transactions would be processed to update the suppliers’ accounts in the purchase ledger. Most organizations generate a large volume of transactions which need to be processed efficiently and effectively. Computerised transactions processing systems have clear cost and performance advantages over manual systems for all but the most trivial applications.
Small businesses are using microcomputers to provide these functions just as larger companies earlier acquired mainframe computers for these purposes. Transactions processing systems provide the raw material which is often used more extensively by management information systems, databases or decision support systems.
In other words, transactions processing systems might be used to produce management information, such as reports on cumulative sales figures to date, total amounts owed to suppliers or owed by debtors, total stock turnover to date, value of current stock-in-hand, and so on, but the main purpose of transaction processing systems is operational, i.e., as an integral part of day-to- day operations.
What is Management Information System – Different Levels of MIS
Information required at different levels of management are as follows:
1. Operational Level MIS:
Operational decisions are essentially small-scale and programmed, and that operational information is often highly formal and quantitative. Many operational decisions can, in fact, be incorporated into computer processing.
Most MIS at operational level, however, are essentially used for processing transactions, updating files and so forth. The inputs will be basic transaction data, and outputs will be simple reports, which have sorted or listed the input data, or documents as records of transactions, or further instructions.
To see that profits are not lost through inefficient handling of men and machines, it is necessary to closely watch costs and the volume of work. In other words, annual operations of production and distribution have to be kept under a close surveillance. The control activity at this level is known as the operational control. In operational control, the emphasis is on day to day or weekly planning and control.
There is hardly any uncertainty and the plans that are compiled are in exact terms. Standards are set in exact quantitative terms and performance is appraised against the standards. This enables an exact measurement of efficiency. Standard costing is of immense value at this level. The decision-making involved in planning and control at this level tends to be repetitive.
The following routine and repetitive information falls under operational level MIS:
i. Recording of customer’s orders
ii. Breakdown into parts and subassemblies
iii. Determining net requirements of parts and materials
iv. Shop floor data collection
v. Preparation of work tickets
vi. Maintaining inventory records
vii. Reordering parts and materials
viii. Production of purchase orders
ix. Goods receiving
x. Payment to suppliers
xi. Accounts payable
xii. Goods shipping
xiv. Accounts receivable
xv. General ledger
xvi. Budget accounting
2. Tactical Level MIS:
A variety of systems can be used at this level, and there may be a greater reliance than at operational level on:
(a) Exception reporting
(b) Informal systems
(c) Investigation and analysis of data acquired at operational level
(d) Externally generated data
The MIS at tactical level will interact with the same systems as that at operational level, and in fact tactical information may be generated in the same processing operation as operational level information. For example- tactical level information comparing actual costs incurred to budget can be produced by a system in which those costs are recorded.
Functional MIS at tactical level are typically related to other functional MIS. For example- Information from the sales MIS will affect the financial accounting system, Management level MIS is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of organization’s objectives.
It is characterized by the following:
(a) Its time horizon is usually one year as it concerns functional planning and budgeting viz., marketing, production, purchasing, finance etc. It is undertaken within the framework of strategic planning and the plans to support the objective set therein.
(b) Unlike strategic planning, it is a continual activity; it is periodic and concerns the middle management. Since external environment does not figure so importantly, there is much less uncertainty than at the strategic planning level and consequently the plans are fairly realistic.
(c) Appraisal is constant and not too difficult.
(d) The emphasis is on both planning and control as more or less a continuous activity.
In general the following management control tasks are covered under tactical level MIS:
i. Setting work budgets
ii. Planning working capital
iii. Determining prices
iv. Choosing suppliers
v. Sales management
vi. Annual forecasts
vii. Production scheduling
viii. Maintenance management
ix. Routine personnel administration
x. Formulating rules for routine operation
3. Strategic Level MIS:
At strategic level the information system is likely to be informal, in the sense that it is not always possible to quantify or program strategic information, and much of the information might come from environmental sources. The MIS will provide summary level data from transactions processing. Human judgment is used more often at this level, as many strategic decisions cannot be programmed. In short, formal systems are likely to be less important at this level.
However, they can be used in the gathering of information. In a finance sub-system, the operational level would deal with cash receipts and payments, bank reconciliations and so forth. The tactical level would deal with cash flow forecasts and working capital management. Strategic level financial issues are likely to be integrated with the organization’s commercial strategy, but may relate to the most appropriate source of finance (e.g. long-term debt or equity).
Strategic planning is undertaken to set the objectives for an organization. Its primary concern is to deal with major threats and opportunities for which obviously there cannot be a time table, therefore, it is no periodic and is only undertaken as and when major threats or opportunities arise. Its time horizon is long, usually 5 years to 15 years and is the domain of the top management and the corporate staff.
Though internal capabilities and the progress of an organization are appraised, its major thrust is towards the external environment viz., competitors, political situation, economic undercurrents, etc. The task of collecting the necessary information is not continuous but just a due time affair. Even in highly computerised organizations these tasks remain eminently human tasks.
The computer will help in many areas but it is more difficult to provide computerised information or assistance at this level for two reasons. First, the level of thinking is often complex and ill-structured and second, the needs are unpredictable.
The following strategic planning tasks are coming under strategic level MIS:
i. Determination of markets
ii. Long-range forecasts
iii. Directing research
iv. Choosing new product lines
v. Setting financial policies
vi. Setting personnel policies
Different management activities for functions will have different informations processing requirements. Transaction processing will be much more significant in terms of processing time, number of files etc. compared to strategic planning. Transaction processing provides the base for all the activities.
The lower part of the pyramid describes structured well defined procedures more useful to clerical personnel and lower a management level. The top part of the pyramid involves more ad hoc, unstructured decisions, providing support to higher level management. The decision process at the lower level will be more programmed. While at the higher level more non-programmed.
What is Management Information System – DSS (With Characteristics)
DSS are a form of management information system. DSS are used by management to aid in making decisions on issues which are unstructured. These complex problems are often very poorly defined with high levels of uncertainty about the true nature of the problem, the various responses which management would undertake or the likely impact of those actions.
These highly ambiguous environments do not allow the easy application of many of the techniques or systems developed for more well defined problems or activities. DSS are intended to provide a wide range of alternative information gathering and analytical tools with a major emphasis upon flexibility and user orientedness.
DSS is usually taken to mean computer systems which are designed to produce information in such a way as to help managers to make better decisions. DSS do not make decisions. The objective is to allow the manager to consider a number of alternatives and evaluate them under a variety of potential conditions.
A key element in the usefulness of these systems is their ability to function interactively. Managers using these systems often develop scenarios to refine their understanding of the problem and their actions. A DSS integrates many of the functions supplied by information systems so that managers may use them more easily and on a wider range of both structured and unstructured problems.
The main characteristics of DSS are:
(a) The computer provides support but does not replace the manager’s judgment nor does it provide predetermined solutions.
(b) DSS are best suited to semi-structured problems where parts of the analysis can be computerised but the decision maker’s judgment and insight is needed to control the process.
(c) Where effective problem solving is enhanced by interaction between the computer and the manager.
The existence of the database and a DBMS to handle it means that the manager can interrogate and access a mass of data at will. He then needs to be able to use this data in exploring alternatives and making decisions. To do this there is an enormous range of packages available.
These include packages for:
(a) Modelling and simulation
(c) Statistical analyses of all types
(e) Non-linear and Linear programming
(f) Regression analysis
(g) Financial modelling
(h) Sensitivity and risk analysis
(i) Expert systems and so on.
What is Management Information System – Evaluation of MIS
A number of conceptual frameworks are available for evaluating MIS function in an organisation. These frameworks are the guide maps that highlight and focus attention on important areas which must be evaluated to ascertain the health of MIS function in an organisation.
The evaluation of MIS is important for several reasons as have been given below:
1. Senior executives feel very strongly that corporate MIS function should be evaluated in one way or the other due to large amount of investment in the information processing technology.
2. To assess if the benefits received from MIS are commensurate with the level of expenditure incurred on it.
3. To assign MIS the status of being a function of management like Production, Finance and Marketing.
4. To evaluate efficacy of MIS function in the organisation over a period of time.
5. To ascertain the competitiveness of the MIS of one organisation as compared to its competitors.
Dickson and Wetherebe have suggested three approaches to MIS evaluation in an organisation as given below:
1. To evaluate net contribution of MIS function to the overall organisation. This approach to MIS evaluation is purely of economic nature.
2. To evaluate MIS function with the objective of minimizing the “risk” of the overall organisation to inadequacies of MIS performance. This approach to MIS evaluation has an accounting orientation.
3. To evaluate MIS function in clinical sense realizing that the economic and accounting evaluation of MIS might be impractical owing to the problem of quantification of the results obtained in an organisation.
4. The third approach suggests that the evaluator must take into account all normative components of MIS and conduct an examination to determine the extent to which ‘good practice’ is being followed. This approach is associated with a concept called ‘Management’s Assessment’ of the MIS function.
Evaluation of MIS-Management’s Assessment Approach:
Dickson and Wetherebe feel that the third approach called ‘Management Assessment’ is the most viable approach to evaluation of overall MIS function for two reasons:
(i) Pure economic and accounting evaluation of MIS is impractical. Value of good quality information cannot be evaluated in quantitative terms only.
(ii) In order to evaluate the MIS function of an organisation it is important to evaluate, the end user-manager’s perception about the output from MIS. Management Assessment approach helps to achieve this objective.
Both Kanther and Dickson and Wetherebe have provided a comprehensive list of factors to be evaluated in order to have a complete check on the “health” of MIS organisation. The identification of factors/areas is based upon Management Assessment Approach.