4

MANAGEMENT INFORMATION SYSTEM (MIS)

• Backdrop
• Definitions of MIS
• MIS: Nature and Scope
• Characteristics of MIS
• Functions of MIS
• Elements of MIS
• Structure of MIS
• Role of MIS
• MIS as a Control System
• MIS: A Tool for Management Process
• MIS Applications
• MIS Development Approaches
• Business Planning with MIS
• MIS versus Data Processing
• Benefits of MIS
• Limitations of MIS
• Misconceptions about MIS
• Effective MIS Pre-Requisites
• Evaluating MIS Effectiveness
• MIS and IT
• Computerised MIS and Management
• MIS in Indian Organizations
BACKDROP
In organisations people assemble to achieve common objectives through their
coordinated efforts. Different individuals in an organisation are functionally interrelated.
Organisations interact with external environment and take various inputs — materials,
energy, information etc. The interaction between organisation and environment is
possible only through exchange of information. Information processing is vital to
organisationas for survival as well as growth.
Business involves decision making process. With the increasing competition
executives need meaningful/useful information for making decisions. The required
information is provided by information specialist or by data processing department. The
main purpose of MIS is to provide timely, specific, accurate information at all levels in
an organization.
MIS is an old concept that is now used to manage various activities in the
organization. Before the emergence of electronic computing machine, it existed in its
manual form. It was then used as a tool for analyzing and developing routine reports.
These reports used to be only simple and numeric analysis of achievements and
targets.
Previously, internal reporting was done manually and only periodically in
businesses and other organizations, as a by-product of the accounting system and with
some additional statistic(s), and gave limited and delayed information on management
performance. Data had to be separated individually by the people as per the
requirement and necessity of the organization. Later, data was distinguished from
information, and so instead of the collection of mass of data, important and to the point
data needed by the organization was stored.
 Early on, business computers were mostly used for relatively simple operations
such as tracking sales or payroll data, often without much detail. Over time, these
applications became more complex and began to store increasing amounts of
information while also interlinking with previously separate information systems. As
more and more data was stored and linked, man began to analyze this information into
further detail, creating entire management reports from the raw, stored data.
The term "MIS" arose to describe such applications, which were developed to
provide managers with information about sales, inventories, and other data that would
help in managing the enterprise. Today, the term is used broadly in a number of
contexts and includes (but is not limited to): decision support systems, resource and
people management applications, Enterprise Resource Planning (ERP), Supply Chain
Management (SCM), Customer Relationship Management (CRM), project management
and database retrieval applications.

DEFINITIONS OF MIS
In competitive business world, processing and communicating information
consumes most of the time of managers. Information is used for making and
implementing different types of decisions for the achievement of organisational
objectives. Such a system is generally referred to as ‘information processing system’,
‘organisational information system’, ‘information system’, or ‘management information
system’.
However, the term management information system is the most popular because it
is more descriptive and generally understood. Since in an organisation, management
information system may consist of a number of subsystems which may also be termed
as systems at a specific level, there is a tendency to use plural form as management
information systems or abbreviated form as MIS concerns, but it would be wrong to
think that such a system cannot be operated without the help of computers.
According to Raymond J. Coleman and M. J. Riley, “MIS applies to all
management levels; is linked to an organization’s sub-systems; it functions to measure
performance, monitors progress, evaluates alternatives or provides knowledge for
change or corrective action; and is flexible, both internally and externally”.
G. B. Davis defines management information system as “an integrated
man/machine system for providing information to support the operations, management
and decision-making functions in an organization”. The system utilizes computer
hardware and software, manual procedures, management and decision models, and a
database. According to him, “managerial information structure must be of a pyramidal
shape and it should be in conformity with the pyramidal pattern of the structure of a
particular organization”.
According to Jerome Kanter, “MIS is a system that aids management in making,
carrying out, and controlling decisions”. Here, MIS is a system that aids management in
performing its job. Computerized MIS is a system that reacts instantaneously to top
management requests. A Company can employ MIS concepts that focus on middle and
operating management rather than top management.
James A. O’Brien has defined management information system as “to provide
information to support management decision-making”.
A management information system (MIS) is a system or process that provides
information needed to manage organizations effectively. It is a planned system of
collecting, processing, storing and disseminating data in the form of information needed
to carry out the functions of management. In a way, it is a documented report of the
activities that were planned and executed. According to Philip Kotler "A marketing
information system consists of people, equipment, and procedures to gather, sort,
analyze, evaluate, and distribute needed, timely, and accurate information to marketing
decision makers”.
 MIS Concept is, “Right information to the right person at the right place at the right
time in the right form at the right cost”.
MIS: NATURE AND SCOPE
The management information system is an organized approach to the study of
information needs of the management at every level in making operational, tactical,
and strategic decisions. Its objective is to design and implement man-machine
procedures, processes, and routines that provide suitably detailed reports in an
accurate, consistent, and timely manner. It presents data such as the organization's
processes, operating procedures, internal controls and audit preparation, which the
management uses to make effective and efficient decisions. The internal controls for
each department contain guidelines for operation. The flow of work assigned to
employees, their responsibilities and duties, for example, are listed under internal
controls.
The concept of MIS gives high regard to individual and his ability to use
information. An MIS gives information through data analysis. While analyzing the data, it
relies on many academic disciplines. These include the theories, principles and concepts
from the Management Science, Psychology and Human Behavior, making the MIS more
effective and useful. These academic disciplines are used in designing the MIS, evolving
the decision support tools for modeling and decision - making.
The foundation of MIS is the principles of management and its practices. MIS uses
the concept that a system can be evolved for a specific objective after systematic
planning and design. It calls for an analysis of a business, management views and
policies, organization culture and the management style. The information should be
generated in this setting and must be useful in managing the business. This is possible
only when it in conceptualized as a system with an appropriate design.
The MIS, therefore, relies heavily on the systems theory offering solutions to
handle the complex situations of the input and output flows. It uses theories of
communication which help to evolve a system design capable of handling data inputs,
process, and outputs with the least possible noise or distortion in transmitting the
information form a source to a destination. It uses the principles of system design viz.
the ability of continuous adjustment or correction in the system in line with the
environmental change in which the MIS operates. Such a design helps to keep the MIS
tuned with the business management needs of the organization.
The concept, therefore, is a blend of principles, theories and practices of
Management, Information and System giving rise to a single product known as
Management Information System (MIS).
The Physical view of the MIS can be seen as assembly of several subsystems
based on the databases in the organization. These subsystems range from data
collection, transaction processing and validating, processing, analyzing and storing the
information in the databases. The subsystem could be at a functional level or a
corporate level. The information is evolved through them for a functional or a
departmental management and it provides the information for the management of
business at the corporate level.
The MIS is product of a multi- disciplinary approach to the business management.
It is a product which needs to be kept under constant review and modification to meet
the corporate needs of the information. The MIS may differ since the people in two
organizations involved in the same business also differ. The MIS is basically for the
people in the organization. The MIS model may be the same but it differs greatly in the
contents.
The MIS, therefore, is a dynamic concept, subject to change, time and again, with
a change in the business management process. It continuously interacts with the
internal and the external environment of the business and provides a corrective
mechanism in the system so that the change needs of information are met with
effectively. The MIS, therefore, is a dynamically designed system, the primary objective
of which is to provide information for decision making and it is developed considering
the organizational fabric, giving due regard to the people in the organization, the
management functions and managerial control.
The MIS model of an organization changes over a period of time as the business
passes through several phases of developmental growth cycle. It supports the
management of the business in each phase by giving information which is crucial in that
phase. Every business or organization has certain critical success factors in each phase
of growth cycle and an efficient and effective MIS model provides more and more
information keeping in view its sensitivity, on the critical success factors for decision
making.
The Purpose and Scope of Management Information Systems can be defined as
“The combination of human and computer based resources that results in the collection,
storage, retrieval, communication and use of data for the purpose of efficient
management of operations and for business planning”. Management Information
Systems are primarily concerned with the delivery of information (both internal and
external) to organisational members from the shop floor workers to the top level
management. The purpose of MIS is to help the smooth running of the business by
providing information on the firms data (such as accounting figures) employees from
different levels will then evaluate this information so that decisions can be made to
ensure that the business remains competitive and successful. MIS has been created to
support the whole range of business's administration and regulatory activities and can
be seen in all parts of the world and in all types of environments.
Management information systems are basis for conducting business today. In
many industries, survival and even existence is difficult without extensive use of
information technology. MIS has become essential for helping organizations operate in a
global economy. Organizations are trying to become more competitive and efficient by
transforming themselves into digital firms where nearly all core business processes and
relationships with customers, suppliers, and employees are digitally enabled.
Businesses today use information systems to achieve six major objectives: operational
excellence; new products, services, and business models; customer/supplier intimacy;
improved decision making; competitive advantage; and day-to-day survival.
Management Information Systems have the following objectives:
• Pre-specified and preplanned reporting to managers is accomplished by
“Information Reporting Systems “.
• Interactive and ad hoc support for decision making by managers is
accomplished by ‘Decision Support Systems’, for optimal decisions.

CHARACTERISTICS OF MIS
Main characteristics of MIS are the following:
(i) Comprehensiveness: Management Information System is comprehensive
in nature. It includes transactions processing systems and other information
systems designed primarily for managers at all levels. It embraces manual
and computer systems, office information systems, forecasting information
systems, intelligence information systems, decision support systems and
other computer models that process business.
(ii) Well Coordinated: Management information system is centrally
coordinated to ensure that information is passed back and forth among all
the sub-systems of the organization as and when needed.
(iii) Subsystem Concept: MIS is composed of all the subsystems that are the
part of the overall system. These sub-systems share the goals of the
 management information system and of the organization. These sub-
systems serve multi-levels or multiple activities.
(iv) Integrated System: MIS is rationally integrated so as to produce more
meaningful MIS. Sub-systems are integrated so that the activities of each
are inter-related with those of the others. This integration is accomplished
by passing data between these systems. Computer networks can be
designed to facilitate data flows among these various systems. Integration
makes information processing more efficient by reducing both intermediate
processing. Senior managers benefit from integrated systems because they
need cross functional information. A substantial degree of integration is
required for an effective management information system.
(v) Transformation of Data into Information: MIS transforms data into
information in variety of ways. When data is processed, it becomes
information. There are many ways in which data are transformed within an
information system. The ways in which MIS should transform data into
information are determined by the organizational personnel and the task
for which information is needed.
(vi) Enhances Productivity: MIS enhances productivity of the organisation in
many ways. It provides early notice of opportunities and facilitates the
management processes. It enhances managers’ ability to deal with
unanticipated problems.
(vii) Management Oriented: Management information system is developed as
per the unique managerial styles of the personnel who use it. The
management information system is carefully tailored to each individual
manager’s requirements. At the lower levels, the management information
system is developed for clerical and operations purpose. At middle level,
the information system is tailored to the requirements of departmental
managers. For professional personnel, the information system is tailored
according to the specialized tasks.
(viii) Management Directed: When MIS is management-oriented, it should be
directed by the management because it is the management who tells their
needs and requirements more effectively than anybody else. Manager
should guide the MIS professionals not only at the stage of planning but
also on development, review and implementation stages so that effective
system should be the end product of the whole exercise in making an
effective MIS.
(ix) Relevant Information: MIS should provide only relevant information. It is
very difficult to decide about relevancy. Systems designers must carefully
consider the human factor when developing a management information
system.
(x) Quality Criteria: Management information system must be designed for
timeliness, relevance, and accuracy of information.
(xi) Feedback: management information system should provide feedback
about its own efficiency and effectiveness. The transactions processing
error rate is a simple example of this feedback. Feedback system helps in
improving the efficiency of the system. Usage statistics can be used for
managerial analysis.
(xii) Flexibility: MIS must be designed in such a manner that it can be easily
modified. The information system should be capable of being easily
expanded to accommodate growth or new types of processing activities.
 (xiii) Modularity: Modular approach increases the efficiency in MIS design. The
MIS should be composed of many modules or sub-systems rather than be
designed as one.
(xiv) Sharing of Data: In an organization, common database is used for all
managers. Two or more managers often utilize the same information. So
the system should have the feature of multiple uses by managers.
Sometimes, it is important to reserve certain information for the exclusive
use of selected managers. This selective sharing quality can be established
by controls that are part of the computer programs.
(xv) Computerized: Now-a-days it is not possible to have an MIS system
without using a computer. IT has increased the effectiveness of the System.
Presently management information system is based on the computers.
(xvi) Heavy Planning Element: The preparation of MIS is not a one or two days
exercise. It usually takes a much longer period. So the system expert has to
keep two things in mind – one is that he has to keep future objectives as
well as the firm’s information well in advance and also he has to keep in
mind that his MIS will not be obsolete before it gets into action.

FUNCTIONS OF MIS
Management Information System is a combination of computers and procedures
for providing information to managers for making decisions.
Data Collection: The first function of an MIS is to determine the information
requirements to make decisions and to organize it into a database. Data Base is an
integrated collection of data stored in one place for, efficient access and information
processing. Data can be obtained from within and outside the organisation. At
operational level most data collected for an MIS come from internal sources such as
company records but at strategic level external sources are used for collecting data.
External sources include trade publications, customers and consultants.
Data Storage and Processing: After creation of a database, it must be stored
and processed in a form which is useful to managers. Data are stored on magnetic tape
or hard disks. The data can be loaded into computers in seconds for easy access by the
user.
Information Provider to Managers: After collection of data, storing and
processing of data, the next function is to present the information to managers for their
use.
Prediction
It predicts the future situation by applying modern mathematics, statistics or
simulation.
Planning
It arranges reasonably the plans of each functional department in accordance with
the restrictions afforded by enterprises and provides the appropriate planning reports
according to different management.
Controlling
It monitors and inspects the operation of plans and comprises with the differences
between operation and plan in accordance with the data afforded by every functional
department, and be assistant to managers to control timely each method by analyzing
the reasons why the differences comes into being.
Assistance
It derivates instantly the best answers of related problems by applying to various
of mathematics’ mode and analyzing a plentiful data stored in computers in the hope of
using rationally human resource, financial resource, material resource and information
resource for relative abundant economic benefits.

ELEMENTS OF MIS
There are three elements constituting an MIS - Management, Information and
System.
Management
Management Information System (MIS) is a subset of the overall internal controls
of a business covering the application of people, documents, technologies, and
procedures by management experts to solve business problems such as costing a
product, service or a business-wide strategy.
MIS is a support system for organizational functions and decision making.
Organization theory has provided many important concepts which are directed towards
understanding the functions of MIS.
Information
Every aspect of management in the modern age relies heavily on information to
thrive. Nothing moves without information and it is generally believed that information
is power and that he who has it has power. It is an important resource needed to
develop other resources. Changing circumstances and environments have necessitated
the need for proper dissemination of information at various levels of management. The
development and use of information management systems (MIS) is a modern
phenomenon concerned with the use of appropriate information that will lead to better
planning, better decision making and better results.
System
Information flow in a system is becoming of ever greater interest in progressive
and dynamic organizations. The need to obtain access conveniently, quickly and
economically makes it imperative to devise procedures for the creation, management
and utilization of databases in organizations. Management information and information
systems, in particular those related to effective decision-making processes in an
organization, i.e. MIS, are regarded as valuable organizational resources. Simply put, an
information system is a system for accepting data/information as a raw material and
through one or more transmutation processes, generating information as a product. It
comprises the following functional elements which relate to the organization and its
environments:
• Perception - Initial entry of data whether captured or generated, into the
organization;
• Recording - Physical capture of data;
• Processing - transformation according to the "specific" needs of the
organization;
• Transmission - the flows which occur in an information system;
• Storage - presupposes some expected future use;
• Retrieval - search for recorded data;
• Presentation - reporting, communication; and
• Decision making - a controversial inclusion, except to the extent that the
information system engages in decision making that concerns itself.

STRUCTURE OF MIS
On one side many experts think that MIS is computerization of routine clerical
work, whereas on the other hand others think it provides answers and solutions for all
the managerial problems. MIS is more than a set of ideas and it provides means for
connecting the organizational systems with exchange of information. The systems
approach to management helps in designing the MIS systems. IT is tool used by the MIS.
The interaction between information technology and organizations is very complex. It is
influenced by the organization’s structure, standard procedures, politics, culture and
surrounding environment. An organization is a stable, formal, social structure that takes
resources from the environment and processes them to produce outputs. The
organization transforms these inputs into products and services.
MIS is more than a set of ideas or concepts. It is an operational system performing
a variety of functions to produce outputs which are useful to the management of an
organisation. The systems approach to management must precede the design and use
of an MIS. The computer is only a tool of the MIS, not the MIS itself. Management must
take an active part in the design of the MIS. System designer should use participatory
design process. Technical knowledge of the computer, is preferable, but the essence of
MIS is integrated planned systems and not “the islands of mechanisation” or data
processing systems.
Davis and Olson define MIS as an integrated user machine system for providing
information to support operations management and decision-making functions in an
organisation. The computer based system utilises computer hardware and software,
manual procedures, decision models and a database. A database is a centrally
controlled integrated collection of logically organised data. The data needs to be
managed in order to be available for processing and have appropriate quality and value.
The MIS concept is now developed around a federation of subsystems and implemented
as per overall plan. MIS is an organised method of providing past, present and future
information relating to internal operations of an organisation. It also provides external
intelligence by environmental scanning techniques. All organisations have information
system that performs data processing operations to meet the legal and transactional
data processing requirements, carrying out their functions effectively and a variety of
useful reports. Structure of an MIS can be described in the following three forms:
• Functional form
• MIS at Different Levels
• Comprehensive Structure of MIS
Functional Form
Under this type of structure, MIS may be viewed as assisting in functions of an
organization such as marketing, production, purchasing, technical, finance and
accounting. Each of these functional areas has their own information system to cater to
its need of information.
MIS at Different Levels
The following three levels in an organization are important from the point of view
of MIS:
(i) Strategic Information Level.
(ii) Tactical Information Level.
(iii) Operational Information Level
(i) Strategic Information Level- This level is concerned with determining,
maintaining and supplying information required by top level management. Top
management requires information for formulating long-term objectives, strategies,
major policies and programmes of the concern. It also requires information about
external environment for strategic planning. Strategic planning is the process of
deciding on objectives of the organisation, on changes in these objectives, on the
resources used to attain these objectives, and on the policies that are to govern the
acquisition, use and disposition of these resources.
Top management in any organization is mainly responsible determining the overall
goals and objectives of the business. It deals mainly with long-term strategic plans,
policy matters and broad objectives of the organization. They are responsible for
interacting with representatives of the external environment, such as financial
institutions, political figures, and important clients of the organization. The top level
normally consists of Chairman and members of the Board of Directors, Chief Executive
Officer and the heads of the major departments of the organisation. In fact, these
executives, responsibilities relate to the whole organization and they are accountable
for effectiveness and efficiency of the operations of the organization as a whole.
Top management needs the information on the trends in the external environment
(economic, technological, political and social) and on the functioning of the internal
organization. Top management requires historical as well as current and future
information. Mostly the information utilized by top management is futuristic and
external in nature. Much of the information so generated for strategic planning purpose
tends to be incomplete and not fully reliable. The strategic planning information often
has the following characteristics:
• Ad hoc Basis: Information for strategic planning is more often produced
when it is needed, on an ad hoc basis. The information may be produced
either regularly or periodically.
• Unexpected Information: The information produced by the system may not
be as per expectation. The result of the forecast may be a surprise to the
organization planners.
• Predicted nature: The information produced at this level is usually of
predictive nature about future events rather than descriptive of past events.
• Summary Form: The information produced at this level is usually not
detailed but in summary form. For example strategic planners may not be
interested in the customer invoices but overall buying trends.
• External Data: A large part of data used for input at this level is acquired
from the external sources.
• Unstructured format: The data used for input are unstructured in format.
• Subjectivity: The input to the system may be highly subjective in nature.
(ii) Tactical Information Level: This level meets the information requirements of
the middle level of management. Middle management level requires information for
management control. Management control is the process by which managers assure
that organisational resources are obtained and used effectively and efficiently in the
accomplishment of the organisation’s objectives. It also requires information to
translate strategies and policies in terms of action programmes and norms of
performance. Tactical level also supplies information to strategic level for strategic
decisions by top management. This level collects the required information from
strategic and operational level and thus serves as a bridge between strategic and
operational levels of information.
Tactical Level Management and its Information Needs: Middle level
management is a group of management positions, which consist of heads of functional
departments and chiefs of technical staff and service units. It includes the Sales
Manager, Finance Manager, and the Manager of Personnel etc. Middle management is
responsible for the elaboration, and operability of organization goals, strategies and
policies in terms of action programmes. Middle management is also concerned with the
task of formulating operating policies and procedures for the guidance of operational
management.
The information required at the middle management level is less diverse and
complex. Much of the information used by the middle management is internal in nature.
Middle management does not require much “futuristic” information since its decisions
are not strategic in nature. For example, a sales manager needs information on sales
potential and trends in different market segments, geographical territories, competitive
conditions etc. He also needs information to generate a variety of reports, including
summary reports, exceptional reports, and ad hoc reports. Characteristics of
information required at this level are the following:
 Predictive Nature: The information by a tactical system is sometimes produced
periodically.
Unexpected Findings: The information provided by a tactical information system
may not be the information that was expected.
Comparative Nature: The information produced at tactical level is usually
comparative in nature. These information alert managers to major variation from the
accepted standards. These types of information systems are similar to the control
process systems.
Summary Form: The Information produced at this level is not detailed but is in
summary form.
Both External and Internal Sources: The data used, as input are internal to the
organizations well as external.
(iii) Operational Information Level: This level meets the information
requirements of operational level of management. Operational level requires
information for implementing and regulating operational plans for the purpose of
converting inputs into outputs and operational control. Operational control is the
process of assuring that specific tasks are carried out effectively and efficiently. This
level supplies routine and other information to tactical level in summarized form.
Operational management is defined as a team of management positions at the
base of the hierarchy. It consists of section officers, office managers and
superintendents, foreman and supervisors who are directly responsible for instructing
and supervising the tasks in the organisation. It is concerned with implementing
operational plans, policies and procedures. At this level, managers are responsible for
routine, day-to-day decision and activities of the organization, which do not require
much judgment and discretion. Operational management mostly needs internal
information on operational aspects. It generates internal information for and also
receives information from the middle management levels on operational plans and
programmes. The nature of information is routine and structured. There is little element
of complexity and uncertainty involved in the information at this level.
The major characteristics of information at this level are as follows:
• Repetitiveness: The information produced by these systems is usually
repetitive in nature
• Predictability: The information they produce usually does not contain any
surprises for the users of the information. These systems produce results at
the expected time.
• Emphasis on the past: The information generated by the systems usually
describes the past.
• Detailed nature: The information produced is very detailed.
• Internal origin: The data for operational system usually originate entirely
from internal sources. That is data for paychecks come from internal
documents of the organization.
• Structured form: The form of the data input and the form of the output
produced by the operational information systems is structured.
• Great accuracy: The accuracy of the data used as input to such systems and
of the output produced by such systems is usually very high.
Comprehensive Structure of MIS
An ideal MIS structure should support for decision making based on
management activity and organizational function. The comprehensive structure of an
MIS should possess the following characteristics:
• It should be closely directed by management.
 • It should integrate various subsystems of the management and should avoid
duplication and redundancy of data.
• It should make the effective dissemination of information.
• It should be capable of meeting the information requirement of managers in
different functions.
Taking into consideration the above characteristics, the suitable structure of a
comprehensive MIS may be a federation of information subsystems for different
functions, viz. production, material management, marketing, finance and engineering
personnel. Each subsystem of information system is supposed to provide information
support to executives for operational control, management control and strategic
planning.
(i) Conceptual Structure
It is defined as a federation of functional units. Each of the subsystem of the
information system has some unique data files, which are used only by that subsystem.
There are files that need to be accessed by more than one application. These files are
organized in the form of a database, which is managed by the data base management
system. In addition to application programs written especially for each subsystem, there
are common applications, which serve multiple functions. Each subsystem has linkages
to these common applications. The information requirement of executives for
operational control, management control and strategic planning itself depend upon-
operational function, and type of decision-making.
Different operational functions have different information requirements. Their
information requirements vary in content and characteristics. The content of
information depends upon the activities to be performed under an operational function.
Operational function also influences the characteristics which a particular information
must posses. The level of management activity too influences the characteristics of
information. Management control requires more accurate and repetitive information.
Operational level requires information in detailed form about the performance.
Information requirements also differ as per the types of decisions. The content of
information for programmed decisions can be completely pre-specified. In the case of
non-programmed decisions, it is difficult to specify complete information requirements.
The information or data requirements of each sub-system can be met by developing two
types of data files, viz., unique and common.
Unique data files may meet the specific information requirements and common
data file stores data meant for general use in the decision-making.

(ii) Physical Structure

A management information system (MIS) is an organized combination of people,
hardware, communication networks and data sources that collects, transforms and
distributes information in an organization. An MIS helps decision making by providing
timely, relevant and accurate information to managers. The physical components of an
MIS include hardware, software, database, personnel and procedures.
The physical structure of an MIS should be identical to the conceptual structure.
Integrated processing is used in order to simplify the interconnections and reduce
duplication of input. Integrated order entry system crosses functional boundaries.
(iii) MIS Pyramidal Structure
Pyramidal arrangement facilitates management decision making that may
include structured, unstructured and semi-structured decisions. It involves strategic
planning, management control and tactical planning, operational planning and control
and lower level activities towards action and monitoring of the decision support for
decision making.
 Figure 4.1: MIS Pyramidal Structure.

(iv) Computer based MIS (CBMIS) Structure

Conceptually, Management Information System can exist without Computer; but it
is the power if computerised which makes MIS feasible. MIS is characterised mainly by
its ability to produce periodic reports (e.g. quarterly sales forecast, etc.), compared with
set target (e.g. budget) and providing required representation of analysis to be made
thereof — all done in minimum time with minimum human involvement.

Figure 4.2: Computer based MIS Structure.

The Four Building Blocks
There are primarily four building blocks for the structure of complete MIS. They
are:
• Organizational functions and cross-functional processes.
• Management activities at different hierarchical levels.
• Decision support.
• Operating elements.
Organizational Functions
• MIS structure has to be designed to satisfy the requirements of various
organizational functions.
• In addition, there will be many cross functional processes going on in an
organization.
• Each of these requires information for their various levels of hierarchical
activities which are normally known as transaction processing
(clerical/worker level), operational control (junior/middle management
 level), managerial control (senior management level) and strategic
planning (top management level).
• These organizational functions, as we know, are: marketing and sales,
supply chain (materials), manufacturing, logistics, human resources,
finance and accounting, information technology and top management.
Each of these functions also interacts with each other in cross functional
processes in the project phases and also during stabilized business
phases.

Figure 4.3: Organizational Functions and Representative Information

Systems.
Hierarchical Management Activities
• MIS structure has to be designed to satisfy various hierarchical information
requirements.
• There are four levels of hierarchy: strategic planning (top management),
management control and tactical planning (senior management),
operations planning and control (middle and junior management),
transaction processing (clerical staff and workers).
• At each level of management, the nature of information in terms of
details, conciseness, frequency, interpretations, decision
supporting/decision giving capabilities etc is different and MIS structure
should support it.
 Figure 4.4: Management Activities.
Decision Making
• Nature of decisions varies for each hierarchical level in each management
function.
• Broadly, these decisions can be classified in two ways as: structured
(programmable) decisions and unstructured (non programmable)
decisions.
• MIS requirements for structured programmable decisions are clear,
unambiguous and decision making logic can be formulated. These are
normally related to the requirements of transaction processing and
operation control levels in various functions of the organization.
• MIS requirements for unstructured non programmable decisions are
ambiguous and often frequently changeable,. The decision making is not
amenable for pre-established procedures or logic. These are normally
related to the requirements of strategic planning and some times, for
management control levels. Information requirements are not fully known
in advance information/data retrieval is done through ad hoc enquiries.
• MIS structure should address to the needs of both the types of decision
making mentioned earlier.
Operating elements of MIS

Figure 4.5: Business Processes supported by Functional Area

Information Systems.
• MIS that has to support the requirement of various types of decision
making at different hierarchical levels in various functions of an organization finally has
its operating elements on which the entire structure is created.
• There are three operating elements: physical components, processing
functions and outputs for the users of information.
• Physical components are: hardware, software, database, algorithms
(procedures or logic) and the people/experts in information technology
function.
• Processing functions include: transaction processing, database
maintenance, reports production, enquiry processing and interactive
support applications.
• Types of outputs are: transactional types or action oriented, informational
and decision support types.
 • The operating elements of MIS structure should be designed keeping
these (physical components, processing functions and types of
information outputs) in mind.
Finally, the four building blocks of MIS structure as discussed above should be
synthesized in order to make a seamless, integrated and contingency based MIS
structure.

Figure 4.6: MIS Architecture.

One of the important issues regarding the structure of MIS is formal versus
informal information systems. The complete information processing system of an
organization consists of both formal systems and informal systems. Documents and
other records indicating compliances with pre-specified rules and procedures manifest
the formal system. The informal systems process information without formal records of
that process.
Information systems and organizations influence one another. Information Systems
are critical to the success of organization at all managerial levels. The information
systems are changing the way an organization runs its business and makes
management decisions.

Figure 4.7: Schematic Model of Organizational MIS.

Information Systems are now integrated throughout the organization. End users
take greater responsibilities for the success of Information Systems. Companies make
huge investments not just in hardware, but in software also. The fastest and biggest
change in modern computing is the Internet. Businesses are rushing to the Internet in
an effort to keep up with the competition or to create whole new businesses.
Organizations are designing new systems, or transform old ones, with the help of
Internet, Extranets, and Intranets.

ROLE OF MIS
 The role of the MIS in an organization can be compared to the role of heart in the
body. The information is the blood and MIS is the heart. In the body the heart plays the
role of supplying pure blood to all the elements of the body including the brain. The MIS
plays exactly the same role in the organization.
The system ensures that an appropriate data is collected from various sources,
processed, and sent further to all the needy destinations. The system is expected to
fulfill the information needs of an individual, a group of individuals, the management
functionaries: the managers and the top management.
The MIS satisfies the diverse needs through a variety of systems such as Query
Systems, Analysis Systems, Modeling Systems and Decision Support Systems. The MIS
helps in Strategic Planning, Management Control, Operational Control and Transaction
Processing.
The MIS helps the clerical personnel in the transaction processing and answers
their queries on the data pertaining to the transaction, the status of a particular record
and references on a variety of documents. The MIS helps the junior management
personnel by providing the operational data for planning, scheduling and control, and
helps them further in decision making at the operations level to correct an out of control
situation. The MIS helps the middle management in short them planning, target setting
and controlling the business functions. It is supported by the use of the management
tools of planning and control. The MIS helps the top management in goal setting,
strategic planning and evolving the business plans and their implementation.
The MIS facilitates information generation, communication, problem identification
and helps in the process of decision making. The MIS, therefore, plays a vital role in the
management, administration and operations of an organization.

Figure 4.8: MIS Role-Play.

MIS provides important tools to the organisation. Gathering and using
information is central to managing the processes of organisation for quality
management. MIS helps to:
• Capture information and store it.
• Access stored information and manipulate it according to needs,
• Control flow of information.
• Manage resources.
• Produce reports for organisations.
• Maintain records needed for quality control.
• Manage and track achievement and progression.
• Manage returns.
• Record and track outcomes.
• Manage marketing information.

MIS AS A CONTROL SYSTEM

 MIS can be used as an effective tool for management control in an organization. It
can perform as a management planning and control agent facilitating at the following
three levels of management hierarchy:
1. Operational Control – This is a process of ensuring that the operational
activities are carried out effectively and efficiently. A large percentage of decisions are
programmable and the procedure used is quite stable. It makes use of pre-established
procedures and decision rules. Individual transactions are often important; hence the
system must be able to respond to both individual transactions and summaries of
transactions. The data required for this process is generally current and the sequence of
processing is often significant.
Processing support for operational control consists of:
• Transaction processing – Inventory withdrawal transaction can examine
balance on hand, calculate order quantity, produce action document.
• Enquiry processing – An enquiry for personal files describing the
requirement for a position.
• Report processing – A report showing orders still outstanding after 30
days.
2. Management Control – This system is required by managers of
departments, profit centers to measure performance, decision on control actions,
formulate new decision rules and allocate resources. Summary information is needed
and it must be processed so that trends may be observed, reasons for performance
variations and solutions may be suggested.
The control process requires the following types of information:
• Planned performance – To assist managers in finding problems and
reviewing plans and budgets. It projects the effect of current action.
• Variance from planned performance – This report shows performance
and variations from planned performance.
• Problem analysis models to analyze data to provide input for decision
making.
• Decision models to analyze a problem situation and provide possible
solutions.
• Inquiry model to provide assistance to enquiries.
3. Strategic Planning – The purpose of strategic planning is to develop
strategies by which an organization will be able to achieve its objectives. These
activities do not occur on a periodic basis. Data required for strategic planning are
generally for processed summarized data from a variety of sources. Information system
support can provide substantial aid to the process of strategic planning in the following
ways:
• Evaluation of current capabilities based on internal data.
• Internal projection of future capabilities by analyzing past data.
• Fundamental market data on the industry and the competitors.
• Databanks of public information regarding industry and competitors.

MIS: A TOOL FOR MANAGEMENT PROCESS

 The process of management requires a lot of data and information for execution
of the plan. This requirement arises on account of that in each step of management, a
variety of decisions are taken to correct the course of development. The decisions or
actions are prompted due to the feedback given by the control system incorporated in
the management system. The control of overall performance is made possible by way of
budget summaries and reports. The summary showing sales, costs, profit and return on
investment throws light on the direction that the organization is moving in. The
exception reports identify the weaknesses in the system of management.
If effective management system is to be assured, it has to rest on business
information. The management performance improves if the business risk and
uncertainties are handled effectively. If the information provided is adequate, one can
deal with these factors squarely. The information support improves the lack of
knowledge, enriches experience and improves analytical abilities leading to better
business judgment. So, if efficient information support is to be provided, it calls for a
system with the goals of generating management information. A good MIS is expected
to furnish information to the managers to expand their knowledge base. The managers
must know the adverse trends in business, the shortfalls and failures in the
management process.
The MIS provides the support to act decisively. It supports management in terms
of basic business information at the corporate level and meets the specific needs of the
managers. It highlights the critical success factors and supports key areas of
management. MIS should, wherever possible, support systems to help the manager in
decision making.
Modern management systems rely on MIS for efficient and effective execution.
The complexity of business operations demands skill and foresight to avert the crisis.
Modern business management requires shift from the traditional controls to managerial
control. The shift requires the manager to become more efficient in handling affairs
than he is committed to. The manager becomes more efficient if he is well informed,
made richer in knowledge, experience and analytical skills and is able to face the
uncertainties and the risk of business. This is possible only if he is supported by MIS in
his specific task of management of business.
Modern business has become more technology-oriented wherein the manager is
required to be up-to-date on technological advancement not only in his field of
operations but also in other technologies. The emerging new technologies are posing
threats to current business and are opening new opportunities for new business
ventures. The manager has to keep himself abreast of the information that how these
technologies may affect his business prospects. A good MIS designed for such a support
is absolutely essential. MIS therefore, is a tool for effective execution of the
management process.

MIS APPLICATIONS
Management Information System is used by the organizations to provide them with
a competitive edge. The system must support the objectives of the organization.
Generally, organizations are structured along functional lines like HR, Marketing,
Production, Finance etc. In these departments, the MIS is applied in many ways. Some
of the applications are given below:
1. Accounting Management Information System: It is basically a part of
financial management information system. All the accounting reports are generally
showed by all level of accounting managers. These reports are prepared by taking the
inputs from various departments through an effective MIS. It thus, helps in preparing
general ledger, trial balance and other accounts of the organizational purpose.
2. Financial Management Information System: This system helps in meeting
the primary objectives of finance by providing various tool and techniques like:
• Break Even Analysis
 • Financial Modeling
• Capital Budgeting
• Cost analysis
• Cash flow and fund flow projections
• Management Accounting
• Expense Analysis
• Auditing and Control.
With the help of these tools the finance manager analyzes past and current
financial activities, projects, future financial needs, audit and control and the use of
funds using the information which is developed by MIS department. The FMIS also helps
to:
• Provide timely, accurate, and consistent data for management and budget
decision-making;
• Support organization-wide policy decisions;
• Integrate budget and budget execution data, allowing greater financial
control and reducing opportunities for discretion in the use of organizational
funds;
• Provide information for budget planning, analysis and organization -wide
reporting;
• Facilitate financial statement preparation; and
• Provide a complete audit trail to facilitate audits.
3. Production Management Information System: A production MIS supports
the information related to various subsystems of production like manufacturing or
assembling, planning and control, industrial engineering, maintenance and quality
control. It also has a strong interface with materials management function.
Production MIS accounts for a number of entities in a systematic manner to fulfill
the needs of the production management functions in various tasks. These entities are
as follows:
• Quantity of production at a specified time period
• Material Requirement
• Rejection Quantity
• Breakdown Incidence
• Labour Requirement
• Use of Raw Materials
• Machine Utilization
• Labour Laws.
All these entities support the production at every stage i.e. raw materials, work in
process and finished goods etc. The area of production has been impacted most by the
advancements in information technology as a result of which manufacturing operations
have changed up to a great extent.
4. Marketing Management Information Systems: They support the managers
in the area of product planning and development, distribution, logistics, pricing
decisions, promotional effectiveness, sales forecasting and control etc.
Marketing function draws and relies heavily on the data from external sources
like market survey, market research, product journals/competitor's reports and
industrial association publications. Therefore, an effective MIS is of a great help to the
marketing management system.
5. Personnel Management Information System: The primary objective of
personnel management function is to acquire and maintain suitable manpower with
requisite abilities, skills and knowledge. MIS helps it in controlling personnel cost
through continuous increase in manpower productivity by the help of following
techniques:
• Human Resource Development
• Motivation through leadership
• Promotion and Rewards
• Grievance handling
• Performance Appraisal
• Designing the organization structure.
To perform all such activities some of the documents generally used are as
follows:
• Personnel application forms
• Appointment letter
• Attendance and leave record
• Bio-data
• Wage and salary agreement etc.
6. Inventory Management Information Systems: It is very important to
allocate and mobilize resources in inventory critically on right time. Accumulative
inventory management information system reduces the cost to minimum and results in
Just in Time (JIT).
7. Corporate Review: MIS keeps the top management informed through various
kinds of reports, notes, inter-office memos, minutes of meetings, etc. It relates all the
departments and generates overall corporate reports by taking the inputs from every
department. MIS provides a real time data at the corporate level.
8. Transaction-Processing Systems: Transaction-processing systems are
designed to handle a large volume of routine, recurring transactions. Transaction-
processing systems are used widely today. Banks use them to record deposits and
payments into accounts. Supermarkets use them to record sales and track inventory.
Managers often use these systems to deal with such tasks as payroll, customer billing
and payments to suppliers. As soon as a transaction is processed, the information of
transaction processing is generated in real time.
9. Operations Information Systems: An operations information system gathers
comprehensive data, organizes it and summarizes it in a form that is useful for
managers. These types of systems access data from a transaction-processing system
and organize it into a usable form. Managers use operations information systems to
obtain sales, inventory, accounting and other performance-related information.
MIS major application areas include business, industrial sector, service sector,
hotels, NGOs and non-profit organizations, airline reservations (seat reservation,
payment, schedules, boarding list, special needs, etc.), train reservation and bank
operations (deposit, transfer, withdrawal and other transactions). MIS principal concerns
comprise facilitating decision making by supplying the information needed in an up-to-
date and accurate form to the people who need it, on time, in a usable form.
With computers being as pervasive as they are today, there is hardly any large
business that does not rely extensively on their IT systems.
However, there are several specific fields in which MIS has become invaluable.
Strategy Support
While computers cannot create business strategies by themselves they can
assist management in understanding the effects of their strategies, and help enable
effective decision-making.
 MIS can be used to transform data into information useful for decision making.
Computers can provide financial statements and performance reports to assist in the
planning, monitoring and implementation of strategy.
MIS provides a valuable function in that they can collate into coherent reports
unmanageable volumes of data that would otherwise be broadly useless to decision
makers. By studying these reports decision-makers can identify patterns and trends
that would have remained unseen if the raw data were consulted manually.
Management information systems can also use these raw data to run simulations
– hypothetical scenarios that answer a range of ‘what if’ questions regarding alterations
in strategy. For instance, MIS can provide predictions about the effect on sales that an
alteration in price would have on a product. These Decision Support Systems (DSS)
enable more informed decision making within an enterprise than would be possible
without management information systems.
Data Processing
Not only do management information systems allow for the collation of vast
amounts of business data, but they also provide a valuable time saving benefit to the
workforce. Where in the past business information had to be manually processed for
filing and analysis it can now be entered quickly and easily onto a computer by a data
processor, allowing for faster decision making and quicker reflexes for the enterprise as
a whole.
Management by Objectives
While management information systems are extremely useful in generating
statistical reports and data analysis they can also be of use as a Management by
Objectives (MBO) tool.
MBO is a management process by which managers and subordinates agree upon
a series of objectives for the subordinate to attempt to achieve within a set time frame.
Objectives are set using the SMART ratio: that is, objectives should be Specific,
Measurable, Agreed, Realistic and Time-Specific.
The aim of these objectives is to provide a set of key performance indicators by
which an enterprise can judge the performance of an employee or project. The success
of any MBO objective depends upon the continuous tracking of progress.
In tracking this performance it can be extremely useful to make use of an MIS.
Since all SMART objectives are by definition measurable they can be tracked through
the generation of management reports to be analysed by decision-makers.

MIS DEVELOPMENT APPROACHES

The following three approaches are used for developing MIS:
(I) Top-down Approach
In this approach the development of MIS begins by defining the objectives of the
organization, the kind of business and the constraints. The activities essential for the
achievement of these objectives are identified. On the basis of these, the major
information requirements are ascertained.
This approach develops a model of how information flows in the organization. On
the basis of information flows various information subsystems are defined. Then
modules are developed for each subsystem. A module is a basic unit for the
development of information system. The selection of module is based on the basis of
the priority assigned to activities. Then various sub-systems and their modules are
coordinated to achieve the objective of integration. In this approach, top management
takes the initiative in formulating major objectives, policies and plans in a
comprehensive manner. Then these are communicated to middle and operative
management levels for translating them into action plan.
 (II) Bottom-up Approach
The development of information system under this approach starts from life
stream systems which are essential for the day-to-day business activities. Payroll, sales
order, inventory control are the examples of life stream systems. The development of
information system, for each life stream system starts after identifying file requirements
and information processing.
After ascertaining the data/information requirements, the information system for
each stream is developed. The next step is towards the integration of data. The data is
integrated after examining various applications, files and records. It ensures that
uniform data being used by all programs. Integrated data also provides added capability
for inquiry processing and ad hoc requests. The next development is the addition of
decision for supporting the activities involved in management control. Then, these
models are integrated to evolve model base to support higher level management
activities.
A comparison of top-down and bottom-up approaches reveals the following points:
Under top-down approach top management takes the main initiative in formulating
major policies for developing MIS, whereas in the bottom-up approach operative
management identifies the life stream systems for the development of MIS.
Under top-down approach middle and operative management have a little role in
the development, but, under bottom-up approach, they guide the development of MIS.
The information system developed under top-down approach is according to the
systems approach and is also viewed as a total system. The information system
developed under bottom-up approach may not be so integrated.
(III) Integrated Approach
To overcome the limitations of the above two approaches, integrated approach
permits managers at all levels to contribute to the design of the system. In this
approach, top management identifies the structure and design of MIS, then, the design
is presented to the lower level management for modification. The lower management
returns the design with their suggestions to the top level for approval. Then, the revised
design is drawn and evaluated by the top level and finalized.
(IV) Organization-Chart Approach
Using this approach, the MIS is designed based on the traditional functional
areas, such as finance, administration, production, R&D and extension. These functional
areas define current organizational boundaries and structure.
(V) Data-Collection Approach
This approach involves collection of all data which might be relevant to MIS
design. The collected data are then classified. This classification influences the way the
data can be exploited usefully at a later stage. The classification therefore needs to be
done extremely carefully.
(VI) Database Approach
A large and detailed database is amassed, stored and maintained. The database
approach is more and more accepted for two main reasons: first, because of data
independence it allows for easier system development, even without attempting a
complete MIS; and, second, it provides management with immediate access to
information required.
(VII) Total-System Approach
In this approach the interrelationships of the basic information are defined prior
to implementation. Data collection, storage and processing are designed and done
within the framework of the total system. This approach can be successfully
implemented in organizations which are developing.
BUSINESS PLANNING WITH MIS
Business environment is prone to changes and this factor makes business
planning very complex. Some factors such as the market forces, technological changes,
complex diversity of business and competition have a significant impact on any
business prospects. MIS is designed to assess and monitor these factors. The MIS design
is supposed to provide some insight into these factors enabling the management to
evolve some strategy to deal with them. Since these factors are a part of the
environment, MIS design is required to keep a watch on environment factors and
provide information to the management for a strategy formulation.
Strategy Formulation
Strategy formulation is a complex task based on the strengths and the
weaknesses of the organization and the mission and goals it wishes to achieve. Strategy
formulation is the responsibility of the top management and the top management relies
on the MIS for information.
There are various business strategies such as overall company growth, product,
market, financing and so on. MIS is expected to provide the relevant information that
would help the management in deciding the type of strategies the business needs.
Every business may not require all the strategies all the time. The type of strategy is
directly related to the current status of business and the goals it wishes to achieve. The
MIS is supposed to provide current information on the status of the business vis-à-vis
the goals. MIS is supposed to give a status with regard to whether the business is on a
growth path or is stagnant or is likely to decline, and the reasons thereof. If the status of
the business shows a declining trend, the strategy should be of growth. If business is
losing in a particular market segment, then the strategy should be a market or a
product strategy.
Continuous Progress Assessment
The continuous assessment of business progress in terms of sales, market,
quality, profit and its direction becomes the major role of MIS. It further aids the top
management in strategy formulation at each stage of business. The business does not
survive on a single strategy but it requires a mix of strategy operating at different levels
of the management. For example, when a business is on the growth path, it would
require a mix of price, product and market strategies. If a business is showing a decline,
it would need a mix of price-discount, sales promotion and advertising strategies.
The MIS is supposed to evaluate the strategies in terms of the impact they have
on business and provide an optimum mix. The MIS is supposed to provide a strategy-
pay off matrix for such an evaluation.
Top Management’s Guiding Tool
In business planning, MIS provides support to top management for focusing its
attention on decision making and action. In business management, the focus shifts early
on from one aspect to another. In the introductory phase, the focus would be on a
product design and manufacturing. When the business matures and requires to sustain
or to consolidate, the focus would be on the post sales services and support. The MIS
should provide early warning to change the focus of the management from one aspect
to the other.
Strategy Implementation
Evolving the strategies is not the only task the top management has to perform.
It also has to provide the necessary resources to implement the strategies. The
assessment of resource need, and its selection becomes a major decision for the top
management. The MIS should provide information on resources, costs, quality and
availability, for deciding the cost effective resource mix.
Feedback
 When the strategies are being implemented, it is necessary that the
management gets a continuous feedback on its effectiveness in relation to the objective
which they are supposed to achieve. MIS is supposed to give a critical feedback on the
strategy performance. According to the nature of the feedback, the management may
or may not make a change in the strategy mix, the focus and the resource allocation.
Forecasting Models
MIS has certain other characteristics for the top management. It contains
forecasting models to probe into the future-the business model for evaluation of the
strategy performance by simulation business conditions. It contains functional models
such as the model for a new product launching, budgeting, scheduling and the models
using PERT / CPM technique for planning.
Adequate Use of Data
MIS for the top management relies heavily on databases which are external to
the organization. The management also relies heavily on the internal data which is
evolved out of transaction processing. Management uses the standards, the norms, the
ratios and the yardsticks while planning and controlling the business activities. They are
also used for designing strategies and their mix. The MIS is supposed to provide correct,
precise and unbiased standards to the top management for planning.
We can summaries the role of the MIS in the top management function as
follows.
MIS supports by way of information, to:
• Decide the goals and objectives,
• Determine the correct status of the future business and projects,
• Provide the correct focus for the attention and action of the management,
• Evolve, decide and determine the mix of the strategies,
• Evaluate the performance and give a critical feedback on the strategic
failures,
• Provide cost-benefit evaluation to decide on the choice of resources, the
mobilization of resources, and the mix of resources.
• Generate the standards, the norms, the ratios and the yardsticks for
measurement and control.
Success of a business depends on the quality of support the MIS gives to the
management. The quality is assured only through an appropriate design of the MIS
integrating the business plan with the MIS plan.

MIS VERSUS DATA PROCESSING

A data processing or electronic data processing system processes transactions and
produces reports. It represents the automation of routine processing to support
operations. Prior to computers, data processing was performed manually or
mechanically. A management information system is more comprehensive than data
processing; it encompasses processing for organizational functions and management
processes. MIS includes transaction processing as one of its functions. MIS has access to
decision models and methods for querying the database. The database is also, an
essential part of routing transaction processing and reporting. MIS orientation means
information resources are utilized to improve decision-making and improved
organizational effectiveness.
The conversion of facts into meaningful information is known as data processing or
information processing. It is the processing of data to make it more usable and
meaningful, thus transforming it into information. Data processing involves a number of
transactions and file maintenance in order to provide a database for generating and
providing information to various users at the management levels.
 MIS is a concept towards which an information system design moves. One of the
important differences between MIS and data processing is the capability to provide
analysis and decision making support. Though data processing is an important tool of
MIS, yet, it has no value if not used within a system like MIS. Database is an essential
part of routing transaction processing and reporting. In MIS, information resources are
utilized to support decision-making and achieve organizational effectiveness. In the
present competitive environment, information resources have become more important
as means for achieving competitive advantage.

BENEFITS OF MIS
The field of MIS can deliver a great many benefits to enterprises in every
industry. Expert organisations and MIS professionals continue to find and report new
ways to use MIS to achieve business objectives.

Facilitates Planning
MIS improves the quality of planning by providing relevant information for sound
decision–making. Due to increase in the size and complexity of organizations, managers
have lost personal contact with the scene of operations.
Minimizes Information Overload
MIS change the larger amount of data in to summarize form and there by avoids
the confusion which may arise when managers are flooded with detailed facts.
Encourages Decentralization
Decentralization of authority is possibly when there is a system for monitoring
operations at lower levels. MIS is successfully used for measuring performance and
making necessary change in the organizational plans and procedures.
Brings Coordination
MIS facilities integration of specialized activities by keeping each department
aware of the problem and requirements of other departments. It connects all decision
centers in the organization.
Makes Control Easier
MIS serves as a link between managerial planning and control. It improves the
ability of management to evaluate and improve performance. The use of computers has
increased the execution of data processing and storage capabilities reducing the overall
information processing cost.
Information Flow Channel
MIS assembles, processes, stores, retrieves, evaluates and disseminates
information.
Core Competencies
Every market leading enterprise will have at least one core competency, that is,
a function they perform better than their competitors. By building an exceptional
management information system into the enterprise it is possible to push out ahead of
the competition. MIS systems provide the tools necessary to gain a better
understanding of the market as well as a better understanding of the enterprise itself.
Enhances Supply Chain Management
Improved reporting of business processes leads inevitably to a more streamlined
production process. With better information on the production process comes the ability
to improve the management of the supply chain, including everything from the sourcing
of materials to the manufacturing and distribution of the finished product.
 Quick Reflexes
As a result of improved supply chain management comes an improved ability to
react to changes in the market. Better MIS systems enable an enterprise to react more
quickly to their environment, enabling them to push out ahead of the competition and
produce a better service and a larger piece of the pie.

LIMITATIONS OF MIS
MIS has the following limitations:
(i) The quality of the MIS outputs is based on the quality of inputs and processes.
(ii) MIS is not a substitute for effective management. It is a tool that helps in
making decisions in different functional areas and problem solving.
(iii) Static MIS system may not have adaptability with the fast changing and
complex environment.
(iv) MIS cannot provide information suitable for every type of decisions made by
executives.
(v) MIS has focus on quantitative factors; thus it ignores qualitative factors like
morale, attitudes of members in the organization.
(vi) MIS is not so useful for making non-programmed decisions.
(vii) MIS effectiveness is linked with changes in top management and
organizational structure.
If Management Information Systems are flexible, and relate to the needs of
organisation, and the stakeholders, then they work well and effectively. MIS systems
used, should suit your purposes.

MISCONCEPTIONS ABOUT MIS

The following are the misconceptions or “myths” about MIS:
• The study of management information system is about the use of
computers: This is not true as MIS may, or may not be computer based.
Computer is just a tool for MIS. MIS depends on many factors, e.g., response
time required for getting information; size of the organisation, and the
complex needs of the processing.
• More data means more information: It is not the quantity of data, but its
relevance, that is important to managers in the process of decision-making.
Data provided should meet information requirements of managers.
• Higher accuracy level in reporting is important: Accuracy in reporting
should be of high order, it is true. But higher levels of accuracy involve higher
cost. The degree of accuracy has to be adequate for top management
decisions.
• Managers need all information: MIS designers ‘determine’ information
levels needed by asking managers about their needs. For this, managers
should be aware of each type of decision they should make. Managers would
like to have all information which can be obtained. Situation would be that of
overloading irrelevant information.
• All information improves decision-making: It is assumed that if
managers are provided with the information they need, they will have no
problem to use it effectively. In management, problem solving, experience,
judgment or intuition has very important role to play.
• More communication leads better performance: MIS provides managers
with better current information about what other managers are doing. The
belief is that better inter-departmental communication enables managers to
coordinate their decisions more effectively. This is not necessarily so.
 • Managers need not to understand how MIS works: MIS designers
provide managers with easy access to the system and assure them that they
need not know anything about MIS. This leaves managers unable to evaluate
MIS as a whole.
EFFECTIVE MIS PRE-REQUISITES
(a) Qualified Personnel
Qualified persons at all levels are required for effective MIS. For an effective
implementation of MIS, experts for following fields are required:
• Communications and Computers
• Overall Management.
Communication and computer experts should be capable to understand the
process of decision-making and information required for planning and control functions.
The basic knowledge of computer based systems will be useful to the management
experts and will help them in understanding the problems faced by these technical
experts.
(b) Database
Information generation is based on the availability of database. With the help of
the data warehouse, organizations can store huge amounts of database. The data
warehouse is the huge repository of data. Database provides following facilities:
• Avoiding Data Redundancy and Inconsistency: Database provides the
facility of centralized database which reduces the storage costs; there is no
need to update multiple copies of the same data when transactions are
entered.
• Data Independence: DBMS Programs used for database helps in
independent logical structure of the data. So data stored in database are
independent.
• Sharing of Data-Data stored in database can be used by multiple users. It
avoids duplication of storage costs. In database softwares can be written to
use any data stored in the corporate databases.
• Reliability- Now a days databases have been developed by experts. The
reliability of the stored data is ensured by the DBMS.
• Centralized Control of Data: In the database, data are stored at a central
place. There are many advantages of centralized database.
(c) Support of Top Management
For implementing MIS whole system of collecting data, processing data and
providing output is required .So for effective MIS implementation full support of top
management is required. lt is required to get the resources for implementing the MIS.
(d) Maintenance of MIS
For effective working of MIS, the time bound maintenance system should be
designed. The management at each level in the organization should devise methods for
information system control.

EVALUATING MIS EFFECTIVENESS

Effective management information systems are needed by all business
organization because of the increased complexity and rate of change of today’s
business environment. Thus, effective management information systems must be
developed to provide modern managers with the specific marketing, financial,
production and personnel information products always required by them to support
their decision making responsibilities.
 An effective MIS should be capable of meeting the information needs of its
managers. To maintain this capability evaluation and timely corrective action is
required. The evaluation of MIS effectiveness is based on the following criteria:
• Relevance: Information should be relevant to the individual decision-
makers at their level of management.
• Management by Exception: Managers should get precise information
pertaining to factors critical to their decision making.
• Accuracy: The database from which information is extracted should be up-
to-date, contextually relevant and validated.
• Timeliness: The information should be provided at the time required.
• Adaptability: The information system should have an in-built capability for
re-design so that it can suitably adapt to environmental changes and
changing information requirements.
• Flexibility to meet any information requirements in future.
• Feedback of the users and the designers.
• Features indicating the effectiveness of MIS.
An effective MIS should possess the following features:
• It should ensure the appropriate presentation formats and time frames
required by operations and senior management.
• MIS whether developed and maintained by either manual or automated
systems or a combination of both should run in a proper flow system.
• It should always be sufficient to meet an institution's unique business
goals and objectives.
• The effective deliveries of an institution's products and services are to be
supported by the MIS.
• These systems should be accessible and useable at all appropriate levels
of the organization.
• MIS is a critical component of the institution's overall risk management
strategy.
• MIS should be used to recognize, monitor, measure, limit, and manage
risks.

MIS AND IT
(i) Increase in Speed of Processing
Modern business organizations work in complex and competitive environment. It
requires availability of relevant information for decision-making. Computer with fast
computational capability and storage of information has helped in this challenge faced
by management. This has proved as a major factor in MIS development.
(ii) Widened Scope of Analysis
The use of computer can provide multiple type of information accurately to
decision-makers. With the help of these information managers can carry out a thorough
analysis of the problem and take the final decision. Computers are capable of providing
various types of reports instantly. These reports are useful in analyzing the working and
to ascertain the performance gaps to take adequate measures.
(iii) Complexity of System Design
Presently we are living in the era of fast changing systems and sub-systems. The
information systems have become quite complex due to convergence of IT and
communication technology. Due to this experts faced problems in designing systems.
(iv) Integration of the Information Subsystems
Information systems in organizations are a federation of information sub-system,
viz., production, material, marketing, finance, engineering and personnel. These sub-
systems are required to provide information to support operational control,
management control and strategic planning. Computer technology is useful for
integrating the day-to-day working of different information sub-systems.
(v) Effectiveness of Information Systems
Effectiveness denotes the availability of quality information. With the use of
computer technology it is quite easy to provide timely, accurate and desired information
for the purpose of decision-making at all the levels of management.
(vi) Comprehensive Information
The use of computer for MIS, enabled system experts to provide more
comprehensive information to managers on business matters. It covers internal as well
as external information. Intranets and extranets are also used by the organizations.

COMPUTERISED MIS AND MANAGEMENT

Top Level Management
Top level corporate management spends most of its time for business planning.
The major responsibilities of this level include long and short-range planning, resource
and capacity analysis and in general establishing the business objectives of the
company. It is, thus, apparent that there is a heavy planning and lesser control element
in the work domain of top level management. Impact of computers on this level is the
minimum. The reasons for lesser computer effect on top level are:
(i) Unstructured nature of information;
(ii) Non-availability of suitable systems and computer experts;
(iii) Reliance on intuitive abilities.
In fact MIS in its present form is more effective for control than for planning. So the
impact of MIS on top management level is almost non-existent presently. But the
potential impact of computers on top level management may be quite significant. For
example, with the help of a computer it may be possible in future to develop a financial
model by using simulation technique, which will facilitate executives to test the impact
of ideas and strategies formulated on future profitability. By carrying sensitivity analysis
with the support of computers, it may be possible to measure the effect of individual
factor to determine the final results. Availability of a new class of experts will facilitate
effective communication with computers. Therefore, potential impact of computers
would be more in the area of planning and decision-making.
Top management will realize the significance of techniques like simulation,
sensitivity analysis and management science. The application of these techniques to
business problems with the help of computers would provide comprehensive
information to top management, which will be quite useful for the purpose of
managerial planning and decision-making.
Middle Level Management
The impact of computers on middle management is moderate. This level of
management translates the management objectives into plans and arranges resources
to achieve objectives laid down by top management. It reviews the result of operations
performed at the operating level. It acts as a bridge between these two levels. The
information provided by computer serves only limited purpose to middle management.
Potential impact of computers on middle management level will be significant. At this
level, most of the decisions will be programmed and thereby drastically reducing the
number of middle level managers. In inventory control system, computer may carry
records of all items with respect of their purchase, issue and balance. The futurists also
foresee the computer and the erosion of middle management.
Operational Level Management
The impact of computers today at operational management level is the maximum.
At this level, managers are responsible for routine, day-to-day decision and activities of
the organization. These activities do not require much judgment and discretion.
Operational manager’s job is directed more towards control function, which is highly
receptive. Such managers are provided with accurate, timely, comprehensive and
suitable reports for control. Potential impact of computers on operational level will
completely revolutionize the working at this level. Most of the controls in future will be
operated with the help of computers. In future, MIS would provide highly accurate,
precise and desired information to control operations with the support of computers.
Major constraints which come in the way of operating an information system are
the following:
(1) Non-availability of experts, who can give a desired direction needed for
operating information system.
(2) Difficulty in identifying and selecting the sub-systems of MIS.
(3) Sources of availability of experts are not always known to management.
(4) The non-standardised approach adopted by experts for designing and
implementing MIS.
(5) Non-availability of cooperation from staff.
(6) Non-availability of heavy financial resources.
(7) High turnover of MIS experts.
(8) Perceptional problems.
The MIS in a corporate enterprise is usually entrusted to an officer who is
designated as head of Management Information Department and reports to chief
executive of the concern. The MIS presently may be in any one of the following forms:
(a) It may be a manual one.
(b) It may be a computerized one.
(c) It may be a manual one but may be heading for computerization.
Under manual information system, the tasks of procuring, refining, analyzing,
storing and retrieval of data are carried out by manual means. To carry out these
functions a set of suitably designed form is used. MIS manual provides all related
guidelines. Such a system of information is generally entrusted to a person who
possesses the experience of working with different functional areas.
The person entrusted with MIS knows quite clearly on the basis of his experience
and interaction with other departments, the type of decisions made by different
executives. He can also ascertain the information requirement of executives while
working closely with different functional areas. He can easily perceive the frequency
and the changing needs of information requirement of managers.
In the case of computerized information system the information is collected
manually and is transferred to a computer system for analysis, storage and retrieval.
Such type of information system is entrusted to a system expert, who is well conversant
with management concepts. The head of management information system possesses
the requisite capabilities, which are necessary for developing various applications. He
can also foresee the changing information requirements of managers by analyzing the
decisions made by them.
Such system, which involves the computerization of the entire system, may be
entrusted to a project leader. This project leader may render all possible help to the
outside consultants. Due to lack of project leaders in the area of computers, he may be
assisted by outside consultants. The project leader works closely with outside
consultants, so he understands the system quite well.
MIS IN INDIAN ORGANIZATIONS
The rapid advancement of technology and the consequent advent of computers
have mainly contributed for the success of MIS in developed countries. In India, where
computers were not heard of earlier than 1950s. Even after three decades of computer
advent, operations of MIS in certain big organizations, it still has remained debatable
issue whether it would serve any useful purpose .The Indian organizations lag behind in
the computer technology which is essential for the development of MIS.
The major hurdle is the reluctance on the part of top management to convince
themselves of the usefulness of MIS. With their traditional thinking, they do not support
to the implementation of MIS. Another important reason for the unsatisfactory
functioning of MIS in many Indian organizations is the lack of proper training on the part
of the personnel dealing with it. Ineffective handling of the system by these
inexperienced people has been mainly responsible for the slow development of
computerized MIS in India. Also India being a poor country, many business organizations
cannot afford to invest huge funds required for the installation and maintenance of MIS.
Questions
1. Define MIS and explain its role at different levels of management.
2. What are the advantages of an effective MIS?
3. Discuss the merits and demerits of computerized MIS.
4. All information are neither required nor justified. Explain.
5. Discuss the importance of MIS as a tool for control.
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