Unit-1 Management Information System: Basic Concepts - Osou

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UNIT-1 MANAGEMENT INFORMATION SYSTEM:BASIC CONCEPTSUNIT STRUCTURE1.0 Introduction1.1 Learning Objectives1.2 Basic Concepts1.4 Functions of Management1.5 Levels of Management:1.5.1 Top Level Management:1.5.2 Middle Level Management:1.5.3 Low Level Management:1.6Concept of a System1.6.1System Concepts1.6.2Components of a System1.6.3Types of System1.7 Data and information1.8 Information System1.9 Need for information systems1.10 Uses of information system1.11 Roles of Information system in business1.12 Let us Sum-up1.13 Self Assessment Questions1.14 Model Questions1.15 References and Further ReadingsOdisha State Open UniversityPage 1

1.0 IntroductionManagement Information System (MIS) is a study of people, technology,organizations, and the relationships among them in a broader sense. However inprecise terms MIS is a software system that focuses on the management ofinformation technology to provide efficiency and effectiveness orstrategy decision making. The term is often used in the academic study ofbusinesses and has connections with other areas, such as informationsystems, information technology, informatics, e-commerce and computer science.In this unit, we will discuss the basic concepts in Management InformationSystem.1.1 Learning ObjectivesAfter going through this unit you should be able to: Know the fundamental management concepts Understand the basic concepts of Information Systems Understand and apply core knowledge in Information Systems Identify and analyze requirements for information systems Understand and apply design principles in Information Systems. Identify the basic components of Management Information Systems. Conceptualize information systems as combinations of hardware andsoftware technologies. Know the applications of information systems in various levels ofManagement.1.2 Basic ConceptsManagement Information System is an accumulation of 3 different terms asexplained below.Management: We can define management in many ways like, “Manage ManTactfully” or Management is an art of getting things done by others. However, forthe purpose of Management Information System, management comprises theprocess and activity that a manager does in the operation of their organization,i.e., to plan, organize, direct and control operations.Information: Information simply means processed data or in the laymanlanguage, data which can be converted into meaningful and useful form for aspecific user.System: The system can be explained in a following ways:Odisha State Open UniversityPage 2

System can be defined as a set of elements joined together for a commonobjective. A group of interrelated or interacting elements forming a unified wholee.g., business organization as systems. A group of interrelated components working together towards a commongoal by accepting input and producing output in an organizedtransformation process.1.3 Overview of Management ConceptsEvery business unit has some objectives of its own. These objectives can beachieved with the coordinated efforts of several personnel. The works of anumber of persons are properly co-ordinated to achieve the objectives through theprocess of management.Management is a vital aspect of the economic life of man, which is an organisedgroup activity. It is considered as the indispensable institution in the modernsocial organization marked by scientific thought and technological innovations.One or the other form of management is essential wherever human efforts are tobe undertaken collectively to satisfy wants through some productive activity,occupation or profession.It is management that regulates man's productive activities through coordinateduse of material resources. Without the leadership provided by management, theresources of production remain resources and never become production.Management is the integrating force in all organized activity. Whenever two ormore people work together, to attain a common objective, they have to coordinatetheir activities. They also have to organize and utilize their resources in such away as to optimize the results.Management is usually defined as planning, directing and controlling the businessoperations. Management is the process of allocating and organizations inputincluding human and economic resources by planning, organizing, directing andcontrolling for the purpose of producing goods or services desired by customersso that organizational objectives are accomplished.1.4 Functions of ManagementManagement has been defined as a process of getting things done through others.This process is identified in a set of functions performed by managers toOdisha State Open UniversityPage 3

accomplish the goals. A manager is thus someone who defines, plans, guides,helps out, and assesses the work of others, frequently people for whom themanager is accountable in an organization. The following mentioned managementfunctions will involve creative problem solving.Planning: According to Terry and Franklin, “planning is selecting informationand making assumptions concerning the future to put together the activitiesnecessary to achieve organizational objectives.” Planning includes both thebroadest view of the organization, e.g., its mission, and the narrowest, e.g., atactic for accomplishing a specific goal.Organizing: Organizing is the classification and categorization of requisiteobjectives, the grouping of activities needed to accomplish objectives, theassignment of each grouping to a manager with the authority necessary tosupervise it, and the provisions for coordination horizontally and vertically in theorganization structure. The focus is on separation, coordination, and control oftasks and the flow of information inside the organization. It is in this function thatmanagers allocate authority to job holders.Directing: Direction is telling people what to accomplish and seeing that they doit to the finest of their capability. It includes making assignments, correspondingprocedures, seeing that mistakes are corrected, providing on the job instructionand, of course, issuing orders.” The purpose of directing is to control thebehaviour of all personnel to accomplish the organization's mission and objectiveswhile simultaneously helping them accomplish their own career objectives.Staffing: Staffing function requires recognition of human resource needs, fillingthe organizational structure and keeping it filled with competent people. Thisfunction includes recruiting, training; evaluating and compensating are thespecific activities.Controlling: “Control is the course of action that measures present performanceand guides it towards some predetermined goal. The quintessence of control liesin checking existing actions against some desired results determined in theplanning process.”1.5 Levels of ManagementAccording to the expert there are three types of level of management:i)Top Level Managementii)Middle Level ManagementOdisha State Open UniversityPage 4

iii)Low Level or Operative Management1.5.1 Top Level ManagementTop level management consists of board of directors, managing directors orexecutive committee members.Objectives of Top Level Management include the following. Setting key objectives, policies and identifying factors essential for thedevelopment of the organization. Making appointments to the top position of the organization such asmanagers department heads etc. Reviewing the work of different personnel in various levels.1.5.2 Middle Level ManagementMiddle level management consists of managers of various departments such asproductions, sales, marketing, resource, finance etc.Objectives of Middle Level Management include the following. Follow the rules and policies formulated by the top level management. Motivating personnel for higher productivity. Collecting detail analysis reports from the various departments. Mutual understanding with other departments in the organization. Recommendations to the top level management.1.5.3 Low Level Management.Low level management consist of supervisors, daily workers etc. Follow the rulesand guidelines made out by the top level authentic of the organization.Some of the functions of Lower Level Management include the following. To issue orders and instructions to the workers and to supervise andcontrol their workTo classify and assign jobs to the workersTo direct and guide the workers about work procedureTo arrange for the necessary tools, equipment, materials etc., for theworkerTo solve the problems of workersTo inform the management about the problems of workers which are notsolved at this level?To maintain discipline among the workers and to develop in them theright approach to work.To maintain good human relations.To build a high group morale among the workers.Odisha State Open UniversityPage 5

1.6 Concept of a SystemA System is a group of interrelated components working together toward acommon goal by accepting inputs and producing outputs in an organizedtransformation process.1.6.1 System ConceptsThe concepts of a system are Technology, Application, Development andManagement.a. Technology.Computer networks are systems of information processing components that area variety of hardware, software and telecommunication technology.b. Application.That electronic business and commerce application involves interconnectedbusiness information systemc. Development.That developing way to use IT in business includes designing the basiccomponent of information system.d. Management.Managing IT emphasize the quality, strategic business value and security of anorganization in information system.1.6.3 Components of a SystemThere are three basic components of a system, they area) Input,b) Processing andc) Output.a. Input.Input involves capturing and assembling elements that enter to the system to beprocessed. Some of the inputs are raw materials, energy, data etc.b. Processing.It involves transformation process that converts input to output.c. Output.It involves transforming element that has been produced by a transformationprocess to their ultimate destination.1.6.4 Types of SystemOdisha State Open UniversityPage 6

a. Dynamic System:When the interrelated component of the system interacts with each other and thiscontrolled by management then it is known as Dynamic System.b. Cybernative SystemDynamic System implementing the concept of feedback and control is known asCyber native System.c. Open SystemA system got interacts with other system in its environment by exchanging inputand output with its environmentd. Adoptive SystemA System having the ability to change itself and its environment in order tosurvive is called an Adoptive System.1.7 Data and informationBy data we mean the facts or figures representing an object, place or the eventsoccurring in the organization. It is not enough to have data (such as statistics onthe economy). Data themselves are fairly useless, but when these data areinterpreted and processed to determine its true meaning, they become useful.Characteristics of Data They are facts obtained by reading, observation, counting, measuring andweighing etc. which are then recorded Data are derived from external and internal sources (activities with firm). Data may be produced as an automatic by-product of some routine butessential operation such as the production of an invoice or alternative aspecial counting or measuring procedure must be introduced and the resultrecorded. The source of data need be given considerable attention because if thesources of the data flawed, any resulting information will be worthless.Data ProcessingData or processing systems perform the essential role of collecting and processingthe daily transactions of the organizations. Data processing is necessary to ensurethat the day-to-day activities of the organization are processed, recorded and actedupon. Files are maintained which provide both the current data for transaction, forexample the amount invoiced and cash received during the month for statementpreparation, and which also serve as a basis for operational and tactical controland for answering enquiries.By information, we mean that the data have been shaped into a meaningful form,which may be useful for human beings.Odisha State Open UniversityPage 7

So, when data are processed, interpreted, organized, structured or presented so asto make them meaningful or useful, they are called information. Informationprovides context for data.Information is created from organized structured and processed data in aparticular context, “information can be recorded as signs, or transmitted assignals. Information is any kind of event that affects the state of a dynamic systemthat can interpret the information. Conceptually, information is the message(utterance or expression) being conveyed. Therefore, in a general sense,information is ‘knowledge communicated or received concerning a particular factor circumstance”.Characteristics of Good InformationGood information is that which is used and which create value. Experience andresearch shows that good information has numerous qualities which are:1. Relevance: Information must be relevant to the problem being considered. Toooften reports, messages, tabulations etc. contain irrelevant parts which mostprevent the user of the information to get the actual meaning of what the senderwants.2. Accuracy: Information should be sufficiently accurate for it to be relied uponby the manager and for the purpose for which it is intended.3. Completeness: Ideally, all the information required for a decision should beavailable. However, in practice, this is not often obtainable. What is required isthat the information is complete in respect of the key elements of the problem.This suggests that there should be interaction between information provides andusers to ensure that the key factors are identified.4. Confidence in the source: For information to have value it must be used. Forit to be used managers must have confidence in the source. Confidence isenhanced: Data Processes Outputa. The source has been reliable in the pastb. There is good communication between the information producer and themanager.5. Communication to the right person: All persons have a defined sphere ofactivity and responsibility and should receive information to help them carry outtheir designated tasks. In practice this is not always as easy as it sounds. It is quitecommon for information to be supplied to the wrong level in the organization. asuperior may not pass it on the person who needs it whilst subordinates may holdonto information in an attempt to make themselves seem indispensable.Odisha State Open UniversityPage 8

Functions of Informationa) Reduction of Uncertainty: Uncertainty exist where there is less than perfectknowledge. Rarely, if ever is there perfect knowledge but relevantinformation help to reduce the unknown.b) An aid to monitoring and control: By providing information aboutperformance and the extent of deviations from planned level of performance,management are better able to control operation.c) As a means of communication: Managers need to know aboutdevelopments, plans, forecasts, impending changes and so on.d) As a memory supplement: By having historical information aboutperformance, transactions, results of past actions and decisions available forreference, personal memories are supplemented.e) As aid to simplification: By reducing uncertainty and enhancingunderstanding, problems and situations are simplified and become moremanageable.1.8 Information SystemMeaning: An information system can be any organized combination of people,hardware, software, communication software and data resource that collectstransformation or screening the information in an organization.Definition: An information system can be defined as a set of interrelatedcomponents that collect (or retrieve), process, store and distribute information tosupport decision making, coordination and control in an organization.Examples of Information SystemA business is an example of an organizational system to an economic resource(input) is transformed by various business processes into goods and services(output).Information system provides information on the operation of the system tomanagement for the direction and maintenance of the system as it exchangesinputs and output with its environment.Odisha State Open UniversityPage 9

Some examples of information systems include the following. Airline reservations (seat, booking, payment, schedules, boarding list,special needs, etc.). Bank operations (deposit, transfer, withdrawal) electronically with adistinguish payment gateways. Integration of department with the help of contemporary software’s likeERP. Logistics management application to streamline the transportation system.a. Feedback and controlA system with feedback and control components is sometimes known ascybernetic system that is a self monitoring or self regulating system.b. Feedback.Feedback is a data about the performance of a system.c. Control.Control involves monitoring and evolving feedback determines whether asystem is moving towards the achievement of its goals. The control functionmakes necessary adjustments to a system input and possessing components toensure that to produce proper output.1.8 Components of Information Systema. People Resources People are required for the operation of all information system. People Resources divided into two typesi) End-UsersThese are the people who use an information system or the information itproduce.Ex: Accounts, Sales Persons, Customers and Managers.ii) Information system specialistThese are the people who develop and also operate Information system.Ex: System Managers, Programmers, Computer Operation.Odisha State Open UniversityPage 10

b. Data ResourcesData resources of an Information system are typically organized in two parts:i) DatabaseDatabase holds processed and organized data.ii) Knowledge BaseIt holds knowledge in a variety of forms such as facts, rules, and caseexamples.c. Software ResourcesIt includes all sets of information processing instruction. It is also two types:i) Program:Set of operating instructions the direct and computer hardware.ii) ProcedureSet of Information processing instructions needed by people.Ex: Operating System, Spreadsheet Programs, and Word processor Programs.d. Hardware ResourcesInclude all physical devices and materials used in information processing.It has also two typesi) MachinesEx: Computer, Video Monitor, Scanner.Odisha State Open UniversityPage 11

ii) MediaHardware in computer based Information system.Ex: Floppy Disk, Magnetic Tape and Optical Disk.Computer SystemEx: Microcomputers, Midrange Computers System, Large MainframeComputer Peripheral: Ex: Mouse, Key Board.e. Network Resources:These are the fundamental resource components of all information Systems. Ithas also two types:i) Communication Media:Ex: Co-axial Cable, Twisted Paired Wire, Fibre Optics Cable, MicrowaveSystem and Communication Satellite System.ii) Network Support:Generally used for the operation and use of a communication network.Ex: Modems, Internet Browser and Communication Control Software.Odisha State Open UniversityPage 12

1.9 Need for Information SystemsThe information system is very important for the internet technology and thetraditional business concerns and is really the latest phase in the ongoingevolution of business. All the companies need to update their business,infrastructure and change way they work to respond more immediately tocustomer need.A first step in designing and developing an MIS is to assess the informationneeds for decision making of management at different hierarchical levels, sothat the requisite information can be made available in both timely and usableform to the people who need it. Such assessment of information needs isusually based on personality, positions, levels and functions of management.1.10 Uses of Information SystemInformation system and technology including E-business and E-commercetechnology and application has become vital component of successful businessand organization.It is a study of business administration and management. For a manager or abusiness professional it is just as important to have basic understanding ofinformation system and any other functional area in business.Odisha State Open UniversityPage 13

1.11 Roles of Information Systems in businessAn Information system supports the business Organizations in thefollowing ways.a) Support the Business Process: Treats inputs as a request from thecustomer and outputs as services to customer. Supports currentoperations and use the system to influence further way of working.b) Support Operation of a Business Organization: An IS supportsoperations of a business organization by giving timely information,maintenance and enhancement which provides flexibility in the operationof organizations.c) Support Decision Making: An IS supports the decision making byemployee in their daily operations. It also supports managers in decisionmaking to meet the goals and objectives of the organization. Differentmathematical models and IT tools are used for the purpose evolvingstrategies to meet competitive needs.d) Strategies for an Organization: Today each business is running in acompetitive market. An IS supports the organization to evolveappropriate strategies for the business to assent in a competitiveenvironment1.12 Let us Sum UpIn this unit we have, have discussed some basic concepts relevant to managementinformation system such as the fundamental concepts of management, levels ofmanagement, systems concepts, types of systems, components, information andtypes of information systems and examples of information systems. ManagementInformation System is seen as a way of evaluating, analyzing and processing anorganization data to produce meaningful and useful information from which themanagement can take decision to ensure future growth and development of theorganization.In the next unit we will discuss different types of Information systems and theirsupport to different levels of management in an organization.Odisha State Open UniversityPage 14

1.13 Self Assessment Questions1. What are different management functions?.2. Define a system? What do you mean by system concepts?.3. What are various types of systems?.4. What is an Information system? Why information systems are needed?.5. Explain how an Information System supports business Organizations.Odisha State Open UniversityPage 15

1.14 Model Questions1. What are three levels of management and outlinethe objectives each level of management.2. Discuss the concepts and components of a system.3. Differentiate between data and information. Whatare the characteristics of good information?4. What is an Information system? Discuss about eachcomponent of an Information System.5. Discuss the role of information systems in business.1.15 References and Further Readings1. Louis A. Allen, Management and Organization, McGraw-Hill Kogakusha,Ltd.2. Sadagopan, Management Information System, 2007, Prentice Hall ofIndia.3. McLeod, R. and George P Schell (2008). Management informationsystems (10th ed.). Pearson education India4. C. W. Frenzel and J. C. Frenzel, 2004. “Management of InformationTechnology”, 4th edition Thomson course technology, Cengage Learning.5. Laudon, K. C. & Laudon, J. P. Management Information Systems:Managing the Digital Firm. 10th ed. Prentice Hall and Pearson Education,2006.6. Management Information System, Study Material of Indira GandhiNational Open University.7. Management Information System, Study Material of National OpenUniversity Of Nigeria8. http://ocw.mit.edu9. http://www.chriskimble.10. Com/Courses/mis/mis links.Odisha State Open UniversityPage 16

UNIT 2 MIS APPLICATIONS IN ORGANISATIONUNIT STRUCTURE2.0 Introduction2.1 Learning Objectives2.2 Information Concept2.3 Need for Information Systems2.4 Information for Management2.4.1 Production Management2.4.2 Marketing Management2.4.3 Material Management2.4.4 Finance Management2.4.5 Human Resource Management2.5 Computer Based Information Systems2.5.1 Transaction Processing Systems2.5.2 Management Information Systems:2.5.3 Decision Support Systems2.5.4 Office Automation Systems2.6 Management Information Systems (MIS)2.6.1 Definition2.6.2 Objectives of MIS2.6.3 Characteristics of MIS2.6.4 Role of MIS in an Organization2.7 Let us Sum Up2.8 Self Assessment Questions2.9 Model Questions2.10. References and Further ReadingsOdisha State Open UniversityPage 17

2.0 IntroductionLarge number of jobs today for computer professionals is in creating informationsystems for managing organizations. Students should know what information isand how it is different from data, should know nature of organizations and theirstructure to design appropriate information system, should know managementstructure and needs of each level of management and should know functionalareas of management and information needs for each area.The management professionals also should identify different type of informationthat is needed at various levels of management and how Information systems canprovide the information each levels of management.In this unit we will explain different types of information needed at various levelsof management and the applications of management information systems in theorganization.2.1 Learning ObjectivesAfter going through this unit you should be able to Define the term Information”. Explain the concepts of Information and its types. Understand the need for information at various levels of management. Types of Information Systems Define MIS Identify the objectives of MIS Know the applications of MIS in an organization.Odisha State Open UniversityPage 18

2.2 Information ConceptsData is a raw material for information systems. Collecting data costs money andhence one must collect necessary and sufficient data. Data is generally input tothe information systems for processing. Data size is also growing but is uselessunless it is processed to create information.Information is processed data, used by managers to initiate actions and to run theorganization efficiently. The data processed by machines gives informationTypes of Information Strategic: Needed for long range planning and directions. This is lessstructured. Tactical: Needed to take short range decisions to improve profitability andperformance. Operational: Needed for day to day operations of the organization. Eg: DailySales, Billing. Statutory: Needed by law to send to government authorities. Eg: Sales taxreturn.Odisha State Open UniversityPage 19

2.3 Need for Information SystemsInformation systems are needed when timely processing for fast action is needed;same data has to be processed in different ways and when organizations requireinnovative processing.UnstructuredInformationTopStrategic: Longranged l: Shortranged PlanningLowerHighly structuredinformationOperational: day today activitiesFig: Management hierarchy and information needsFunctional areas of management are as followsA. ProductionB. MarketingC. Materials – purchase, storesD. Finance –accountsE. Human Resource Development (HRD)F. Research and Development (R&D)2.4 Information for ManagementDifferent types of information required f

1.6.1 System Concepts The concepts of a system are Technology, Application, Development and Management. a. Technology. Computer networks are systems of information processing components that are a variety of hardware, software and telecommunication technology. b. Application.

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