Concepts 1-1.pptx

Fundamental Concepts of MIS

• Three words which constitute MIS are – Management – Information – System

Management • It is the force that drives the organization. • The lifeblood of an organization. • People performing various management roles in an organization are called managers. • The most important task that managers perform is the task of taking decisions.

Information • Is the key ingredient for taking decisions. • Information improves the quality of decision making. That’s why information is the most important asset for managers. • Information is created after processing data, mostly transaction – level data. • This transaction – level data has to be captured , stored and then processed to create any meaningful information for managers.

System • A system can be defined as a set of interacting entities having interrelation, interconnections with each other, forming an integrated whole. • A system means a process for capturing data , storing it and then processing / analyzing it to provide information. • A system is a set of elements which are joined together to achieve a common objective.

• Information systems that help a management in taking decisions are called management information systems. • MIS consists of a set of information systems working towards the common goal of achieving greater efficiency in decisionmaking at each level of management.

• MIS deals with internally- generated information. • The in – house data is processed (summarized/aggregated) to create reports , which helps a management at different levels in taking decisions.

• E.g. for MIS – Enterprise Resource Planning System.(ERP) – Customer Relationship Management System(CRM) – Supply Chain Management System(SCM)

Information Technology (IT) • Technology has always been and will be a platform for MIS. • IT refers to the technology that uses computer software and hardware for the purpose of processing data and producing useful information.

• What is Information Technology? – Any form of technology used by people to handle information.

• What are Information Systems? – Integrated components processing, storing and disseminating information in an organisation. – Interdisciplinary study of systems that provide information to users in organisations.

• IT refers to all the components that a system needs to operate including the following. – Software • Operating system s/w, database management s/w, web browsers etc.

– Hardware • Servers, computers, I/O devices

– Telecommunication • Modems, switches, routers etc

• Data – Data is in raw form. – meaningless without structure. – Disorganised and disintegrated in the form. – Can’t be understood or made use of by the users.

• Information – Clusters of facts, meaningful and useful to human beings in processes such as making decisions . – Properly arranged, classified and organised. – Information is in finished form. – It is understood and used by the users. – It is derived from data.

Input DATA

Data processing

Output Information

Feedback

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Salesman code Zone item Code SM 001 North P001 SM 002 East P001

SM 001 North P001 475 SM 002 East P001 500 DATA

Processing Information

Sales 475 500

Information System (IS) • It is concerned with processing the raw facts into information and transferring this information to the users. • Information system can be two types – Manual IS ( that uses pen, pencil or paper technology) – Computer based IS (CBIS) (uses IT to perform its various tasks.)

Characteristics of MIS • • • • • • •

Management – oriented Management –directed Integrated Common data flows Strategic planning Bias towards centralization Information and communication technology enabled

• Management – oriented – MIS is designed top down. – The system is designed around the need for information of the management at different levels.

• Management –directed – MIS is ‘for the management’ and initiated ‘by the management’. – The system is structured according to the directions factored in by the management.

• Integrated – It is integrated with all the operational and functional activities of the management. – To provide a complete picture of a scenario, complete information is needed, which only an integrated system can provide. 19

• Common data flows – The data being stored into the system, retrieved from the system , disseminated within the system or processed by the system can be handled in an integrated manner. – The integrated approach towards data management will result in avoiding duplication of data , data redundancy and help simplify operations. – Avoid data redundancy through integrated approach.

• Strategic planning – A high degree of planning goes into creating an MIS. – This kind of planning is to ensure that the MIS being established not only satisfies the information need of managers currently, but also serves the organization in the next 5 -10 years with modifications.

• Bias towards centralization – Centralized data management helps an MIS to provide an integrated view of data to the managers.

• Information and communication technology enabled – All MIS that run today , run on some ICT platform, to enable smooth functioning of the system and ensure timely and accurate results.

Functions of MIS • The broad functions of MIS are • To improve decision-making • To improve efficiency • To provide connectivity

• The main functions of MIS are • • • • •

Data processing Prediction Planning Control Assistance

– To improve decision-making • The fast and accurate information supplied by the MIS is used by managers to take quick and better decisions , thereby improving the decision making quality and adding to the value of company.

– To improve efficiency • MIS helps managers to conduct their tasks with greater ease and better efficiency. This reflects in better productivity.

– To provide connectivity • MIS provides managers with better connectivity with the rest of the organization.

• The main functions of MIS are – Data processing • This comprises collection, transmission , storage and processing of data to provide an output.

– Prediction • It carries out analysis on data to predict a future situation , by applying methods of modern mathematics, statistics or by way of simulation.

– Planning • The analysis of data of a regular nature may give indications on likely future events or situations and this can be utilized in planning or reviewing the plan already made earlier.

– Control • To control day to day activities, monthly activities , quarterly or annual activities in a regular manner.

– Assistance • Providing assistance to the higher management by analyzing from regular records about various factors related to the performance of the business operation.

Organizations and Information systems • From technical viewpoint an organization – is a formal social structure that takes i/p from its surrounding environment and transforms these i/ps to o/ps through production process. – Here i/p consist of labour and capital provided by the environment. – o/ps are products and services.

organization i/Ps from the environment o/ps to the environment Production process

Technical view of organization

How information systems affect organizations • Economic Impact – Both the cost of information and capital are affected by the change in IT. – With the decrease in cost of IT, the dependence of many firms on IT has increased.

• Organizational and behavioral impact. 1)Information system flattens organizations. – According to traditional organizational hierarchy of management, various levels of management managed the lower level staff. – The use of IS has increased the efficiency by flattening the hierarchies. – IT applications provide the lower level employees with the information they require and they are empowered to make decisions without supervision.

A traditional organizational hierarchy of management

A flattened organizational hierarchy

2)Virtual organizations are easy • Virtual organizations connect people , assets and ideas with the help of networks. • They can support customers , suppliers and even competitors in creating and distributing new products and services without any limitation of physical locations. • In virtual organization whose members are geographically apart , while appearing to others to be a single , unified organization with a real physical location.

• Reasons for using virtual organizations are – To increase flexibility • The organization can hire best workers regardless of where they live.

– Globalization • Greater level of collaboration , cooperation and efficiency is achieved.

– Changes in employee values and attitude towards work. • Employees can balance professional as well as personal life, family requirements and personal fulfillment.

– Cost reduction • The cost of physical assets used to support work environments, cost of infrastructure or the cost involved in maintaining the offices at several physical locations is reduced.

The internet and organizations • The internet has made phenomenal changes in the working of organizations. • It provides precise, timely and accurate information and also helps in effective decision making.

Managers and decision making • Decision making is the core managerial function. • Decision making is the process of choosing the best alternative from among various alternatives. • It involves all the activities of coordinating , information processing, problem solving and evaluating before finally making a decision.

Decision making process • According to Herbert A. Simon, a decision making process can be described in four different stages. They are – Intelligence – Design – Choice – implementation

Intelligence • This stage includes finding , analysing and understanding the problem , the nature of the problem , the reason for its occurrence and its effects on the organization. • In this stage , information system provides detailed information in the form of routine reports ,interpreted transaction data and exception reports that help in identifying the problem.

Design • This stage includes finding the possible solutions for the problem. • The decision support systems (DSS) proves to be of great help as it provides the user with logical tools for modeling data there by enabling users to find possible solutions for the problem.

Choice • This stage includes choosing the optimal solution among the alternatives. • The group decision support system(GDSS) provides an electronic environment to conduct group discussions among all managers , who discuss the various alternatives and select the suitable solution for the problem.

Implementation • This stage includes putting the solution to work and monitoring the working of the solution. • It also includes analysing the chosen solution and finding whether the applied solution is the optimal solution by comparing it with other possible solutions.

Intelligence (Problem identifications. What is the problem?) Design (Solution Identification What are the potential solutions?)

Choice (Selecting solutions Which is the best solution?) Implementation (testing solution Is the solution working? Is there any other better solution?) Stages in decision -making

Types of decisions • According to Simon , on the basis of programmability decisions are classified into two types. – Programmed decisions – Non – programmed decisions

• According to G. A. Gorry and M.S. Scott Morton , programmed and non-programmed decisions are referred as – structured and – unstructured decisions.

Structured Decisions • These decisions are well defined, certain and need little effort from decision makers. • These decisions need to be made at a small interval of time. • They can be easily made using some definite procedure, thus operational level managers are permitted to take such decisions. • Inventory reorder decisions, routine credit decisions etc are structured decisions.

Unstructured decisions • They are not well defined and no certain rules are specified to take such decisions. • This kind of decisions are taken by the strategic(higher) level managers of the organization. • Introduction of a new product , deciding long term corporate goals, planning for R & D etc are unstructured decisions.

Semi - structured decisions • Decisions have elements of both the structured and unstructured decisions. • i.e. there are some well-defined or certain rules for some part of the problem and rest needs to be solved using judgment or intuition. • Generally middle level managers handle semistructured decisions. • Developing a marketing plan , designing a new corporate website etc are semi-structured decisions.