CHAPTER-1

Introduction
1.1 MANAGEMENT INFORMATION SYSTEM (MIS) CONCEPT

The concept of the MIS has evolved over a period of time comprising many different facets of
the organizational function. MIS is a necessity of all the organizations.

The initial concept of MIS was to process data from the organization and presents it in the form
of reports at regular intervals. The system was largely capable of handling the data from
collection to processing. It was more impersonal, requiring each individual to pick and choose
the processed data and use it for his requirements.

This concept was further modified when a distinction was made between data and information.
The information is a product of an analysis of data. This concept is similar to a raw material and
the finished product. What are needed are information and not a mass of data. However, the data
can be analyzed in a number of ways, producing different shades and specifications of the
information as a product.
It was, therefore, demanded that the system concept be an individual- oriented, as each
individual may have a different orientation.

Towards the information, this concept was further modified, that the system should present
information in such a form and format that it creates an impact on its user, provoking a
decision or an investigation.

It was later realized then even though such an impact was a welcome modification, some sort of
selective approach was necessary in the analysis and reporting. Hence, the concept of exception
reporting was imbibed in MIS. The norm for an exception was necessary to evolve in the
organization. The concept remained valid till and to the extent that the norm for an exception
remained true and effective. Since the environment turns competitive and is ever changing,
fixation of the norm for an exception becomes kafutile exercise at least for the people in the
higher echelons of the organization.

The concept was then evolved that the system should be capable of handling a need based
exception reporting. This need maybe either of an individual or a group of people.
This called for keeping all data together in such a form that it can be accessed by
anybody and can be processed to suit his needs. The concept is that the data is one but it
can be viewed by different individuals in different ways. This gave rise to the concept of
DATABASE, and the MIS based on the DATABASE proved much more effective.

Over a period of time, when these conceptual developments were taking place, the concept of
the end user computing using multiple databases emerged.
This concept brought a fundamental change in MIS.
The change was decentralization of the system and the user of the information becoming
independent of computer professionals. When this becomes a reality, the concept of MIS
changed to a decision making system. The job in a computer department is to manage the

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information resource and leave the task of information processing to the user. The concept of
MIS in today’s world is a system which handles the databases,
Databases- provides computing facilities to the end user and gives a variety of decision
making tools to the user of the system.

The concept of MIS gives high regard to the individual and his ability to use information. An
MIS gives information through data analysis. While analyzing the data, it relies on many
academic disciplines. These include the theories, principles and concepts from the Management
Science, Psychology and Human Behavior, making the MIS more effective and useful. These
academic disciplines are used in designing the MIS, evolving the decision support tools for
modeling and decision - making.

The foundation of MIS is the principles of management and its practices. MIS uses the concept
of management. Information System can be evolved for a specific objective if it is evolved after
systematic planning and design. It calls for an analysis of a business, management views and
policies, organization culture and the culture and the management style. The information should
be generated in this setting and must be useful in managing the business. This is possible only
when it in conceptualized as system with an appropriate design. The MIS, therefore, relies
heavily on the systems theory offers solutions to handle the complex situations of the input and
output flows. It uses theories of communication which helps to evolve a system design capable
of handling data inputs, process, and outputs with the least possible noise or distortion in
transmitting the information form a source to a destination. It uses the principles of system
Design, Viz., an ability of continuous adjustment or correction in the system in line with the
environmental change in which the MIS operates. Such a design help to keep the MIS tuned with
the business managements needs of the organization.

The concept, therefore, is a blend of principle, theories and practices of the Management,
Information and System giving rise to single product known as Management Information
System (MIS).

The Physical view of the MIS can be seen as assembly of several subsystems based on the
databases in the organization. These subsystems range from data collection, transaction
processing and validating, processing, analyzing and storing the information in databases. The
subsystem could be at a functional level or a corporate level. The information is evolved through
them for a functional or a department management and it provides the information for the
management of business at the corporate level.

The MIS is a product of a multi- disciplinary approach to the business management. It is a

product which needs to be kept under a constant review and modification to meet the corporate
needs of the information. It is prescribed product design for the organization. The MIS differs
since the people in two organizations involved in the same business. The MIS is for the people in
the organization. The MIS model may be the same but it differs greatly in the contents. The
MIS, therefore, is a dynamic concept subject to change, time and again, with a change in the
business management process. It continuously interacts with the internal and the external
environment of the business and provides a corrective mechanism in the system so that the
change needs of information are with effectively.

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The MIS model of the organization changes over a time as the business passes through several
phases of developmental growth cycle. It supports the management of the business in each phase
by giving the information which is crucial in that phase. It has critical success factors in each
phase of growth cycle and the MIS model gives more information on the critical success factors
for decision making.

1.2 MIS DEFINITION

The Management Information System (MIS) is a concept of the last decade or two. It has been
understood and described in a number ways. It is also known as the Information System, the
Information and Decision System, the Computer- based information System.

The MIS has more than one definition, some of which are given below.
1. The MIS is defined as a system which provides information support for decision making
in the organization.
2. The MIS is defined as an integrated system of man and machine for providing the
information to support the operations, the management and the decision making function
in the organization.
3. The MIS is defined as a system based on the database of the organization evolved for the
purpose of providing information to the people in the organization.
4. MIS refers broadly to a computer-based system that provides managers with the tools for
organizing, evaluating and efficiently running their departments.
5. MIS is an analytical tool that enables the integration of data from different business
applications, Internet, different modules and business functions. It converts data from
internal and external sources into information. This information is communicated in an
appropriate form to managers at different levels in a business to enable them to make
effective decisions.
6. A Management Information System (MIS) is a process that provides information needed
to manage organizations effectively. It is regarded to be a subset of the overall internal
procedures in a business, which cover the application of people, documents, technologies,
and procedures used by management personnel to solve business problems such as
costing a product, service or a business-wide strategy.

Thought there are a number of definitions, all of them converge on one single point, i.e., the MIS
is a system to support the decision making function in the organization. The difference lies in
defining the elements of the MIS.

However, in today’s world MIS a computerized business processing system generating

information for the people in the organization to meet the information needs decision making to
achieve the corporate objective of the organization.

In any organization, small or big, a major portion of the time goes in data collection, processing,
documenting it to the people. Hence, a major portion of the overheads goes into this kind of
unproductive work in the organization. Every individual in an organization is continuously
looking for some information which is needed to perform his/her task. Hence, the information is
people-oriented and it varies with the nature of the people in the organization.

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The difficulty in handling this multiple requirement of the people is due to a couple of reasons.
The information is a processed product to fulfill an imprecise need of the people. It takes time to
search the data and may require a difficult processing path. It has a time value and unless
processed on time and communicated, it has no value. The scope and the quantum of information
is individual-dependent and it is difficult to conceive the information as a well-defined product
for the entire organization. Since the people are instrumental in any business transaction, a
human error is possible in conducting the same. Since a human error is difficult to control, the
difficulty arises in ensuring a hundred per cent quality assurance of information in terms of
completeness, accuracy, validity, timeliness and meeting the decision making needs.

In order to get a better grip on the activity of information processing, it is necessary to have a
formal system which should take care of the following points:
 Handling of a voluminous data.
 Confirmation of the validity of data and transaction.
 Complex processing of data and multidimensional analysis.
 Quick search and retrieval.
 Mass storage.
 Communication of the information system to the user on time.
 Fulfilling the changing needs of the information.
The management information system uses computers and communication technology to deal
with these points of supreme importance.

Based on the definitions given, MIS should have the following Characteristic features:
 multidimensional view of data
 advanced calculation options
 current position statement of a company
 business reviews of specific sectors
 working with time series and trend modeling
 option of integrating data from different data sources
 ability to process and analyze huge amount of data
 plan input and review of data also through the excel interface

1.3 ROLE OF THE MANAGEMENT INFORMATION SYSTEM

The role of the MIS in an organization can be compared to the role of heart in the body. The
information is the blood and MIS is the heart.

In the body the heart plays the role of supplying pure blood to all the elements of the body
including the brain. The heart works faster and supplies more blood when needed. It regulates
and controls the incoming impure blood, processes it and sends it to the destination in the
quantity needed. It fulfills the needs of blood supply to human body in normal course and also in
crisis.

The MIS plays exactly the same role in the organization. The system ensures that an
appropriate data is collected from the various sources, processed, and sent further to all the needy

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destinations. The system is expected to fulfill the information needs of an individual, a group of
individuals, the management functionaries: the managers and the top management.

The MIS satisfies the diverse needs through a variety of systems such as Query Systems,
Analysis Systems, Modeling Systems and Decision Support Systems.
 The MIS helps in Strategic Planning, Management Control, Operational Control and
Transaction Processing.
 The MIS helps the clerical personnel in the transaction processing and answers their
queries on the data pertaining to the transaction, the status of a particular record and
references on a variety of documents.
 The MIS helps the junior management personnel by providing the operational data for
planning, scheduling and control, and helps them further in decision making at the
operations level to correct an out of control situation.
 The MIS helps the middle management in short them planning, target setting and
controlling the business functions. It is supported by the use of the management tools of
planning and control.
 The MIS helps the top management in goal setting, strategic planning and evolving the
business plans and their implementation.
The MIS plays the role of information generation, communication, problem identification and
helps in the process of decision making. The MIS, therefore, plays a vita role in the
management, administration and operations of an organization.

MIS provides the following advantages:

 It facilitates planning: MIS improves the quality of plants by providing relevant
information for sound decision - making. Due to increase in the size and
complexity of organizations, managers have lost personal contact with the scene of
operations
 it minimizes information overload: MIS change the larger amount of data into
summarized form and thereby avoids the confusion which may arise when
managers are flooded with detailed facts
 MIS encourages decentralization: Decentralization of authority is possibly when
there is a system for monitoring operations at lower levels. MIS is successfully
used for measuring performance and making necessary change in the
organizational plans and procedures
 It brings coordination: MIS facilities integration of specialized activities by
keeping each department aware of the problem and requirements of other
departments. It connects all decision centers in the organization
 It makes control easier: MIS serves as a link between managerial planning and
control. It improves the ability of management to evaluate and improve
performance. The use of computers has increased the data processing and storage
capabilities and reduced the cost
 MIS assembles, processes, stores, retrieves, evaluates and disseminates the
information.

The bottlenecks associated with MIS are as follows:

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  it is highly sensitive, thus requires constant monitoring
 budgeting of MIS is extremely difficult
 quality of outputs is governed by the quality of inputs
 it lacks flexibility to update itself
 effectiveness usually decreases due to frequent changes in top management
 it takes into account only qualitative factors and ignores non-qualitative factors like
morale of worker, attitude of worker etc...

1.4 IMPACT OF THE MANAGEMENT INFORMATION SYSTEM

Since the MIS plays a very important role in the organization, it creates an impact on the
organization’s functions, performance and productivity.

The impact of MIS on the functions is in its management.

 With a good support, the management of marking, finance, production and personnel
become more efficient.
 The tracking and monitoring of the functional targets becomes easy.
 The functional, managers are informed about the progress, achievements and shortfalls in
the probable trends in the various aspects of business. This helps in forecasting and long-
term perspective planning.
 The manager’s attention is brought to a situation which is exceptional in nature, inducing
him to take an action or a decision in the matter. A disciplined information reporting
system creates a structured data and a knowledge base for all the people in the
organization. The information is available in such a form that it can be used straight away
or by blending analysis, saving the manager’s valuable time.

The MIS creates another impact in the organization which relates to the understanding of the
business itself.
 The MIS begins with the definition of a data entity and its attributes. It uses a dictionary
if data, entity and attributes, respectively, designed for information generation in the
organization. Since all the information system use the dictionary, there is common
understanding of terms and terminology in the organization brining clarity in the
communication and a similar understanding of the organization.
 The MIS calls for a systemization of the business operation for an affective system
design. A well designed system with a focus on the manger makes an impact on the
managerial efficiency. The fund of information motivates an enlightened manger to use a
variety of tools of the management. It helps him to resort to such exercises as
experimentation and modeling. The use of computers enables him to use the tools
techniques which are impossible to use manually. The ready-made packages make this
task simpler. The impact is on the managerial ability to perform. It improves the decision
making ability considerably.
 Since the MIS works on the basic systems such as transaction processing and databases,
the drudgery of the clerical work is transferred to the computerized system, relieving the
human mind for better work. It will be observed that a lot of manpower is engaged in this
activity in the organization. If you study the individual’s time utilization and its
application; you will find that seventy percent of the time is spent in recording,

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 searching, processing and communication. This is a large overhead in the organization.
The MIS has a direct impact on this overhead. It creates an information- based work
culture in the organization.

1.5 MIS AND THE USER

Every person in the organization is a user of the MIS. The people in the organization operate at
all levels in the hierarchy. A typical user is a clerk, an assistant, an officer, an executive or a
manager. Each of them has a specific task and a role to play in the management of business.

The MIS caters to the needs of all persons.

 The main task of a clerk is to search the data, make a statement and submit it to the
higher level. A clerk can use the MIS for a quick search and reporting the same to
higher level.
 An assistant has the task of collecting and organizing the data, and conducting a
rudimentary analysis of integrating the data from different and disciplines to analyze it
and make a critical comment if anything adverse is found. The MIS offers the methods
and facilities to integrate the data and report the same in a proper format.
 An executive plays the role of a decision maker. He is in of responsibility and
accountability a position of a planner and a decision maker. He is responsible for
achieving the target and goals of the organization. The MIS provides facilities to analyze
the data and offers the decision support systems to perform the task of execution. The
MIS provides an action oriented information.
 The manager has a position of responsibility and accountability for the business results.
His management role expands beyond his management function. He is a strategist and a
long-term planner. He is a person with a foresight, an analytical ability and is expected to
use these abilities in the functions of top management. The MIS provides information in
a structured or unstructured format for him to react. The MIS caters to his constant
changing needs of information. The user of the MIS is expected to be a rational person
and the design of the MIS is based on this assumption.

However, in reality the impact created on individuals by MIS is difficult to explain. The nature
of the impact in a few cases is negative. However, this negative impact can be handled with
proper training and counseling.
It is observed that at lower level, is a sense of insecurity. As the MIS takes away the drudgery of
search, collection, writing and reporting the data, the work vacuum, so created is not easily filled,
thus creating a sense of insecurity. To some extent the importance of the person is also lost,
giving rise to a fear of non-recognition in the organization.

At the level of an officer and an executive, the MIS does the job the of data manipulation and
integration. It analyses the data in a predetermined manner. This means that the knowledge of
business is transferred from an individual to the MIS and is made available to all in the
organization. This change arising out of the MIS creates a sense of being neglected for
knowledge, information and advice. The psychological impact is larger if the person is not able
to cope up with this change by expanding or enriching the job and the position held by him.

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The manager holding a position in the top or middle management suffers from fear of challenge
and exposure. The MIS makes these competitors more effective as they have access to the
information and have an ability to interpret. This leads to a situation where he is afraid that that
his position, decision and defense will be challenged and may be proved wrong sometime. The
risk of adverse exposure to the higher management also increases. The effects so far pointed out
are all negative and they are seen only in few cases.

The positive effects on the individuals at all levels are that they have become more effective
operators. The time and energy which was spent earlier in unproductive work is now applied for
a productive work. Some are able to use their analytical skills and knowledge with the in
formation support for improving their position in the organization. Managers, having improved
their decision making ability, are able to handle the complex situations with relative ease. Some
are benefited by improving their performance and being held in high esteem by the higher
management.

The enterprising managers are able to use the systems and the models for trying out a Number of
alternatives in a given problem situation. The impact of the MIS on people of the organization is
phenomenal as it has made the same body of people collectively more effective and productive.
The recent major technological advances in communication such as Multimedia, Imaging.
Graphical User Interfaces (GUI), Internet, Web etc. and the ability to access the data stored at
different locations on the variety hardware of platforms would make MIS more attractive and
efficient proposition. An intelligent user of information can demonstrate the ability of decision
making, since his manipulative capability is considerably increased, with the information now
being available on his desktop.

Through the MIS, the information can be used as a strategic weapon to counter the threats to
business, make business more competitive, and bring about the organizational transformation
through integration. A good MIS also makes an organization seamless by removing all the
communication barriers.

1.6. Information Technology: Principles, Practices, and Opportunities

1.6.1. The Evolution of the Information Age
• Agricultural Age: The period up to the 1800s, when the majority of workers were farmers
whose lives revolved around agriculture.
• Industrial Age: The period from the 1800s to 1957, when work processes were simplified
through mechanization and automation.
• Information Age: The period that began in 1957, in which the majority of workers are
involved in the creation, distribution, and application of information.
• Knowledge Workers: Workers involved in the creation, distribution, and
application of information.

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The Characteristics of the Information Age
• An information-based society has arisen.
– Information Society: A society in which more people work at handling
information than at agriculture and manufacturing combined.
• Businesses depend on information technology to get their work done.
• Work processes are being transformed to increase productivity.
– Work Processes: The combination of activities that workers perform, the way
they perform those activities, and the tools they use.
– Productivity: The relationship between the results of an activity (output) and the
resources used to create those results (inputs).
– Effectiveness: The extent to which desirable results are achieved.

• Information technology provides the means to rethink/recreate/reengineer conventional

business processes.
– Reengineering: The reshaping of business processes to remove barriers that
prohibit an organization from providing better products and services and to help
the organization capitalize on its strengths.
– Business Processes: Collections of activities, often spanning several departments,
that take one or more kinds of input and create a result that is of value to a
company’s customers.
• Success in business is largely determined by the effectiveness with which information
technology is used.

• Information technology is embedded in many products and services.

• Reengineering efforts to attain greater productivity:
• Industrial Age - Division of Labor: Separation of work process into component
task, with different workers specializing in each of the tasks.
• Information Age – Teamwork, Interconnection, and Shared Information.

1.6.2. What is Information Technology?

Definition
• A term used to refer to a wide variety of items and abilities used in the creation,
storage, and dispersal of data and information. Its three main components are
computers, communications networks, and know-how.

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 • Data: Raw facts, figures, and details.
• Information: An organized, meaningful, and useful interpretation of data.
• Knowledge: An awareness and understanding of a set of information and how that
information can be put to the best use.

Computers
• An electronic system that can be instructed to accept, process, store, and present data and
information.
• Computers come in four sizes:
– Microcomputers
– Midrange computers
– Mainframes
– Supercomputers
• Hardware: The computer and its associated equipment.
• Program: A set of instructions that directs a computer to perform certain tasks and
produce certain results.
• Software: The general term for a set of instructions that controls a computer or a
communications network.
• System: A set of components that interact to accomplish a purpose.
• Information System: A business information system designed to produce the information
needed for successful management of a structured problem, process, department, or
business.

Communication networks
• Communication: The sending and receiving of data and information over a
communications network.
• Communications Network: A set of locations, or nodes, consisting of hardware,
programs, and information linked together as a system that transmits and receives data
and information.
• Data Communication: The transmission of data and information through a
communications medium.

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What is Information Technology?
Know-How
• The capability to do something well.
• Information technology know-how consists of:
– Familiarity with the tools of IT; including the Internet
– Possession of the skills needed to use these tools
– An understanding of when to use IT to solve a problem or create an opportunity

The Functions of Information Technology

• Capture: The process of compiling detailed records of activities.

• Processing: The process of converting, analyzing, computing, and synthesizing all forms
of data or information.
– Data Processing
– Information Processing
– Word Processing
– Image Processing
– Voice Processing
• Generation: The process of organizing information into a useful form, whether as
numbers, text, sound, or visual image.
• Storage and Retrieval: Storage is the computer process of retaining information for future
use. Retrieval is the process by which a computer locates and copies stored data or
information for further processing or for transmission to another user.
• Transmission: The computer process of distributing information over a communications
network.
– Electronic Mail, or E-Mail
– Voice Messaging, or Voice Mail

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The benefits of information technology

The opportunities of information technology

• Helping People
• Solving Problems
– Problem: A perceived difference between an existing condition and a desired
condition.
– Problem Solving: The process of recognizing a problem, identifying alternatives
for solving it, and successfully implementing the chosen solution.

Information Technology Is All Around Us, Improving Our Lives

• Television • Agriculture
• Education • Taxation and Accounting
• Training • Health and Medicine
• Entertainment • Manufacturing
• Shipping • Journalism
• Paperwork • Energy
• Money and Investments • Sport
The responsibility of using information
technology
• To be Informed
• To Make Proper Use of IT
• To Safeguard

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