Management Information System

Management Information System

Data...Data, the raw material for information is defined as groups of non-random symbols which represent quantities, actions, objects, etc. Data items in information systems are formed from characters. These may be alphabetic, numeric, or special symbols such as *, $. Data items are organized for processing purposes into data structures, file structure and databases. Data relevant to information processing, and decision making may also be in form of text, images or voice.

Information... information is data that has been given meaning by way of relational connection. This "meaning" can be useful, but does not have to be. Knowledge... knowledge is the appropriate collection of information, such that it's intent is to be useful. Knowledge is a deterministic process. When someone "memorizes" information (as less-aspiring test-bound students often do), then they have amassed knowledge. This knowledge has useful meaning to them, but it does not provide for, in and of itself, an integration such as would infer further knowledge.

Uses of data in computing Data (computing) Raw data are numbers, characters, images or other outputs from devices to convert physical quantities into symbols, in a very broad sense. Such data are typically further processed by a human or input into a computer, stored and processed there, or transmitted (output) to another human or computer. Raw data is a relative term; data processing commonly occurs by stages, and the "processed data" from one stage may be considered the "raw data" of the next.

Information Information is the summarization of data. Technically, data are raw facts and figures that are processed into information, such as summaries and totals. But since information can also be the raw data for the next job or person, the two terms cannot be precisely defined, and both are used interchangeably.

It may be helpful to view information the way it is structured and used, namely: data, text, spreadsheets, pictures, voice and video.

Data are discretely defined fields. Text is a collection of words. Spreadsheets are data in matrix (row and column) form. Pictures are lists of vectors or frames of bits. Voice is a continuous stream of sound waves. Video is a sequence of image frames.

Types of information: The information can be classified in a number of ways for better understanding. Some classifications are as follows: i.   Action vs. No Action information: The information which induces action is called action information. The information which communicates only the status of a situation is no-action information. ii.  Recurring vs. non recurring information: The information generated at regular intervals is recurring information. The monthly sales reports, the stock statements, the trial balance, etc are recurring information. The financial analysis on the report on the market research study is non recurring information.

iii. Internal vs. external information: The information generated through the internal sources of the organization is termed as an internal information, while the information generated through the government reports, the industry surveys, etc is termed as an external information, as the sources of the data are outside the organization. The action information, the recurring information and the internal information are the prime areas for computerization and they contribute qualitatively for the MIS.

Information can also be classified in terms of its application: 1.Planning Information: Certain standards, norms and specifications are used in the planning of any activity. Hence, such information is called the planning information. The time standards, the operational standards, the design standards are examples of the planning information. 2.Control Information: Reporting the status of an activity through a feedback mechanism is called the control information. When such information shows deviation from the goal or the objective, it will induce a decision or an action leading to control.

3.  Knowledge information: A collection of information through library reports and the research studies to build up knowledge base as information source for decision making is known as knowledge information. Such a collection is not directly connected to decision making but the need of knowledge is perceived as a power or strength of the organization. The information can also be classified based on its usage. When the information is used by everybody in the organization, it is called the organization information. When then information has a multiple use and application, it is called the database information. When information is used in the organization in operation of business, it is called functional or operational information.

4. Formal and informal information: Formal information is the information which is provided to the users through authentic channels. It carries some value for the user. Informal information is also referred to as grapevine. It is unorganized information and may or may not carry value for the user.

Quality of information: The quality of information is determined by how it motivates human action and contributes to effective decision making.

Utility of information: There are four utilities of information that are identified: 1)Form Utility: As the form of information more closely matches the requirement of the decision maker, its value increases. 2)Time Utility: Information has greater value to the decision maker if it is available when needed. 3)Place Utility (Physical accessibility): Information has greater value if it can be accessed or delivered easily. Online systems maximize both time and place utility. 4)Possession Utility (Organizational location): The possession of information strongly affects its value by controlling its dissemination to others.

MIS (Management Information Systems) :“MIS is an integrated user machine system for providing information to support operations, management and decision - making functions in an organization. The system utilizes : computer hardware and software, manual procedures, models for analysis, planning, control and decision making, and a database.”

It is also known as the Information System, the Information and Decision System, the Computer – based Information System. The MIS is basically an integrated system which transforms the data (inputs) into reports (outputs) for facilitating decision – making through processing using various components of the information system viz. Hardware, software, Database, Procedures, and Personnel. Management Information Systems (MIS) is the application of information technology to support business activities.

The MIS is basically an integrated system which transforms the data (inputs) into reports (outputs) for facilitating decision – making through processing using various components of the information system viz. Hardware, software, Database, Procedures, and Personnel. Management Information Systems (MIS) is the application of information technology to support business activities.

The system ensures that an appropriate data is collected from the various sources, processed, and sent further to all needy destinations. The system is expected to fulfill the information needs of an individual, a group of individuals, the management functionaries : the management and top management.

MIS helps the junior management personnel by providing the operational data for planning, scheduling and control, and helps further in decision making at the operations level to correct an out of control situation. MIS helps the middle management in short term planning, target setting and controlling the business functions. It is supported by the use of the management tools of planning and control. MIS helps the top management in goal setting, strategic planning, and evolving the business plans and their implementation.

External

Low

Top

Source of  Information

Internal

Middle Management

Operational Management

Structured  Information

High

Different kinds of decisions are made at different levels in the organization. The decision-makers at each level of the organization can be said to be the users of the MIS at that level. Since different users make different decisions at each level in the organization, their individual information needs will be different.

Top management is concerned with the achievement of goals, anticipation of changes in the external environment and readiness of the organization to meet the challenges of the environment. Therefore, the top management will need information about changes in the environment. It will need information about business policy of the government, actions of rivals, general social and economic climate, etc. The Information Needs of top management therefore can be said to be long term and more external than internal. However, top management will also need information on the existing state within the organization. Profitability trends, state of quality consciousness, etc. will have to be taken into account by top management. Their information needs will thus be for this kind of information.

Middle management is concerned with the achieving of interim objectives. It has the task of translating management goals into achievable objectives. Therefore it will need information on the performance of various functional areas, achievement of previous objectives, etc. Thus, the information needs of middle management can be said to be more internal than external to the organization and on a time-scale that is smaller than that required by top management.

Operational management is concerned with the day-today working of the organization. Thus, it will require information that is more immediate. Operational management is often called upon to make snap decisions about various operations that are being carried out within the organization. Therefore, it needs a quicker “turn-around time” in the information that is being supplied to it.

Thus the Information Needs vary according to the users or the decision-makers in the organization. Each set of users has a different set of information needs and it would be unwise to use a common model for all levels of users. The unique information needs of different users must be taken into account when enumerating the total information needs of the organization.

The 3 level of management activities can be differentiated on the basis the planning horizon of each level. Strategic planning deals with long range consideration. The decision to be made are concerned with choice of business direction, product mix, market strategy etc. Management control and tactical planning has a medium term planning horizon. It includes acquisition and organization of resources, structuring of work personnel. It is reflected in the capital expenditure budget, staffing plan etc. Operational planning and control is related to short term decision for current operations. Pricing, production levels, inventory levels etc. are result of operational planning & control activities. The activities & information processing for the 3 levels are inter-related.

The MIS design should be such that it meets the needs of the total organization. For design considerations & for the operational convenience, the organization is divided into 4 levels, viz., the top, the middle, the supervisory and the operational.

Physical Components of Information Systems

The physical components required for an organizational information system are : hardware, software, database, and procedures and operations personnel.

HARDWARE: Hardware refers to physical computer equipment and associated devices. Hardware must provide for five major functions : •Input or entry •Output •Secondary storage for data and programs •Central processor (computation, control and primary storage) •Communication

SOFTWARE: Software is a broad term given to the instructions that direct the operations of the hardware. The software can be classified into two major types: •System software •Application software

DATABASE: The database contains all data utilized by application software. An individual set of stored data is often referred to as a file. The physical existence of stored data is evidenced by the physical storage media (computer tapes, disk packs, diskettes, etc.) Used for secondary storage.

PROCEDURES: Formal operating procedures are physical components because they exist in a physical form such as a manual or instructions booklet. Three major types of procedures are required: User instructions (for users of the application to record data, employ a terminal to enter or retrieve data or use the results). Instructions for preparation of input by data preparation personnel Operating instructions for computer operations personnel.

OPERATIONS PERSONNEL: Computer operators, systems analysts, programmers, data preparation personnel, information systems management, data administrators etc.

Control in a System

Definition of control in system: Control consists of procedures to determine deviations from plans & indicate Corrections. Every measure organizational function has a set of controls associated with it. The basic of a system as input process & outputs did not include regulation & control of the system.

For control purposes, a feedback loop is added to the basic module. In its simplest form outputs from the systems are compared with the desired output. [Standard] , & any difference causes & input to be sent to the process to adjust the operations so that output will be closer to the standard . Feedback with seeks to dampen & reduce fluctuations around the standard its term negative feedback. It is used in feedback control loops. Positive feedback re-enforces the direction in which the system is moving. In other words, positive feedback causes the system to repeat or amplify adjustment or action.

Feedback Control Loop

Input

Control device

Process

Output

Sensors

Feedback control loop in which the system changes its operations , is not the only adjustment an organizational system may make. In the response to feedback the organization may change its standards. (Objectives, Goals, Purposes etc.)

Negative Feedback control :Negative feedback control is system means keeping the system operating within certain limit of performance. System, which is out of control function outside the limit because the regulatory mechanism are not operative. Feed back control loop are classified as closed or open. A closed control loop is an automatic control such as a computer control process. A over control loop is with random disturbance, such as those associated with human control element. There are variations between the two extreme. A human machine system is thus an attempt to use the best characteristics to both open and closed control to make system as closed as possible.

WHAT IS LAW OF REQUISITE VARIETY? Law of requisite variety is one of the basic notation of system control theory, to obtain control. This has various rigorous formulations, but a commonsense, understanding is that to control each possible state of system elements. There must be a correspond control state; to control a hundred state of the system elements there must be hundred different state of control. To view it another way, there must be at least as many variations of control to be applied as there are ways for the system to get out of control.

This means also that the control for the system must be able to determine of variables and send system change instructions for each change. The Law of requisite variety needs that for a system to be control, every controller (human/machine) must be provided with enough control responses (what to do in each case) to cover all possible condition the system may face.

The law of requisite variety means that for a system to be controlled, every controller(human and machine) must be provided with:   1. Enough control responses (what to do in each case) to cover all possible conditions the system may face. 2. The decision rules for generating all possible control responses OR    3.  The authority to become a self organizing system in order to generate control responses. Enumerating all responses is possible in simple cases. In complex systems providing control responses is very difficult.

Decision Making

Decision making is the cognitive process leading to the selection of a course of action among alternatives. Every decision making process produces a final choice called a decision. It can be an action or an opinion. It begins when we need to do something but we do not know what. Therefore, decision-making is a reasoning process which can be rational or irrational, and can be based on explicit assumptions or tactic assumptions.

Management information system supports for decision making. Decisions vary with respect to the structure that can be provided for making them. A highly structured decision can be pre-planned or pre-specified, whereas highly unstructured decisions cannot. Structured decision can be said to be programmable. An unstructured decision is said to be non programming . The structured, programmable decisions tend to be routine & frequently repeated; the unstructured decisions tend to occur with less frequency & is non – routine. Information system support will differ for the two types of decisions. Some decisions will fit easily into this classification, but many decisions are more or less structured & have some elegant that are programmable & some that are not programmable.

Structured programmable decisions – When a decision can be programmed an organization can prepare a decision rule & decision procedure. This can be expressed as a set of steps to follow, a flow chart a decision procedure will almost specify the information may acquire before the decision rules have applied. Since, structured programmable decisions can be prespecified many of these decisions can be handled by lower personnel with little specialized knowledge. The information system requirement for structured decision are clear & unambiguous : Procedures for entering the required input data, validation procedures to ensure correct & complete input; processing of the input using decision logic & output of the decision in a form i.e. useful for action. A useful output should be clear as to how it is to be used & should contain enough data to assist the recipient to assess the reasonableness of the decision.

Unstructured, non-programmable decisionsThe unstructured decision has no pre-established decision procedure, either because the Decision is to infrequent to justify the organizational cost of preparing a decision procedure or because the decision process is not understood well enough or is too changeable to allow a stable pre-established decision procedure .The support requirement for unstructured decision making are accessed to data & a variety of analysis & decision procedures that can be applied to the solution of the problem. The data requirements are not completely known in advance, so data retrieval must arrive from ad hoc retrieval request. Management information system structure is based on management activity.

There are also other two types of decision making, i.e. open decision making, closed decision-making. Open decision-making – When the environment is unknown fully it is called as open system environment. There are unknown sets of alternatives. The after effects are unknown. Unknown model, method, procedures & process. Here objectives are unknown. Open systems are generally designed to satisfy the aspiration of a group. Closed decision-making – When the environment is known fully it is called as a closed system environment. There are known set of alternatives. The after effects are known. Methods, procedures & processes are well known .You are working for the known objectives. The process of decision-making can be delegated to the lower level or it can be automated.

Herbert Simon model for decision making:

A well known model proposed by Herbert A. Simon is used as the basis for describing decision making process.

Intelligence

Design

Choice

The model consists of three major phases, Intelligence, Design and Choice.

1.Intelligence: Intelligence in this context does not refer to native intelligence(or the brains one is born with), but with the process of gathering information. It involves an awareness of the environment, an active attempt to gather information from the environment . This phase may be a continuous, ongoing phases or an intermittent effort, depending upon the requirements of the decision to be made.

2. Design: Design indicates the generation of alternatives to solve the problem formulated. This is a creative process. For a long time, it was thought that creativity is inborn. However, Management Expert have proved that creativity can indeed be taught and nurtured. There are several have techniques that can be used for “Ideation(another term for the generation of alternatives),including Free Thinking, Analogy, Brainstorming, Checklists, etc.”

3.Choice: Once the manager has enough ideas or alternatives to work with, he can apply a rational process to choose the most viable alternatives to work with. He thus makes a choice from the alternatives available to select the path that would most likely solve the problem at hand.

Decision Support System

The term decision support system refers to a class of systems which support the Process of decision making . The emphasis is on “support” rather than on automation of decisions . Decision support systems allow the decision maker to retrieve data and test alternative solutions during the process of problem solving .

Characteristics of decision support system : The concept Decision support system is based on several assumptions about the role of the computer in effective decision making : 1. The computer must support the manager but not replace his /her judgment . It should therefore neither try to provide the “answers” nor “inputs” a Predefined sequence of analysis .

2. The main payoff of computer support is for semi structured problems , where parts of the analysis can be systematized for the computer , but where the decision makers insight and the judgment are needed to control the process .

3. Effective problem solving is interactive and enhance by a dialog between the user and the system . The users explores the problem situation using analytic and information providing capabilities of the system as well as human experience and insights .

The decision support system should provide ease of access to the Database containing relevant data and interactive testing solutions . The designer must Understand the process of decision making for each situation in order to design a System to support it .

Organization

Management is interested in organization mainly from an instrumental point of view. For a company organization is a means to an end in order to achieve its goals. In this sense organizations can be distinguished into two fundamentally different sets of objectives: Organizations whose goal is to generate specific services and/or to produce goods (factories, service enterprises, etc.) or to bring about specific effects in its surrounding world (e.g. authorities, police, political parties, interest groups, trade unions, etc.). Organizations whose goal is to change individuals (e.g. schools, universities, hospitals, prisons). This type of organization is also known as a non-profit-organization.

With regard to the inner structure of organizations two terms have to be distinguished: Structural organization: the hierarchal structure of the company (who is performing which task and who has which decision-making power?) Process organization: the processes and routines of the manufacturing phases that occur within the company (in which order is something done and how?)