Unit-1

INTRODUCTION TO MIS

I. Introduction:
We define a management information system (MIS) as a computer-based system that makes
information available to users with similar needs. The information describes the firm or one of its
major systems in terms of what has happened in the past, what is happening now, and what is
likely to happen in the future.

The information is made available in the form of periodic reports, special reports, and outputs of
mathematical simulations. The information output is used by both managers and non managers
as they make decisions to solve the firm's problems.

Its purpose is to meet the general information needs of all the managers in the firm or in some
organizational subunit of the firm. Subunits can be based on functional areas or management
levels. MIS provides information to the users in the form of reports and outputs from simulations
by mathematical models. The report and model output can be provided in a tabular or graphic
form.

MIS Model:
Both data and information are entered from the environment. The database contents are used by
software that produces periodic and special reports, as well as mathematical models that simulate
various aspects of the firm's operations. The software outputs are used by persons who are
responsible for solving the firm's problems.

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 Figure: MIS Model

Note that some of the problem solvers can exist within the firm's environment. The environment
becomes involved when the firm bands together with such other organizations as suppliers to
form an inter-organizational information system (IOS). In that case, the MIS supplies
information to the other members of the IOS.

Advantages of MIS:
1. Accuracy of the data

2. Flexibility of data analysis

3. Providing data in an appropriate form

4. Avoid information overload

5. Allow speedy decisions for urgent situations

Disadvantages:

1. Complexity of the system

2. Inappropriate hardware and software

3. Lack of professional standards

4. Poor communications between professional

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II. Concept of Organizational Information Subsystems:

Organizational Subsystems:

Organizational subsystems are smaller group of employees that work together within the larger
organizational system. Examples of subsystems include departments, programs, projects, teams,
and informal collections of employees that work together to complete certain work processes.
Identifying these groups within your larger organization helps you establish organizational structure
and manage work processes at lower levels.

Figure: Organizational Subsystems

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 Figure: Organizational Subsystems and its working

Following are the key points for making subsystems:

➢ System Basics: Organizational systems include people, processes, formal and informal rules
and other elements that create a hierarchy for structure and communication. The products,
service and bottom line results generated within a business are a reflection of the effective
setup of your organizational system. Development of communication flow, structured
workplaces and cultural norms and values distinguish your system from others.

➢ Subsystem Types: Departments and divisions are common subsystems carved out within an
organizational system through the use of an organizational chart. A retailer might have
departments for each major category of products it sells. Manufacturers may use divisions to
identify different facilities and employees that work on different production processes. Project
groups or work teams are smaller subsystems that involve people working together on a
single project or on ongoing work activities in a specific area. The informal subsystems are
typically less defined by organizational structure and can involve temporary or permanent

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 interaction between employees in different departments or work groups. Informal, social
groups in the organization are also subsystems.

➢ Planning: The first step in planning to maximize your people and processes in each
organizational subsystem is creating your structured organizational chart. You then outline
the objectives, strategies and basic work flow processes for each subsystem. Each
subsystem has its own objectives, strategies and techniques that ultimately should align with
the mission and objectives of the organization. A sales department, for instance, has goals
and strategies designed to sell more products or services. A production team has objectives
centered on maximizing quality and efficiency in production. You usually base resource
allocation, including budgets, to each subsystem based on its objectives and importance to
the bigger organizational system.

➢ Effective Functioning: Success or failure within an organizational subsystem often affects

the entire organization. Just as your organization needs direction with established policies,
job descriptions and effective management, so to does each subsystem. The more unique
the objectives and culture of the subsystem relative to the organization, the more important
effective management and formalized procedures are to its success. Leaders of finance or
accounting department, for instance, must emphasize quality control and accuracy in
bookkeeping and financial reporting. This helps keep the company out of trouble. The
accounting department also has controls and policies unique to that subsystem

III. Report Writing Software:

MIS Report:
An MIS report is a tool managers use to evaluate business processes and operations. Two types
of software that produce information: report writing and mathematical modeling. The report
writing software consists of programs that produce both periodic and special reports.

It is of two types:

➢ A periodic report is prepared according to a certain schedule. An example is a monthly

analysis of sales by customer.
➢ A special report is one that is prepared when something out of the ordinary happens.
One example is an accident report; another is a response to a database query.
Example:
Pretend you are the manager of a medium-sized company's customer service department. Your
staff takes phone calls and emails from over 300 customers every day. For the most part, they do
a very good job, but recently, customers have started to complain that it takes too long to get
their questions answered. Upper management at your company is concerned about this and wants

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to know what they can do to fix the problem. But before they make a decision, they need you to
give them more information. How will you do this?
This is where MIS reports come in. MIS stands for management information system. Business
managers at all levels of an organization, from assistant managers to executives, rely on reports
generated from these systems to help them evaluate their business' daily activities or problems
that arise, make decisions, and track progress. MIS system reporting is used by businesses of all
sizes and in every industry.

MIS Reports Users:

MIS systems automatically collect data from various areas within a business. These systems are
capable of producing daily reports that can be sent to key members throughout the organization.
Most MIS systems can also generate on-demand reports. On-demand MIS reports allow
managers and other users of the system to generate an MIS report whenever they need it.
Many large businesses have specialized MIS departments, whose only job is to gather business
information and create MIS reports. Some of these businesses use sophisticated computing
technology and software to gather information. However, the method of collecting information
does not have to be that complex. Smaller businesses often use simple software programs and
spreadsheets for their MIS reporting needs.
There can be as many types of MIS reports as there are divisions within a business. For example,
information about sales revenue and business expenses would be useful in MIS reports for
finance and accounting managers. Warehouse managers would benefit from MIS reports about
product inventory and shipping information. Total sales from the past year could go into an MIS
report for marketing and sales managers.

Example:

Type of Information in an MIS Report

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In our pretend manager example, you've been asked to present information about your
department's customer service calls. An MIS report for this would likely contain data such as:

➢ The number of calls your staff takes

➢ The number of emails that come in each day
➢ The average amount of time it takes to answer a phone call or email
➢ The number of questions that your staff answers correctly vs. the number that are
incorrect

To make this information most useful, you also need to ensure that it meets the following
criteria:

1. Relevant - MIS reports need to be specific to the business area they address. This is
important because a report that includes unnecessary information might be ignored.
2. Timely - Managers need to know what's happening now or in the recent past in order to
make decisions about the future. Be careful not to include information that is old. An
example of timely information for your report might be customer phone calls and emails
going back 12 months from the current date.
3. Accurate - It's critical that numbers add up and that dates and times are correct.
Managers and others who rely on MIS reports can't make sound decisions with
information that is wrong. Financial information is often required to be accurate to the
dollar. In other cases, it may be OK to round off numbers.
4. Structured - Information in an MIS report can be complicated. Making that information
easy to follow helps management understand what the report is saying. Try to break long
passages of information into more readable blocks or chunks and give these chunks
meaningful headings.

IV. Mathematical Modeling:

The mathematical model is the type that plays such an important role in the MIS. The second
type of MIS software takes the form of mathematical models. A model is an abstraction of
something; it represents some phenomenon: an object or an activity. The phenomenon is called
the entity. If a model represents a firm, the firm is the entity. If a model represents the fluctuation
in the firm's sales volume, the sales volume is the entity.

A mathematical model can be classified in terms of three dimensions - the influence of time, the
degree of certainty, and the ability to achieve optimization.

➢ Static or Dynamic Models

a) A static model does not include time as a variable. It deals with a situation at a
particular point in time. It is like a snapshot.
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 b) A model that includes time as a variable is a dynamic model. This model represents
the behavior of the entity over time, like a motion picture.

➢ Probabilistic or Deterministic Models

Another way to classify models is based on whether the formulae include

probabilities. A probability is the chance that something will happen. Probabilities
range from 0.00 (for something with no chance) to 1.00 (for something that is a sure
thing).
A model that includes probabilities is called a probabilistic model. Otherwise, it is a
deterministic model.

➢ Optimizing or Suboptimizing Models

a) An optimizing model is one that selects the best solution among the alternatives. For
a model to be able to do this, the problem must be very well structured.

b) A suboptimizing model, often called a satisficing model, permits a manager to enter

a set of decisions; once this step is completed the model will project an outcome. The
model does not identify the decisions that will produce the best outcome but leaves
that task to the manager.

V. Simulation:

The act of using a model is called simulation. The simulation takes place in a particular scenario
and predicts the effect of the problem solver's decision or decisions.

➢ The Modelling Scenario: The term scenario is used to describe the conditions that
influence a simulation. The data elements that establish the scenario are called scenario
data elements. Models can be designed so that the scenario data elements are variables,
thus enabling different values to be assigned.

➢ Decision Variables: The input values that the manager enters to gauge their impact on
the entity are known as decision variables.

Simulation Technique

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The manager usually executes an optimizing model only a single time; it produces the best
solution using the particular scenario and the decision variables. However, it is necessary to
execute a suboptimizing model over and over, searching for the combination of decision
variables that produces a satisfying outcome.

Each time the model is executed, only one of the decision variables should be changed, so that its
influence can be seen. In this way, the problem solver systematically discovers the combination
of decisions that will lead to problem solution.

Format of Simulation Output: It is a good practice to include the scenario elements and
decision variables on the same screen or page as the output. With such a layout, it is always clear
which inputs produced the output.

➢ A Modelling Example: A firm's executives might use a mathematical model to make

several key decisions. Perhaps the executives want to simulate the effect of:
1. The price of the product
2. The amount of plant investment that will be necessary to provide the capacity for producing
the product
3. The amount to be invested in marketing activity, such as advertising and personal selling
4. The amount to be invested in R & D (research and development).

➢ Model Input: Following figure shows the input screen that is used to enter the scenario
data elements for the last, or prior, quarter. Some of the elements relate to the firm -- its
plant capacity, the number of units that were produced, the dollar value of raw materials,
and so forth. The other elements relate to the influence of the firm's environment -- the
economic index, seasonal index, competitor price, and competitor marketing.

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 (a) (b)

Figure: A Model Input Screen for Entering Scenario Data for the Prior Quarter

➢ Model Output: The next quarter's activity (Quarter 1) is simulated, and the after-tax
profit is displayed on the screen. The executives study the figure and decide on the set of
decisions to be used in Quarter 2. These decisions are entered and the simulation is
repeated. This process continues until all four quarters have been simulated. At this point
the screen has the appearance shown in following figure (a).

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 (a) (b)

(c)

Figure: (a) Summary Output from the Model (b) Results of the Simulation

The executives can obtain more detailed output in displayed or printed form. The operating
statement in figure (b) and the income statement in figure (c) are displayed on separate screens.
This screen is an example of a graphical user interface, and the boxes contain default values,
which are changed by keying in the desired data elements.

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VI. Graphical Output:

Both reports and model outputs can be produced in a tabular or graphical form. Until the early
1980s computer graphics were not seriously considered as an output option.

Graphical method help in contributing to improved decision making. In many cases they do, but
success is not always assured. Rather, graphs seem to work best in some situations, and tabular
formats work best in others.

Figure: Grouped Multiple Line and Grouped Multiple Bar charts

Uses of Graphs:
1. Seeking a quick summary of data
2. Trying to detect problems if any
3. For selecting action accordingly
4. Seeking relatively simple impressions from a vast amount of information

The researchers suggest that a tabular presentation be used when it is necessary to read
individual data values.

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 Selection of graph between the various types of graphs:
1. Line or bar charts are preferred for summarizing data.
2. Grouped line or bar charts are good for showing trends over time.
3. Grouped bar charts are better than pie charts for presenting parts of any organization.
4. Grouped line or bar charts are good for comparing patterns of variables. This technique is
preferred over stacked line or bar charts.
5. Put data values at the end of the horizontal bars in a bar chart for easier reading.
6. Use single-line or bar charts to compare individual data points between variables.

VII. MIS and Human Factors Considerations:

Computer applications and projects that develop those applications have always been subject to
certain behavioural influences. The influences that can affect the performance of employees as
they perform their computer-related tasks are regarded as human factors considerations.

Fear as the Underlying Human Factors Consideration:

The employees of the firms that installed the first data processing systems experienced fear. The
employees feared that the computers would put them out of work, and in some cases that actually
happened. However, even in those firms in which management had no intention of replacing
people with the computer, the employees were still distrustful and expected the worst.

What must be kept in mind is the fact that the AIS, MIS, and such virtual office applications as
electronic mail are organizational systems. As such, they are implemented to meet the general
needs of large groups rather than individuals. Individual employees who perceive no real benefit
from the systems

➢ How Employees Express Their Fears: If employees are afraid of the computer, they
may react in various ways. The healthiest response is to openly express their fears to
management. Management then has the opportunity to respond and put the fears to rest.
Many times, however, the employees will keep their fears to themselves.

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 ➢ How Managers Express Their Fears: Managers may have fears of their own. At times
the managers in one functional area do not want to share their information with others.
Their reasoning is that they have gathered the information and should be able to control
its use -- it is their data. While such attitudes are clearly not in the best interests of the
firm as a whole, they are a reality of human nature.

A Program to Minimize Fear and Its Effects:

The designers of information systems must be aware of how fear on the part of both employees
and managers can affect the success or failure of development projects and operational systems.
The firm's management, assisted by the information specialists, can minimize fear and its
detrimental effects by taking the following four steps:

1. Use the computer as a means of achieving job enhancement by giving the computer the
task of doing the redundant, boring work and by giving the employees the tasks that
challenge their abilities.

2. Use formal communications to keep the employees aware of the firm's intentions. The
announcements by top management at the beginning of the analysis and implementation
phases of the system life cycle are examples of this strategy.

3. Build a relationship of trust between the employees, the information specialists, and
management. Such a relationship is achieved by being honest about the projected
impacts of computer systems and in living up to promises. Such formal communications
and the inclusion of users on project teams go a long way towards achieving trust.

4. Align the employees' needs with the objectives of the firm. First identify the employees'
needs, then motivate the employees by showing them that working towards the firm's
objectives also helps them meet their own needs.

Information specialists can contribute to each of these four steps. The specialists often observe
the resistance that employees keep hidden from management and can also detect managers who

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 are not putting their full weight behind projects. Information specialists should be trained to
recognize and respond to resistance. These behavioural skills are just as important as technical
skills.

VIII. MIS and Problem Solving:

MIS and its organizational subsystems contribute to problem solving in two basic ways.

1. Organization-Wide Information Resources: MIS is an organization-wide effort to

provide problem-solving information. The system is a formal commitment by executives
to make the computer available to all managers. MIS sets the stage for accomplishments
in the other areas -- DSS, the virtual office, and knowledge-based systems.

2. Problem Identification and Understanding: The main idea behind the MIS is to keep a
continuous supply of information flowing to the manager. The manager uses the MIS
primarily to signal problems or impending problems, and then to understand them by
pinpointing their locations and causes.

The main weakness of MIS is that it is not aimed at the specific needs of the individual problem
solvers. Very often the MIS does not provide exactly the information that is needed to solve
problems once they have been identified and understood. The decision support system concept
was created in response to that need, and we will turn our attention to that CBIS subsystem in the
next chapter.

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