MANAGEMENT INFORMATION SYSTEM

FUNDAMENTALS OF INFORMATION SYSTEMS

• SYSTEM – A GROUP OF INTER-RELATED /

INTER-ACTIVE ELEMENTS FORMING A
UNITED WHOLE

• AN INFORMATION SYSTEM IS A SYSTEM

THAT ACCEPTS ‘DATA RESOURCES AS
INPUT AND PROCESSES THEM INTO
‘INFORMATION PRODUCTS’ AS OUTPUT
• ADDING TWO MORE COMPONENTS ‘FEEDBACK’ AND
‘CONTROL’ MAKES IT MORE USEFUL NOW
INFORMATION SYSTEM IS ALSO CALLED
‘CYBERNETIC’, ‘SELF MONITORING’ OR ‘SELF
REGULATING SYSTEM’

• FEEDBACK – IS DATA ABOUT THE SYSTEM

PERFORMANCE

• CONTROL – IS A MAJOR SYSTEM THAT MONITORS &

EVALUATES FEEDBACK TO DETERMINE WHETHER
SYSTEM IS MOVING TOWARDS ITS GOAL
ACHIEVEMENT OR NOT.

 IT THEN MAKES NECESSARY ADJUSTMENTS TO

INPUT & PROCESSING COMPONENTS TO PRODUCE
REQUIRED OUTPUT.
 THE SYSTEMS APPROACH for Problem Solving Process

The Scientific Method

• Used by scientists to analyze all types of phenomena

• Attributed to from Aristotle (300 BC) to Sir Francis

Bacon (17th AD) to John Devey (1905 AD).

Steps of Scientific Method

1. Recognize phenomena in real world

2. Formulate a hypothesis about causes & effects of
phenomena
3. Test the hypothesis through experimentation
4. Evaluate the results of experiments
5. Draw conclusion about hypothesis
Eg Medical researchers may recognise that drug ‘A’
causes dizziness

Hypothesis formulate – Medication ‘A’ causes

dizziness

Design an experiment to test drug on animals

and humans under controlled conditions

Evaluate data gathered during experiment &

Draw conclusions whether hypothesis was

correct
 TYPES OF INFORMATION SYSTEMS
(MANAGEMENT SUPPORT SYSTEMS)

TRANSACTION PROCESSING SYSTEM (TPS)

ARE USED PRIMARILY FOR STRUCTURED

OPERATIONS, AND TO A LESSER DEGREE,
MANAGEMENT CONTROLLED APPLICATIONS.

MANAGEMENT INFORMATION SYSTEMS (MIS)

ARE USED PRIMARILY FOR SEMI-STRUCTURED,

MANAGEMENT-CONTROLLED OPERATIONS.
ALSO OVERLAPS INTO OPERATIONAL AND
STRATEGIC PLANNING AREAS.
INFORMATION REPORTING SYSTEM (IRS)

PRESPECIFIED AND PREPLANNED REPORTING

TO MANAGERS

DECISION SUPPORT SYSTEM (DSS)

FOR UNSTRUCTURED AND SEMI-STRUCTURED

DECISION MAKING AT ALL LEVELS ie
OPERATIONAL, MANAGEMENT & STRATEGIC
LEVELS

EXECUTIVE SUPPORT SYSTEM (ESS)

FOR STRUCTURED MANAGEMENT & STRATEGIC

PLANNING APPLICATIONS
EXECUTIVE INFORMATION SYSTEM (EIS)

CRITICAL INFORMATION FOR TOP LEVEL

MANAGEMENT

OFFICE AUTOMATION SYSTEM (OAS)

AS A FACILITATOR OF OFFICE
CORRESPONDENCE & COMMUNICATION
SUBSYSTEMS OF MIS / CLASSIFICATION

• MARKETING
• PERSONNEL
• PRODUCTION
• FINANCE AND ACCOUNTING
• LOGISTICS
• INFORMATION PROCESSING
 ROLE OF AN MIS

• TO PRODUCE INFORMATION SO THAT

PEOPLE WITHIN THE ORGANISATION
CAN USE IT IN THEIR DECISION MAKING

• AN MIS MUST MANIPULATE GREAT

QUANTITIES OF DATA IN VARIOUS WAYS.
GATHERING DATA, ANALYSING IT AND
REPORTING IT ARE MAIN JOBS OF AN
MIS
 STRATEGIC ADVANTAGE WITH MIS

• AN MIS CAN PLAY A MAJOR ROLE IN SUPPORT

OF STRATEGIC OBJECTIVES OF AN
ORGANISATION.

• AN ORGANISATION CAN SURVIVE & SUCCEED

IN LONG RUN IF IT DEVELOP STRATEGIES TO
CONFRONT FIVE COMPETITIVE FORCES.

1. RIVALRY OF COMPETITORS WITHIN

INDUSTRY
2. THREATS OF NEW ENTRANTS
3. THREAT OF SUBSTITUTES
4. BARGAINING POWER OF CUSTOMERS
5. BARGAINING POWER OF SUPPLIERS
THE COMPETITIVE STRATEGIES INCLUDE

• COST LEADERSHIP

• TO BECOME A LOW COST PRODUCER OF

PRODUCT OR SERVICES IN INDUSTRY

• ALSO A FIRM CAN HELP ITS SUPPLIERS

OR CUSTOMERS REDUCE THEIR COST OR
INCREASE COST OF THEIR COMPETITORS
PRODUCT DIFFERENTIATION

• DEVELOP WAYS TO DIFFERENTIATE ITS

PRODUCTS FOR ITS COMPETITORS OR REDUCE
THE DIFFERENTIATION ADVANTAGE OF
COMPETITORS
• THIS MAY ALLOW A FIRM TO FOCUS ITS
PRODUCTS AT NICHE OF MARKET

INNOVATION

• FINDING NEW WAYS OF DOING BUSINESS.

INVOLVES DEVELOPMENT OF NEW PRODUCT OR
NEW WAYS OF PRODUCING/DISTRIBUTING
PRODUCT/SERVICES THAT ARE FUNDAMENTALLY
DIFFERENT FROM THE WAY BUSINESS HAS BEEN
CONDUCTED IN AN INDUSTRY
 Systems Approach

• A modification of scientific method

• It stresses a systematic process of

problem solving

• Problems & opportunities are viewed in

systems context

• Problem study and solution formulation

becomes system of inter-related
activities
• Define a problem or opportunity in
systems context
• Gather data describing problems &
opportunities
• Identify alternative solutions
• Evaluate each solution
• Select best solution
• Implement selected solution
• Evaluate success of selected
solution
STEP I  Understand The Problem

• Separate a problem or opportunity from its

symptoms
• Identify systems in Organisation &
Environment & their interrelationships
• Determine components, objectives &
constraints of systems

STEP II  Gather Data

• Interviews, Questionnaires, personal

observations, document analysis
• Modeling to gather data relating to a
problem or opportunity
STEP III  Design Solutions

• Propose a variety of alternative solutions

based on experience, advice, intuition,
creativity, simulation etc

STEP IV  Evaluate The Solutions

• Evaluate alternative solutions using

criteria that reveals their advantages &
disadvantages
STEP V  Select The Best Solution

• Select the alternative solution that best

meets the evaluation criteria

STEP VI  Implement The Solution

• Implement the selected solution according

to implementation plan

STEP VII  Evaluate Implemented Solution

• Monitor & Evaluate how well the

implemented solution is meeting its
systems objectives
 Systems Context

• Process to find systems, subsystems &

its components to ensure consideration of
their interrelationships

Constraints

• Restrictions on form & content of a

Solution – of broadly two types

 External – Law, Industry etc

 Internal – Paucity of Resources etc
 Evaluation Criteria

• Start up Costs
• Operating Costs
• Ease of Use
• Reliability

Cost/Benefit Analysis

Tangible / Intangible  Cost /Benefits

 Tangible Costs

• Cost of Hardware
• Software
• Salaries
• Quantifiable Costs

Intangible Costs

• Loss of Customer Goodwill

• Employee Morale
 Tangible Benefits

• Increase in Sales
• Profit
• Decrease in Operating Cost
• Investment

Intangible Benefits

• Improved Service Image

• Competition Position
• Morale
 Implementation Plan

A Project Management effort to

specify activities, resources & timing
needed for proper implementation
eg
• Types of Sources of H/W & S/W
• Construction of Physical Facilities
• Hiring & Training of Personnel
• Start Up & Operating Procedure
• Implementation Time Tables
 Characteristics of Systems Approach

Organised

• Combine Various Facets Of Problems

Creative

• Must Focus On Goals First & Method

Second

• Must Be Creative Because Problems Are

Complex & No Unique Solution Is Possible
• Data Available Is Incomplete, Uncertain & Ambiguous

• Alternative Solutions Should Be Available For

Contingencies

Theoretical

• Provide theoretical frame as is based on a scientific

approach

Empirical

• Only relevant data must be used

Pragmatic

• System must be feasible, producible & operable

 Need for Systems Approach

• Increased Complexity of Business

• Growing size of Business

• Environmental Constraints – Legal, Unions

• Technological Revolution – Updation

• Research & Development – Technological Changes

• Product Change - Short Life Span of Product

• Information Explosion – Manager as a

Information Processor
 Increased Complexity of Information

• Information Feedback Systems

• Automated Programmed Decision
Making
• Management Science – Simulation of
Real Systems to Forecast
• Electronic Computer – Tool for
Making Computations & Processing
Data
 Characteristics of MIS

 Management Oriented

Wholestic Approach  ( Top  Down )

• Information need at particular level & not

only Top Level

 Management Directed

• Concerned Managers must be involved in

System Design & Operations
 Integrated

• Place of Subsystems is to be properly realised

• Vertical & Horizontal Communications are must

 Common Data Flow

• To Cater a variety of problems

• Future Planning Element

• Future Business needs must be Foreseen

• Centralised Database

• Computerised

• Exception Oriented

• SubSystem Concept Based

• Predictive
 Characteristics of Information

Accuracy – Processed Facts only

Consistency – Regular Flow &
Co-Relation possible
Adequacy – Available at several
places
Updated – Armed with latest changes
Timeliness – Available well before
decision making
 MIS Organisation Within
The Company Structure

• If MIS is to assist managerial decision

making at all levels of company then
low level information systems must be
integrated to make MIS for Top Level.

• The Design, Redesign, Modification &

Maintenance of company’s total MIS
must be handled by a Top Management
figure.
• Most common Place for MIS is under
Head of Finance as in most
organisations, Finance/Accounting
gains control over computer centre

• Hence Information Systems were

conceived of as Control Decision Aids
rather than Planning Decision Aids

• Best & most desirable practice is to

have MIS function report to Head of
Department and the worst practice can
be to report to Head of computer centre
Hence a conceptual model can be
designed as –

“A System That Integrates The Parts :

Resource Flows, Functions Of
Management, Organisation Theory
And The Various Techniques
Including MIS”
 Inferences

 Management functions serves as

basic platform to construct the
system

 Functions explain what managers do,

how they manage resources to
achieve goals

 For this they depend on Behavioral

Science of Organisation Theory &
Techniques
 While performing manager call upon
these techniques in System Approach
to Mgt

 One or more techniques might be

useful while planning a solution

 Final component of system is envelope

called MIS that collects, analyses,
stores & displays data to Management
Decision Makers at all levels for
Management of Resource Flow of
Materials, Personnel, Money, Facilities
& Machines
 Management & Organisational Behavior
A motivated & supportive work force is required for productivity
 Major Factors Affecting Productivity

Motivation – Five categories from highest priority to

acquired ones

Physiological needs – Air, Food, Rest, Support etc

Social – Safety, Stability & Security

Social – Affiliation to a Group, Belongingness

Egoistic – Self Esteem & Esteem of Others

(Social Recognition)

Egoistic – Self Actualisation – Fulfillment of Person’s

Potential & Interest
 Positive Motivators

 Removing control over employee but holding

accountable for results

 Give a complete, natural module of work not

just tasks

 Granting the worker additional authority & job

freedom

 Making periodic reports available to employee

so that he/she may initiate corrective actions
instead of directed ones

 Introduce new & more difficult assignments so

the employee can learn & grow
 Expectancy Model of Motivation

Effort – How hard & how Persistently an Individual

works

Performance – Behavior that directly promotes

organisation goals eg “ Doing of a work related
task by an employee”

Expectancy – Likelihood that a potential outcome

will occur

Outcomes / Job Satisfaction – Salary, Environment,

Rewards

Valence – Strength of an Individual’s desire for a

particular outcome
 Operant Conditioning Model
(To Control Workers’ Behavior)

Basic types of conditioning sequences –

 Specify objectives & desired standard of

performance

 Provide intermediate feedback to worker

on performance

 Provide positive reinforcement when

performance meets standard by praise,
incentive etc & provide encouragement
when standard is not met but worker has
tried hard
 Informal Groups within Organisation

Total organisation - consists of all groups or

subsystem in entire organisation

Large groups – form over some internal

politics eg Mktg vs Sales

Primary Cliques – When workers are located

together for work purposes or emp have
similar jobs & common interests eg
workers in maintenance crew, executives
dining together in mess
 Procedures for effecting changes
without Resistance

Three positive steps based upon

Organisational Behavior Knowledge –

1. Create a climate for change by getting

managers & workers to feel dissatisfied
with present system

2. Suggestions for revising the present

system with a new one

3. May include some views of participants in

new system
 Develop Effective Agents of Change

• Look out for informal & technical leaders

in organisation to whom employees look
for protection /security
eg Supervisors, Union Leaders, Technical
Manager / Operator

• They might work with system designers

to develop portions of new system

• In turn, they develop support of other

works for changes
 Modify the
“Required Organisational System”

To fit the technical side of the new system

• Rearrangement of organisation into one

that is not technically ideal but may be
made to achieve working relationships
that are far more productive

• Must be as per the Anticipated Emergent

Organisation Behavioral Dictates
 Nature of Resistance to MIS

 Contrary to belief, people do not always resist change

For a manager change has two facets –

Technological & Social

Social change is the one which people mostly resist

• A new introduced system produces new behavioral

patterns unlikely to match theoretically required
patterns

• However, these behavioral patterns translate system

input into system outputs, hence they are important

• Therefore, Required organisation patterns must be

modified to build upon positive potential
Common Specific Reasons for Resistance to MIS

Threat to Status

• Supervisor downgraded below a Technician

Threat to Ego

• A key skilled clerical job performed by an

unskilled computer operator

Economic Threat

• Supervisor fears loss of job

 Job Complexity

• Knowledge of Computer Language

required etc

Isolation

• A top manager deprived of ‘

Personal’ information, and is now
dependent on computer output

• New Supervisor & Subordinate

relationship balance
 Job Ambiguity & Loss of Control

• Production Planning & Control

performed by MIS except for special
conditions that occur randomly

Time Rigidity

• Total System Requires

“Programmed” coordinated action
similar to a Mass-Production
assembly line eg Cars
Interpersonal Relationships Changed

• Former informal groups broken

due to shifting resulting in loss of
companionship benefits

_______________________________