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***|Notes By: Shashi Kant



 Distinct pieces of information, usually formatted in a special way.

 Data can exist in a variety of forms -- as numbers or text on pieces of paper, as bits and bytes
stored in electronic memory, or as facts stored in a person's mind.

RECORDS: Records are composed of similar type of information. A set of records constitutes a file.

DATA MANAGEMENT: Administrative process by which the required data is acquired, validated,
stored, protected, and processed, and by which its accessibility, reliability, and timeliness is ensured
to satisfy the needs of the data users.

DATA MANAGEMENT SYSTEM: A data management system (DMS) is computer software designed
for the purpose of managing data on a variety of models

MANAGEMENT INFORMATION SYSTEM: “'MIS' is a planned system of collecting, processing,

storing and disseminating data in the form of information needed to carry out the functions of


 Administrative process by which the required data is acquired, validated, stored, protected,
and processed, and by which its accessibility, reliability, and timeliness is ensured to satisfy
the needs of the data users.
 The management of many business areas needs information to operate effectively.
Administration, counseling, engineering, education, personnel, public health and sales are all
the departments managing relevant data.


A system is a group of elements that are integrated with a common purpose of achieving a common
objective. An organization contains resources, they work hard towards achieving particular objectives
that are specified by the management.

System Elements. The basic elements of a system is as follows

1) Input element.

2) Transformation element.

3) Output element.

4) Control mechanism.

5) Objectives.

System Elements:

***|Notes By: Shashi Kant

Figure 2.1 shows the diagram for system elements. The resources flow from the input element,
through the transformation element and to the output element. A control mechanism monitors the
transformation process to ensure that the system meets the objectives laid down by the
management. The control mechanism is connected with the resource flow by the means of the
feedback loop from output. The control mechanism compares the output with the objectives and
accordingly directs the input system to make the necessary changes ( if required).

The various category of systems are

1. Open loop & Closed loop System.

2. Open Systems & Closed System.

3. Sub Systems & Super Systems.

4. Physical Systems & Conceptual Systems.

Open Loop & closed Loop Systems

fig 2.2

An open loop system does not have a feedback or control mechanism. These are very simple
systems that do not require monitoring. For example simple space heaters.

In case of closed loop systems there is a feedback mechanism that monitors the output with respect
to objectives. For example room air conditioners. Refer fig 2.1

Open Systems & Closed Systems:

Open systems are connected to their environment through resource flows. These systems require the
help of systems in the environment to accomplish their completion. For example, a centralized air
conditioning system requires a cooling plant for it to cool the entire building, here the centralized air
conditioning system is an open system.

A closed system does not have connection with the environment with which its connected. Closed
systems exist in controlled laboratory conditions. They are kept in ideal conditions which are not
possible in actual environment.

Sub-system & Super-system:

A sub-system is a system that exists in another system. Its existence depends up on the existence of
its super-system. The sub-system contributes in the proper working of the entire system. The proper
functioning of the sub-systems ensure proper functioning of the entire system. For example an
Automobile system, it consists of many sub-systems like acceleration system, fuel injection system,
breaking system etc., every sub-system is responsible for the proper functioning of the entire
automobile system.
A super-system is a system which contains many sub-systems. The super-system is responsible for
monitoring the overall working of its sub-systems. The super-system decides the constrains and
resources to be put on its sub-systems. For example, a Central government system, it is a super-
system which has under its control the state government systems which form the sub-systems.

***|Notes By: Shashi Kant

Physical & Conceptual Systems:

Physical Systems use physical resources or tangible resources. A physical system represents a
working model for any conceptual system. A physical system is completely practical oriented and
interacts continuously with the environment. For example, a computer is a physical system which has
practical implementations and inter acts a lot with the users.

Conceptual Systems use abstract and conceptual resources. Conceptual systems can make the
physical resources work in a proper manner. They basically consist of data, information and mental

Both Physical and Conceptual systems require each other for proper functioning and effective
practical implementation respectively.

Evolution of Computer Based Information Systems (CBIS):

The Initial Focus on Data During the first half of twentieth century, when punch cards were used,
firms generally ignored the information needs of managers. The first computers were only used for
accounting applications. The name given to these early computer based applications was Electronic
Data Processing (EDP). Now a days the term Accounting Information System (AIS) is used to
describe those applications.

The New Focus on Information In 1964, a new generation of computing equipment was introduced
that influenced strongly on the manner in which computers were employed. They were the computers
using the silicon technology. The concept of using computers as Management Information System
was promoted.The MIS initiated that the computers should be applied for the management of
information. This concept was adopted slowly by larger firms.

The revised focus on Decision Support A Decision Support System (DSS) is an information-producing
system aimed at a particular problem that a manager must solve and the decisions the manager must
take. The manager can be located any where, at any level in the organization. These DSS were used
widely in the organizations.

The Current Focus on Communication: During the time DSS evolved, interest was focused on
another computer application called Office Automation (OA) which facilitates communication and
increases productivity among the managers and office workers through the use of electronic devices.
OA got started in 1964, when IBM announced its Magnetic tape and electronic typewriter (called
Selectric typewriter). The selectric typewriter could type the information stored in the magnetic tapes.
This lead to an OA application called word processing. The Office Automation grew to such levels
that applications such as video conferencing, e-mail, desktop publishing etc started. In a collective
term it was given the name Virtual Office.

Potential Focus on Consultation : The development of computers had made it possible to perform
tasks of logical reasoning just like humans. The application called Artificial Intelligence (AI) were
developed. Now a days a subclass of AI known as Expert Systems are growing which works as a
specialist in a particular area. To solve the problems using AI the applications were given the name
Knowledge-based Systems. From 1990s the use of knowledge-based systems were extensively used
by large firms. 4

A Model of Computer Based Information System:

***|Notes By: Shashi Kant
• Managers make decisions to solve problems, and decisions are made based on the available

• Information is presented both in oral as well as in written form using information processors.

• The computer portion of the information processors contain each of the computer based
application areas :- AIS ( Accounting Information System), MIS (Management Information
System), DSS (Decision Support System), Virtual Office and Knowledge Based Systems. They
are collectively called CBIS ( Computer Based Information System).

• The CBIS collectively provides necessary information for problem solving.

Information Services Organization:

The firms using computers realized that there was a need to form separate organizational units of
specialists who would be responsible for implementing the systems. These specialists were known as
Information Specialists.

Information Specialists : Information specialists have the complete responsibility of developing and
managing the computer based systems in the firm.There are five main categories of information

1) System Analyst.

2) Database Administrators.

3) Network Specialists.

4) Programmers.

5) Operators.

Traditional Communication Chain:

The concept of Traditional Communication Chain connects the Users, Information Specialists and the
Computer. This communication is named traditional because they have been communicating with each
other traditionally (since old times). From fig 2.4 it can be seen the various levels in a communication
chain. The functions of the members of a traditional communication chain are as follows.

System Analysts

• They work with the users to develop new systems and in improving the present system.

• They are expert in defining problems and at preparing written documents on how the computer
will assist in solving the problem.

• They are expert in computer systems as they require to know the capabilities of the software and
hardware in which the solution of the problem is to be accomplished.

Database Administrators (DBA s) 5

• They work with users and system analysts to create the appropriate databases that would help in
effectively solving the problem.

***|Notes By: Shashi Kant

• Once the database is created, the DBAs frequently monitor and manage these resources.

Network Specialists

• They work with systems analysts and users to establish the data communication networks that
would connect users with the required systems that are widespread.

• They combine the expertise from the fields of computing and telecommunications.

• Another form of Network specialists are called Web Masters who are expert on the World Wide


• They use the documentation prepared by the System analysts to encode the instructions.

• They require to be very conversant with the software they are working on.


• They are responsible for handling the computing equipments.

• They are expected to be able to handle mainframes to mini computers.

• They monitor the consoles, manage memory libraries etc.

End-User Computing:

In the late 1970s the trend of end user computing started growing. The users started growing interest in
developing their own computer applications. Following are the reasons for the development of en-user

1. Increase in Computer Literacy. During the early 1980s, good education programs related to
computers were conducted in colleges and institutions which caused a computer awareness
between the students. The management ranks, especially on the lower levels started filling up
with computer literate people.

2. The Information services backlog The situation of the information specialists became critical
during early 1980s when the work load increased beyond accepted limits as the users started
demanding more information services and so the specialist could not cope up with the demands.

3. Low-Cost Hardware The market got filled up low cost minicomputers, so the users could afford
them at their homes making it easier for them to develop applications.

4. Prewritten Software Both the hardware and software companies produced software that would
do the accounting, word processing, facilitate development of applications etc. made it easy for
the users to rely more up on themselves rather that in information specialists.

***|Notes By: Shashi Kant


***|Notes By: Shashi Kant

Types of Information Systems:
Levels of Management:

Upper or Top or Strategic Management


Middle or Tactical Management Tactical

Lower level Management Operational

Three levels of management

Lower or Operational level Management:

 They make structured decisions (Operational decisions).
 Structured decision It’s a predictable decision that can be made following a well defined set of
routine procedures.
 Most decisions at this level require easily defined information that relates to the current status and
activities within the basic business functions.
 Information is gained from detailed reports which contain information about routine activities.
 Detailed tasks defined by middle management are carried out by people at operational level.
Middle or Tactical Management
 The middle level management is responsible for evaluating the performance of
SUPERVISORS, WORKERS, SALES etc. Furthermore they prepare long term and short
term plans for the upper level management.
 Acquire and arrange the resources (Computers, people etc) to meet the goals of an organization.
 Define the detailed tasks to be carried out at the operational level.
 Information needed involves review, summarization and analysis of data to help plan and control
operations and implement policy that has been formulated by upper management.
 Information is usually given to middle managers as summarized reports.
Deals with semi structured decisions. (Tactical decisions)
 Semi structured decisions that must be made without a base of clearly defined informational 8
procedures. In most cases a semi structured decision is complex, requiring detailed analysis and
extensive computations.
Upper or Top or Strategic Management
***|Notes By: Shashi Kant
 The PRESIDENT or MANAGING DIRECTOR are post in organizations which are
considered as top level management.
 The executives and senior managers also the part of top level management
 Decides on the broad objectives of an organization.
 Make unstructured decisions. (Strategic decision).
 Unstructured decisions are the most complex type of decisions and are rarely based on
predetermined routine procedures. They involve subjective judgments of the decision maker.


FINANCIAL DATA: Financial data includes information on how the organization resources
translate into money. Reports on an organization profit and loss, assets and liabilities and other
resources of value would result from use of financial data.

i.e. billing, accounts, profit/loss, taxes, payrolls.

RESEARCH DATA: Research data includes analysis of past performance and plans for future

i.e. advertisement, product development , product distribution, sales forcasting, observation.

PRODUCTION DATA: Production data involves information about the actual products made.
Products sold, or services provided.

i.e. Customer service, Purchasing, Orders, Sales, Production & Scheduling.


 Managing the data regarding human resource, training, promotion etc.

 The productivity, absenteeism are also personnel matters.

i.e. Circulam vita (CV), Vacations timing , Over time/ pensions/ sick leaves, Wages.

Types of Information Systems

•Transaction processing systems (TPS)
•Management Information Systems (MIS)
•Decision support Systems (DSS)
•Executive Information Systems (EIS)
•Expert Systems (ES)

Transaction Processing Systems (TPS)

•These systems capture and process data about business transactions.
•Some times called as data processing systems 9
•Mostly used at operational level
•Usually creates detailed reports of daily transactions or future transactions
•Reports generated are useful only to lower level managers
***|Notes By: Shashi Kant
•One functional area of a business consists of an TPS

Management Information Systems (MIS)

•Provides middle level management with reports that summarize and categorize information
derived from company databases. (In pre determined format)
•Supplements Transaction processing Systems
•Able to produce detailed information, summary information, exception information
•Information produced is based on accepted management or mathematical/statistical models

Decision Support Systems (DSS)

•Provides its users with decision oriented information whenever a decision-making situation
•Analyses information already captured by TPS and MIS in order to support unstructured
decision making at top management level
•DSS does not make decisions, it helps some one to make a decision by providing
•TPS or MIS does not analyze information they produce
Executive Information System (EIS)
Is a DSS which is especially meant for top level management and specifically support
unstructured decision making. Also called Executive Support Systems (ESS)
Information in an EIS are presented in charts and tables that show trends, ratios and other
managerial statistics and is stored in data warehouses. Draws data not only from the
organization, able to draw information from outside sources such as news services and marketing
research databases.

Expert Systems (ES)

•ES is an information system that captures and stores the knowledge of human experts and then
imitates human reasoning and decision making processes for those who have less expertise.
•Captures knowledge expertise of a problem solver or decision maker and then simulates
thinking of that expertise for those who have less expertise.
•Includes logic and reasoning within there respective fields
•Emerged from the filed of artificial intelligence (Creating computer systems that simulate
human reasoning and sensation)

Inter-relationships and inter-dependencies between IS types

Computer Based Information System:

CBIS consists of following applications 10
1) Management Information Systems.
2) Decision Support Systems.
3) The Virtual Office.
4) Knowledge Based Systems.
***|Notes By: Shashi Kant
The fundamental work of CBIS is to manage information in an efficient way such that it can be
utilized by the managers effectively to solve problems.

Information Management: Information is the method of efficiently manage the Resources.

There are basically five types of resources that need to be managed by the managers.
1. Personnel
2. Material
3. Machines (includes energy and facilities)
4. Money
5. Information (includes data)
The first four resources are tangible i.e. they exist physically, they are also known as physical
resources. The fifth resource type is not tangible hence called as conceptual resource. Managers
use conceptual resources to manage physical resources.

Resource and Information Management:

Management of resources.
1) Resources are acquired and assembled to make it available for use any time.
2) The manager always tries to maximize the usage of the assembled resources by
minimizing the idle time and functioning at peak of efficiency.
3) Finally the manager replaces those resources which have become obsolete or inefficient.
Management of Information
1) The manager ensures that all the necessary data is gathered and then the process of
conversion of data to information is done.
2) The manager ensures that the information is received to proper individuals at proper time
and in proper form.
3) Finally the manager discards all those information which have become obsolete and
replaces those with the latest and useful information.
This entire process of gathering information, using it in the most effective manner and discarding
it in proper time is called Information Management

The Information Users:

The users of computer based information are
1. Managers.
2. Non managers.
3. Persons and organizations included in the firm.
In the early years of development of computers in information management the users of the
computers were clerical employees who used computers in accounting area, billing, etc. When
the concept of MIS was developed then computers were implemented for management support.
Among other users were the users outside the firm,like customers received receipts, stock
holders receiving dividend checks etc.

Executive Information System:

• An Executive Information System (EIS) is a system that provides information to the
executives on the overall performance of the firm. 11
• The information can be accessed easily and can also provide varying levels of details.

***|Notes By: Shashi Kant

• It usually consists of a PC networked to a central computer. The PC works as the
executive workstation providing access to the executive database. Its also known as
Executive Support System (ESS).

The EIS Model

It usually consists of a personal computer. In large firms the PC is networked to a mainframe or
the central computer. The executive’s personal computer serves as the executive workstation.
The hardware configuration includes hard disks as the secondary storage device. The executive
database contains data and information that has been processed by the firm’s central computer.
The executive is provided by an EIS software, which are menu driven software to implement
EIS. The system permits the use of firm’s electronic mail system and access to the environmental
data & information. EIS software support input of explanations of the information and current
news updates on the information.

Marketing Information System ( MKIS ):

 MKIS is based in the pioneering work of several marketing theorists.
 There are manly two types of subsystems that can be seen in an MKIS, the Input
subsystem and Output subsystem. The input subsystem includes
1) AIS, 2) Marketing research, 3) Marketing intelligence subsystem
 The AIS provides sales order data for the software that produces information in the form
1) Periodic reports, 2) Special reports, 3) Outputs from Mathematical -
-models and Expert systems.
 Marketing research utilizes a variety of data gathering techniques
1) Surveys, 2) In-depth interviews, 3) Observations, 4) Controlled - -
 Most of the MKIS activity is aimed at establishing an intelligence-gathering capability.

The MKIS Model:

The Input Subsystem
• The Accounting Information System gathers data describing the firm’s marketing
• The Marketing Intelligence Subsystem gathers information about the firm’s marketing
• The Marketing Research Subsystem conducts studies of the marketing operations for the
purpose of learning customer needs and improving marketing efficiency.
It contains the necessary data and information that is gathered by the Input Subsystem, which is
then utilized by the Output Subsystem.

Output Subsystem
• The Product Subsystem provides information about the firm’s products. 12
• The Place Subsystem provides information about the firm’s distribution network.
• The Promotion Subsystem provides information about the firm’s advertising and selling
***|Notes By: Shashi Kant
• The Price Subsystem helps the managers to make decisions related to fixing or changing
the price of a product.
• The Integrated Mix Subsystem helps the managers to develop strategies on those areas
which are effected from all the above mentioned subsystems, example – sales forecast.
The users category mainly consists of managers.

Model of the Financial Information System.

Input Subsystems
 The Accounting Information subsystem and Financial Intelligence subsystem are
dedicated to gathering information about accounts and financial resources.
 The Internal Audit subsystems consist of firm’s internal auditors who analyze the firm’s
conceptual systems to ensure that they process financial data properly as required.
 The Financial Intelligence subsystem seeks to identify the best sources of additional
capita and the best investment of surplus funds. It gathers data and information from
stockholders and financial community.
Output Subsystems
 It exerts influence on the firm’s money flow.
 The Forecasting subsystem projects the firm’s long-range future activity in an economic
environment. The forecasting methods are classified mainly in to two groups

1) Non quantitative forecasting, where no computation is involved as the forecasting is done

using subjective estimates. There are mainly two methods for subjective estimation. a)
Panel consensus technique, it consists of a group of experts who analyze the present scenario
and predict the future.
b) Delphi method, it involves a group of experts who do not meet in person but
instead submit responses to a series of questionnaires that are prepared by the coordinator.
These questionnaires are refined by going through various rounds thus refining the contents for
2)Quantitative forecasting methods use various computation methods like regression analysis.

Manufacturing Information Systems:

In Manufacturing Information Systems, manufacturing management uses the computer both as a
1. Physical system.
2. Conceptual system.
The computer as part of Physical System consists of
a) Computer Aided Design (CAD)
b) Computer Aided manufacturing (CAM)
c) Robotics.
The computer as part of Physical System Computer Aided Design (CAD)
• It uses computers to assist in the design of a product that is to be manufactured.
• The design engineer can use a visual display terminal equipped with a light pen as an
input device, to create designs.
• The CAD software refines the drawings, the engineer can subject the design to various
virtual tests that can detect the defects in the design (if any). 13
• The CAD software can simulate the moving parts of the design to show real like
movements, closer to practical situations.

***|Notes By: Shashi Kant

• Once the design is confirmed the CAD software can prepare the detailed specifications
that are required for manufacturing the product. These specifications are stored in a
Design Database.
The computer as part of Physical System Computer Aided Manufacturing
• It’s the application of computers in the production process.
• These applications control the production machines such as drills, lathes etc. to produce
products according to the specifications obtained from the Design Database.
• A single minicomputer can control several production machines as now a days the many
production machines have built-in microprocessors.
• It includes the use of Industrial Robots (IR) which automatically perform manufacturing
• Robots enable firms to cut costs & achieve high levels of quality and also perform
hazardous tasks.
The computer as an Information System includes
• Material Requirements Planning Systems. ( MRP )
• Reorder Point Systems. ( ROP )
• Just-In-Time Approach Systems. ( JIT )
Material Requirements Planning Systems
• It consists of software to calculate and estimate the requirements of the production
materials, their quantities and date on which they will be needed.
• Here the production managers don’t have to wait till the reorder points. The orders are
placed long before the reorder point as the estimated date for reorder is calculated by the
computer based MRP systems.
The computer as an Information System
Reorder Point Systems
• It’s the task of managing the firm’s inventory using computer based systems.
• Here a reactive approach is followed. So if an item balance reaches a particular level
called Reorder Point ( ROP ), it then triggers a purchase order.
• The formula for calculating Reorder Point is
R – reorder point.
L – Supplier lead time ( the amount of time the supplier needs to - - fill the order
U – Usage rate ( number of units used or sold per day )
S – Safety stock level ( precautionary stock in units )
The computer as an Information System Just-In-Time Approach Systems
• It attempts to minimize inventory costs by producing in smaller quantities. Here the ideal
lot size is 1. The single unit should move from various workstations of production until
its production is completed.
• Timing is the key of JIT systems,as the supply of raw materials arrive from the supplier
just before a production run is scheduled to begin.

The Model of Manufacturing Information System

***|Notes By: Shashi Kant

Input Subsystem

• The Accounting Information System gathers internal data describing the manufacturing
operation and environmental data that describes the firm’s transactions with its suppliers.

• The Industrial Engineering Subsystem consists of special data-gathering projects from

inside the firm. It provides proper production standards.

The manufacturing Intelligence Subsystem gathers data from the environment. The data
collected includes recent updates from the activities of labor unions and suppliers.

The Model of Manufacturing Information System

Output Subsystem

• The Production Subsystem measures the production process in terms of Time i.e.
tracking the work flow step by step.

• The Inventory Subsystem measures the production process in terms of Volume of

production – transformation of raw materials in to finished products.

• The Quality Subsystem measures the quality of materials as they are transformed during
the production process.

The Cost Subsystem monitors and measures the cost required during the production process.

Human Resource Information System:

Human Resource basic activities

Recruiting and hiring

 HR helps bring new employees into the firm by publishing ads through media ( audio &
visual )

 By taking the help of both government & private employment agencies.

 By conducting campus interviews.

 By conducting general tests.

Education & Training

 To enhance the employees’ job related skills and knowledge the firms conduct
educational and induction programs. 15

 A motivation factor is added like promotion benefits for those who attend and learn from
the induction programs.
***|Notes By: Shashi Kant
Basic HR activities contd..

Data Management

 HR maintains a database of employees related data and processes those data to meet the
information needs of the users ( usually sister concerns)

Termination and Benefit Administration

 During employment the employees receive in addition to their basic salary, additional
benefits like hospital, housing, profit sharing etc.

 When employees leave their jobs or are terminated, the HR processes the necessary
paperwork and often conducts exit interviews.

 HR administers the firm’s retirement program for the former employees who are eligible.

HRIS Model:

The Input Subsystems

Accounting Information System

 Personal data elements :- they are relatively permanent and non financial in nature.
These personnel data elements are created by HR at the time of employment and are kept
updated as long as the employee is working for the firm. Similar data is kept for retired

 Accounting data elements :- they are financial and tend to be more dynamic like monthly
salary, income tax etc.

Human Resource Research Subsystem

 Succession studies :- are conducted for the purpose of identifying those people in the
firm who are candidates for the positions that become available including promotions.

 Job analysis and evaluation :- is done to identify the scope, qualifications and skills
required for all the jobs in the firm.

 Grievance studies :- are conducted for the solution of the problems faced by the
employees, where employees file complaints.
HRIS model contd..

Human Resource Intelligence Subsystem

***|Notes By: Shashi Kant

 Government Intelligence :- The govt. provides data and information that assist the firm
in complying with various employment related laws and regulations.

 Supplier Intelligence :- Here the suppliers mean such firms and organizations which
provide employee benefits like insurance companies. Also employment agencies. They
provide data and information that help the firm for recruitment and hiring of people.

 Labor Union Intelligence :- The data and information provided by the labor unions are
used for administering labor contracts between the unions and firms.

 Global Community Intelligence :- The global community provides information that

describe local resources like housing, education, recreation etc.

 Competitor Intelligence :- Includes the data and information about the employees of
the competitors who are very efficient, also called potential recruits and various effective
strategies for better human resource development & management used by the

HRIS output subsystems contd..

Compensation Subsystem

 It includes various compensation calculation activities. It mainly includes extra money to

be paid to the employees.

Benefits Subsystem

 It includes the activities related to defined contribution and defined benefits plans that
allow the employees to accumulate retirement funds to meet a specified standard of

 Flexible benefits plans enable employees to select the benefits that they want to take,
which they are eligible for.

Environmental Reporting Subsystem

 It includes reporting of firm’s personnel policies and practices to the government and
also the labor unions.


***|Notes By: Shashi Kant