Management Information System Chapter 1 Evolution of MIS The computerized Electronic Data Processing (EDP) department started to help

operating managers by generating them with periodic standardized reports for effective planning and control activates in the organizations. This process have been called computer based information system or management information system. MIS has now become largely formal and an important field of study. If a system generates information for managerial use in planning and control, it is called management information system (MIS). A management information system (MIS) is a system that provides information needed to manage organizations effectively. MIS is required in all levels of management for effective and efficient functioning of an organization. It is the function of management information system to determine the information needs of decision makers in the organization in advance and meet such needs by the provision of timely, relevant and reliable information. Management information systems are regarded to be a subset of the overall internal controls procedures in a business, which cover the application of people, documents, technologies, and procedures used by management accountants to solve business problems such as costing a product, service or a business-wide strategy. Management information systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Definition: Management Information Systems (MIS) is the term given to the discipline focused on the integration of computer systems with the aims and objectives on an organisation. Davis and Olson define MIS as an integrated, user-machine system for providing information to support operations, management, and decision making functions of an organization. The system utilizes computer hardware and software; manual procedures; models for analysis, planning, control and decision making and a database. The development and management of information technology tools assists executives and the general workforce in performing any tasks related to the processing of information. MIS and business systems are especially useful in the collation of business data and the production of reports to be used as tools for decision making.

Characteristics of MIS The purpose of MIS is to enhance organizational effectiveness through information support. It derives its goals from organizational goals. Following are some of the features of MIS: 1. MIS is management oriented/ directed MIS is designed to meet the information needs at all levels of management in organizations by which the organizational goals are achieved. MIS requires good planning and huge investment; hence management carefully does the designing, implementation and maintenance of the system. 2. Business driven MIS is a support function and meets the information needs of the organization and its shareholders. MIS is driven on the business philosophies and goals of the organization. 3. Avoids redundancy in data storage Since MIS is an integrated system and it avoids unnecessary duplication and redundancy in data gathering and storage. The purpose is not to terminate redundancy but to minimize it. 4. Heavy planning Designing and implementation of MIS requires heavy planning. The actions like acquisition and operation of hardware and software, hiring and training of personnel, planning data processing operations, information presentation and feedback should be done with well planning. 5. Common database The database is the brain of any information system. It stores transaction data for present and future uses. Applications access this database for relevant date to process transactions or to generate information. The system maintains general database so that any functional subsystem can access the database. 6. Flexibility and ease of use: The MIS is designed flexible enough to accommodate new requirements. The system can be easily operated that users can access database for information or for carrying out special analysis of data. 7. Distributed systems Most of the organization are spread widely and have got many offices and sales outlets in different places. But the information has to be exchanged between these offices.

Therefore most of the big organizations develop distributed systems to meet the information processing requirements of their various constituents. 8. Information as a resource Information is the original resources for MIS. The information resources is centralized by many organizations to provide greater access to them. Evolution of Information Systems From EDP to MIS Until the 1960s, the role of most information systems was simple. They were mainly used for electronic data processing (EDP), purposes such as transactions processing, record-keeping and accounting. EDP is often defined as the use of computers in recording, classifying, manipulating, and summarizing data. It is also called transaction processing systems (TPS), automatic data processing, or information processing. Transaction processing systems these process data resulting from business transactions, update operational databases, and produce business documents. Examples: sales and inventory processing and accounting systems. In the 1960s, another role was added to the use of computers: the processing of data into useful informative reports. The concept of management information systems (MIS) was born. This new role focused on developing business applications that provided managerial end users with predefined management reports that would give managers the information they needed for decision-making purposes. Management information systems provide information in the form of prespecified reports and displays to support business decision-making. Examples: sales analysis, production performance and cost trend reporting systems. By the 1970s, these pre-defined management reports were not sufficient to meet many of the decision-making needs of management. In order to satisfy such needs, the concept of decision support systems (DSS) was born. The new role for information systems was to provide managerial end users with ad hoc and interactive support of their decision-making processes. Decision support systems provide interactive ad hoc support for the decision-making processes of managers and other business professionals. Examples: product pricing, profitability forecasting and risk analysis systems. In the 1980s, the introduction of microcomputers into the workplace ushered in a new era, which led to a profound effect on organizations. The rapid development of microcomputer processing power (e.g. Intels Pentium microprocessor), application software packages (e.g. Microsoft Office), and telecommunication networks gave birth to the phenomenon of end user computing. End users could now use their own computing resources to support their job requirements instead of waiting for the indirect support of a centralized corporate information services department. It became evident that most top executives did not directly use either the MIS reports

or the analytical modeling capabilities of DSS, so the concept of executive information systems (EIS) was developed. Executive information systems provide critical information from MIS, DSS and other sources, tailored to the information needs of executives. Examples: systems for easy access to analysis of business performance, actions of all competitors, and economic developments to support strategic planning. Moreover, breakthroughs occurred in the development and application of artificial intelligence (AI) techniques to business information systems. With less need for human intervention, knowledge workers could be freed up to handle more complex tasks. Expert systems (ES) and other knowledge management systems (KMS) also forged a new role for information systems. ES can serve as consultants to users by providing expert advice in limited subject areas. Expert systems knowledge-based systems that provide expert advice and act as expert consultants to users. Examples: credit application advisor, process monitor, and diagnostic maintenance systems. Knowledge management systems knowledge-based systems that support the creation, organization and dissemination of business knowledge within the enterprise. Examples: intranet access to best business practices, sales proposal strategies and customer problem resolution systems. The mid- to late 1990s saw the revolutionary emergence of enterprise resource planning (ERP) systems. This organization-specific form of a strategic information system integrates all facets of a firm, including its planning, manufacturing, sales, resource management, customer relations, inventory control, order tracking, financial management, human resources and marketing virtually every business function. The primary advantage of these ERP systems lies in their common interface for all computer-based organizational functions and their tight integration and data sharing needed for flexible strategic decision making. From MIS to e-commerce The rapid growth of the Internet, intranets, extranets and other interconnected global networks in the 1990s dramatically changed the capabilities of information systems in business. Internetbased and web-enabled enterprise and global electronic business and commerce systems are becoming commonplace in the operations and management of todays business enterprises. Indeed todays information systems are still doing the same basic things that they began doing over 50 years ago. We still need to process transactions, keep records, provide management with useful and informative reports, and provide support to the accounting systems and processes of the organization. However, what has changed is that we now enjoy a much higher level of integration of system functions across applications, greater connectivity across both similar and dissimilar system components, and the ability to reallocate critical computing tasks such as data storage, processing, and presentation to take maximum advantage of business and strategic opportunities. With increasing capabilities, future systems will focus on increasing both the speed and reach of our systems to provide even tighter integration combined with greater flexibility.

The Internet and related technologies and applications have changed the way businesses operate and people work, and how information systems support business processes, decision-making and competitive advantage. Today many businesses are using Internet technologies to web-enable business processes and to create innovative e-business applications. E-business is the use of Internet technologies to work and empower business processes, electronic commerce and enterprise collaboration within a company and with its customers, suppliers and other business stakeholders. The Internet and Internet-like networks those inside the enterprise (intranet) and those between an enterprise and its trading partners (extranet) have become the primary information technology infrastructure that supports the e-business applications of many companies. These companies rely on e-business applications to (i) reengineer internal business processes, (ii) implement electronic commerce systems with their customers and suppliers, and (iii) promote enterprise collaboration among business teams and workgroups. Changing Role of Information Systems over the Years Period 1950s-1960s 1960s-1970s 1970s -1980s 1980s-1990s Major Focus EDP IRS DSS EIS & KBS Main Functions Transaction Processing, record keeping and accounting Information Reporting Decision Support Special Information needs top management and use of artificial intelligence for problem solving

MIS and Other Related Disciplines Management Accounting and MIS Role of Management Information System

Applications of MIS 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 systems 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 systems provide 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. MIS 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 systems 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 MIS systems.

Data Processing Not only do MIS 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 MIS 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 system. Since all SMART objectives are by definition measurable they can be tracked through the generation of management reports to be analyzed by decision-makers.

Chapter 2 Concepts of information Introduction Information is processed data. Information is a resource like material and money. The purpose of information is to reduce uncertainty about decision situations and consequences. Information is vital for survival of business firms. As the size and nature of the business increases, managers may increasingly rely on reported information for decisions and actions. It helps them to understand and analyze the problems and opportunities. Definition of Information According to Davis and Olson, information is data that has been processed into a form that is meaningful to the recipient and is of real or perceived value in current or prospective actions or decisions. In other words Data that has been verified to be accurate and timely, is specific and organized for a purpose, is presented within a context that gives it meaning and relevance, and that can lead to an increase in understanding and decrease in uncertainty. This implies that information is: Processed data It has a form It is meaningful to the recipient It has a value and It is useful in current or prospective decisions or actions. Features of Information Information posses some features or attributers that give it value and usefulness. Following are the important features of information: I. Information adds to a representation II. It corrects or confirms previous information III. It has surprise element or news value IV. It reduced uncertainty V. It has value in decision making VI. It is reusable. Information generation Business Data Processing

Business data processing is a major application of computers. In BDP huge quantity of data forms input and after processing the data into small quantity of meaningful information to the users. BDP is concerned with abstracting meaningful information from large volumes of data. Business Data processing is defined as any of the many techniques in which data is retrieved, stored, classified, manipulated, transmitted and/or reported in such a way as to generate information, specially using computers. Steps in Data Processing Once the information needs are identified, there are few steps to be followed to locate data sources, generate information and communicate it. The basic steps are: i. Identifying the data: The accurate information is based on the accurate input we receive. Once the needs are determined, the data for generating has to be identified accurately. Therefore the first step would be locating the data source for information. Designing forms The second step is to design the forms of data entry and the forms are linked to database which is easy to enter the data into systems. Entering data Once the inputs are identified and designed, the information is entered into the system with the help of data entry personnel. Validation The entered data must be value in order to avoid all the incorrect and inaccurate data. Storage The next step is to organize and store the appropriate database to have easy storage and retrieval of data. It also takes care of the data security. Processing the data The next step is to retrieve the appropriate data for the information required and process it. According to the data required and nature of the data, the operation is performed for generating information. Generating reports and communicating them The information must be meaningfully presented to the users. Each user may want information in particular format, thus the applications are developed to generate reports for the users. The reports may be presented in the form of print- out, on screen display etc.

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Information Processing

Information processing is the change (processing) of information in any manner detectable by an observer. Information processing includes the traditional data processing as well as processing text, images, audio, video and animation. The focus of information is on creation of information products for users. Dimensions of Information The information has many dimensions. Following are some of them: I. Economic Dimension The economic dimension includes both the cost of information and its benefits from use. The cost consists of cost to acquire data, the cost to maintain data and the cost for generating and communicating information. The cost related to accuracy, speed of generation etc of information will go higher when the information system has to be more reliable and accurate. II. Business Dimension The managers from different hierarchy require different characteristics of information. The information varies from each level of management. The top level managers require information such as future oriented, external, unstructured, non-programmable and inexact etc, for strategic planning and directing the organization. where as the operating managers require information related to historical, internal, structures, programmable and exact for the smooth production in the organization. III. Technical Dimension The technical dimension is based on the quality and reliability of technology used of data processing and information communication. It is alos based on the database that is vital for information system. The database is an orderly collection centrally controlled data which reduces data redundancy, facilitates massive storage of data, quick retrieval and safety of data. The capacity(concise and clear content) of the information, security(privacy) and validity(quality and quantity) of information are the main technical consideration of information. Quality of Information Information quality (IQ) is a term to describe the quality of the content of information systems. It is often pragmatically defined as: "The fitness for use of the information provided." Or reliability of information. Quality of information is difficult to be measured. When the accuracy of information is high, quality of information also increases. Apart from the accuracy there are some other attributes also influences the quality of information. They are: a) Time-related Attributes i. Timelines: information should be available when needed. ii. Currency: The information should be up to date when needed.

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Frequency: the information should be available as frequently as needed. Time Period: the time period may be past, present and future as needed by the user. Content-Related Attributes i. Accuracy: The information should be free from errors. ii. Relevance: The information should be specific to the needs of the recipient. iii. Completeness: All the information required must be provided to the user when needed. iv. Brevity: Information needed must be provided in the right measure. Too much information may confuse the recipient. Form-Related i. Clarity: The form in which information is served must be very busy to understand. ii. Detail: The level of summary or detail as required by the user must be met. iii. Order: There should be predetermined order for providing information. iv. Presentation: The presentation may be in narrative, numeric or graph form etc. v. Media: The media may be paper documents, video displays etc. as needed by the user. If the information provided has these attributes in the required measure, that information has quality. Roman R. Andrus has suggested a utility approach to evaluate the quality of information. According to him the information can be evaluated in terms of its utilities and he suggested four utilities which information may have. They are: Forum Utility: The closer the form matches the decision-makers requirements, the greater is its value. Place Utility: Information has greater value if it can be had or accessed easily. Time Utility: if information is available when needed, its value is greater. Possession Utility: The possessor of information influences its value by controlling its flow to others in the organization.

Value of Information Information has a great impact on decision making, and hence its value is closely tied to the decisions that result from its use. Information is a resource and has got cost for its acquisition and maintenance. By verifying its value, one has to decide whether to acquire it or not. Information does not have an absolute universal value. The value of information is derived indirectly from the change in decision behavior due to provision of information. The cost of information must be deducted from the gain to arrive at its value. The decision maker must determine the value of information by studying the sensitivity of the decision to the additional information required. The value of the information also based on the time, adequate, usable, reasonably accurate and relevant to the problems on hand. The true value of information must have the following properties:

Availability Relevance Usefulness Timeliness Accuracy Consistency and Comprehensibility

Information Overload Information overload is a state when user is presented with too much information. The information contains both essential and the rest just in case needed. The decision maker is is flooded with information. It will be quite difficult to find out which information is relevant to the problem context and which is not. Overload can causes a barrier to understand the information presented and create confusion in the user. The overload can take place when unfocused and irrelevant information is presented to the user. It can also results in the presentation of poor information. Information overload can crush the purpose of information system and it should be avoided or minimized. Techniques for Managing the Overload In order to avoid or minimize the information overload certain techniques are used. They are information filtering, data summarizing, inferences and message routing. a. Information Filtering Information filtering is a technique that trims irrelevant information before it reaches to the manager. Sophisticated information system converts the vast data resources into information easily and quickly. If such information is presented without checking its relevance to decision maker, he will be confused. If he is presented with too much information, he might experience information overloaded. This would lead to many problems like the presented information may not be noticed or perceived properly. Information filtering reduces the volume of information flow upwards. Briefness is a very essential characteristic of information. Therefore in the organizations the information is summarized at every higher level for superiors convenience. Thus in each hierarchy level the information is given in the filter station and decides what information should go to the superiors and when and how. The main purpose of filtering is done to avoid overloading of superiors with irrelevant information. Thus the managers are given the information which is pertinent to the problem to solved or action to be taken.

The information filtering enables the mangers to have control over the information flows in the organization. It also reduces the pressure on communication channels and the expenditure on money and time on generation and distribution of trivial information. There can be also danger in filtering; there is chance of not reaching the vital information to the users. Therefore the unfiltered information also is retained with the help of computers.

b. Data Summarisation Data summarisation reduces the volume of data for transmission without affecting its essential meaning. Since the data in the data warehouse is of very high volume, there needs to be a mechanism in order to get only the relevant and meaningful information in a less messy format. The summarisation rises progressively from operations level to strategic level of management. At the supervisory level of management, information is presented in detail where as in higher level management only the summary of such information is offered. The summarisation is done in many ways. Aggregation and statistics are the mani two ways of doing it. Aggregation is the process of combining information originating at higher level of organizations such as department levels, divisional and organizational level. For instance sales of various products of a company in various sales territories under a region are added to give aggregate sales figure for quarter to the sales manager. Statistics is the second important form of summarisation. Average, mean, medians, ratios and standard deviations are some of the popular summary statistics used for summarisation. It can provide information about a set of transactions or other detailed data. A statistical sample also can be used as a summary of large amounts of data. c. Inferences Inference is the act of drawing a conclusion by deductive reasoning from given facts. The conclusion drawn is also called an inference. Usually inferences are drawn from a large volume of data and such inferences are communicated in the place of original data. This technique can reduce the volume of data transmission significantly. The inferences are drawn based on the statistical analysis of data or spontaneously. Inferences are often found to be subjective and personal and the quality of inference depends upon the ability of the persons to see the patterns, trends and relationship in the data available and make an objective conclusion of it. d. Message Routing When A message is passed through BizTalk without being processed then it is called Message Routing.

System Concept

A system is a set of interrelated components. The components are orderly arranged according to the design and each component has a definite function to perform in that system. The components forming a system are called subsystems. Each subsystem can be further divided into lower level subsystems. This process I s called factoring of a system. A system is a group of elements that are integrated with the common purpose of achieving an objective. A system is a set of components that operate together to achieve a common purpose. Thus a management information system collects, transmits, processes, and stores data on an organization's resources, programs, and accomplishments. The system makes possible the conversion of these data into management information for use by decision makers within the organization. A management information system, therefore, produces information that supports the management functions of an organization. Definition of System A system can be defined as an organized or complex whole, an assemblage or combination of things or parts forming a complex or unitary whole. The system may be abstract or physical. The abstract systems are made of concepts or events and where as physical systems are made of objects such as land, building, machines, people and other tangible objects. Therefore we can say that organizations are defined as an array of components designed to accomplish a particular objective according to a plan. A system is a collection of related elements. These elements take the form of input, process and output. Characteristics of Systems The system posses some characteristics that enable them to be distinguished from components. They are: i. Objective orientation ii. Components iii. Structure( designing of components in a particular arrangement) iv. Interaction v. Interdependence vi. Inputs of information, energy and materials vii. Processing of inputs viii. Outputs or results

Types of Systems Systems can be classified into a number of groups. 1. Conceptual and Empirical: Conceptual system is a theoretical frame work that may or may not have any counterpart with real world. Examples: economic theories, theology etc. Empirical systems are generally concrete operational system made up of people, machines, materials and energy. Empirical systems are developed based upon the conceptual systems. Examples are production system, examination system etc. 2. Natural and Artificial systems: Natural systems flourish in nature such as solar system and water system. They are not out of human efforts. Artificial systems are man-made. Examples of artificial systems are transport system and communication system.etc. 3. Social and Machine Systems: Systems made up of people may be viewed purely as social systems. Examplesbusiness organizations, government agencies, political parities etc. Machine systems are made of machine or machines only. 4. Open and Closed systems Open system interact with the environment and exchange information, material or energy with environment. They are difficult to study. Eg: biological systems, organizational systems, etc. A closed system is self-contained and does not interact with its environment. It has a well defined boundary that keeps the environment from influencing the system directly. 5. Adaptive and Non-adaptive Systems: A system that reacts to its environment in such a way as to improve its functioning is called an adaptive system. Most biological systems are adaptive systems. A non-adaptive system does not change with changes in its environment. It is free from its environmental influences and may degenerate eventually. 6. Probabilistic and Deterministic Systems: This classification is based on their predictability of outcomes. In a probabilistic system some states can be predicted from the previous state only with a certain amount of error. Eg: inventory system, average stock, average demand etc. Deterministic systems are perfectly predictable. That is, it is possible to predict the outputs accurately from the inputs. 7. Permanent and Temporary Systems Systems enduring for a long time relative to the people belonging to the system are called permanent systems. Most manmade systems are permanent systems.

Temporary systems are designed to last only for limited period of time. Once the purpose is achieved such systems ceases to exist. 8. Stationary and Non-stationary Systems: Systems whose properties and operations do not vary significantly or change in repetitive cycles are called stationary systems; for example an automatic production systems. The properties and operations of non-stationary systems change very frequently. Control in Systems Control is necessary to ensure proper operations of a system. Feedback process is added to basic system model to achieve this purpose. Feedback in organizational systems is normally provided through information systems. It involves comparing actual output with the standard and in case of difference input is sent to the process to modify the operations so that the output conforms to the standard. A vital element in any planning process is controlling and control systems necessary to achieve the objective. Steps in Control Control is the activity that measures deviation from planned performance, and initiates corrective action, if required. The steps involved are: Setting up a standard specifying expected performance. Examples: a budget, a decision rule or an operation procedure. Measurement of actual performance Comparison of the actual with standard Reporting of deviation to a control unit( say a manager) A set of actions the control unit can choose from to change performance if it is unfavorable. A procedure for higher levels action if the control unit fails in producing correct performance. Feedback Loops Feedback is defined as the returns of the output of a system into the input for purpose of modification and control of output as in electronic amplifiers, automatic machines, etc. the feedback may be either positive or negative. Control is exercised based on the feedback in the organizational system. Positive feedback Positive feedback causes the systems to repeat or amplify an adjustment or action. It acts in the same direction as the measured deviation. For example, if advertisement appending brings more

sales than the target sales, positive feedback causes the advertisement spending to be increased further. Negative Feedback Feedback that seeks to dampen and reduce fluctuations around a norm or standards is termed negative feedback. The corrective action would be in opposite direction to the error. Negative feedback tends to smooth out fluctuations and enables the system to conform to norms and standards.

Types of Control Systems Feedback is the key to system control. The control system can be classified into the following three categories: i. Closed Loop System It is a system where feedback, based on output measurement is fed back to make appropriate alterations to the input. For example, stock level control system has planned level of stock for each item. The actual stock level of each item is measured and compared with the planned level. Adjustments are made to bring stock level up or down to conform to the planned level. ii. Open Loop System These are system where no feedback loop exists an control is external to the system; that is, control is not an integral part of it. Control action is not automatic and may be made without monitoring the output of a system. An example may be heating system without an automatic thermostat. Control is exercised externally by turning the heating system on and off at appropriate intervals iii. Law of requisite Variety The law of requisite variety was coined by Ross Ashby. According to him, complete control of a system can be achieved only when the control system has as much as variety in response as the number of ways the system can go wrong. The control system should have an appropriate response to each control situation. The business organizations are being very large and complex and they cant be controlled with a few control systems like budgets and standards.

Chapter 3 Structure of MIS Every system has a definite structure; that is, a design according to which the components are blended into a functioning whole. MIS is different from most other physical systems due to the difficulty of identifying its physical boundaries and properties. Therefore its very difficult to define the structure of MIS. The structure of MIS can be described from different angles such as formal and informal, physical components of the subsystem and functional subsystems. Formal and Informal Information System A formal information system is based on the organisation represented by the organization chart. The chart is a map of position and their authority relationship, indicated by boxes and connected by straight lines. It is concerned with the pattern of authority, communication and work flow. The formal information system is formally organized to provide information to different users for attaining higher levels of efficiency in their respective area of responsibility and to ensure effective functioning of different subsystems of the organisation so as to achieve the organizational objectives. This system defines very clearly the work-flow system, communication flow-down and the authority. The information flows in terms of policies, goals, strategies, rules and regulations from the top level management to the bottom level of management.. The information also flows from the bottom level management to the top level in terms of feedback, results of work done etc

The informal information system is employee based system design to meet personnel and vocational needs and to help in the solution of work-related problems. It also funnels information upward through indirect channels. In this way, it is considered to be a useful system because it works within the framework of the business and its stated policies. It does not have any welldefined routine or procedure. Informal information is accessible to any user in the organisation regardless of his hierarchical position in the firm. There is no formally rigid procedure for information gathering or sharing in the organization. It does not have any systematic flow. The

informal information system should be employee based and cater to their development and solve their work related problem. Employee co-operation and the knowledge of the informal communication should help one to get a good Informal Information Systems in place. Both formal and informal components should be integrated into the organizational MIS for the smooth functioning. But the accuracy and the authenticity of informal information should be carefully checked by the decision makers.

Public and private Information Systems If the information system subject to the security procedures is available to everyone in the organization it is called public information system. Most of the formal information are in the public domain of the information system. In the information system certain files are not available to others in the organization and might be shared with only certain personalities. These files are created and maintained by a manager for their private use and may or may not use as the formal channel and secretarial service for gathering data, and creating and maintain such private files. The private-informal component of information system represents information that is informally gathered by available to only the user who maintains it. Multiple Approaches to Structure of MIS MIS can be described using several approaches like the components, decision support, managers activity and organizational function. According Gordon B. Davis and Malgrethe Olson, the structure can be explained using four approaches and they synthesized these approaches into a conceptual structure for organizational information system. The approaches to MIS are asl follows: 1. 2. 3. 4. Operational elements of MIS Organizational function Management activity, and Decision support

1. Operational Elements of MIS The operational elements of MIS are divided into three classes:

a. Physical components b. Processing functions and c. Output to users. a. Physical Components of MIS These are the tangible elements of the information system. It can be refered to the physical computer equipment and associated devices. i. ii. iii. iv. Hardware: it includes the CPU, input/output devices, storage devices, communication equipment etc. Software: software is the instructions to the hardware and they are system software and application software. Database: it is a collection of records logically related and centrally controlled. It refers to the physical set of stored data and tapes and disks. Procedures: for the effective functioning MIS requires a set of instruction to users, data preparation people and operating personnel. These instructions are contained in users manuals, instruction book etc. People: users and operational personnel. The users include all information users in the organisation an outside. The operational personnel comprise the elements of information system. They include computer operators, system analyst, programmers, data preparation people, data administrators etc.

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b. Processing Functions The processing functions include: i. Processing transactions: Transaction is an activity and is the source of all data. The information system measures and records all transactions. This transaction data becomes the basis for all the internally generated information. Maintaining Master files: master files store relatively permanent data. Each transaction demand updating of master files. Information system has the facility to update master files by incorporating new transaction data. Producing reports: report generation is the integral process of MIS. Information system generates reports to provide information to users at different levels of management periodically or on special requests. Processing Inquiries: the information system provides response to inquiries coming into it such as say stock available at warehouse, the customer orders pending, and shipments during the last week.

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Process interactive support application: the information system provides interactive facility to users. They ca use models of various kinds use the database and generate alternative solutions interactively.

c. Outputs for users Information system can be understood from the outputs provided by it users. They include: i. Transaction documents: transactions when processed result into some physical documents likes sales invoice, payroll cheques, customer bills, purchase order etc. Reports: information system provides periodic and ad-hoc reports to provide users with information. Enquiry responses: each enquiry is processed and the system h=generates a response for each user. Output of interactive support application: the systems interactive facility enables users to draw on the database and manipulates the data with the aid of models. Such interactive operation results into some outputs to the users.

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2. Organizational Function and Information Requirement ( Functional Subsystems) The structure of an information system can be also described in terms of the organizational functions which use information. There is no standard classification of functions but the set of functions of a manufacturing origination includes production management, sales and marketing management, finance and accounting, logistic management, personnel management, information systems, etc. Each of these functions has four activity subsystems such as transaction processing, operational control, managerial control and strategic planning. 1. Production Subsystem Transaction processing- functions are production orders, assembly orders, finished part tickets, scrap tickets, time keeping tickets. Operational Control- requires detailed reports comparing actual performance with the production schedule and highlighting areas where bottlenecks occur. Management control- Requires summary reports which compare overall planned or standard performance with actual performance.

Strategic Planning- requires information about mergers and acquisitions, alternative manufacturing approaches, alternative approaches to automation etc. 2. Marketing Subsystem Transaction processing- sales orders, promotion orders, etc. Operational Control- hiring and training of sales force, day-to-day scheduling of sales and promotion efforts, periodic analysis of sales volumes by region, product, customer etc. Management control- compares the overall performance against a marketing plan. Strategic Planning- considers new markets and new marketing strategies based on the customer analysis, competitor analysis, income projection, demographic projection and technology projections.

3. Personnel Subsystems Transaction processing- employment requisitions, job descriptions, training specifications, personnel data, pay rate changes, hours worked, pay-cheques, benefits, and termination notices. Operational Control- requires information about decision procedures for action such as hiring, training, termination, changing pay rates and issuing benefits. Management control- requires information about employees hired, cost of recruiting, compositions of skills inventory, cost of training, salary paid, distribution of wages etc. Strategic Planning- requires information for evaluating alternative strategies for recruiting, salary, training, benefits and retaining personnel. 4. Finance Subsystem Transaction processing- processing credit applications, sales, billings, collection, payment vouchers, cheques, journal vouchers, ledgers and stock transfers. Operational Control- requires information about daily errors and exception reports, reports of processing delays, records of unprocessed transactions, etc.

Management control- requires information on budgeted and actual financial resources, cost of processing accounting data and errors rates, etc. Strategic Planning- requires information to evolve alternative strategy to adequately fianc the firm, a long range tax planning policy to minimize taxes, planning of systems for cost accounting and budgeting. 3. Levels of Management Activity and Information Requirement( Activity Subsystem) Anthony has divided management activities into three categories. They are: i. ii. iii. Strategic planning, Tactical planning, and Operational planning control.

Fixing of the broad goals, policies and general guidelines for the organization are the responsibilities of management at strategic planning level. This level requires information about the organization and its environment and also competitor information, industry information, economic and political information, information about current performance of the organization and new investment opportunities, etc. At the management control and tactical planning level the responsibilities are concerned with raising utilization of resources efficiently and effectively. The activities include acquisition of recourses, acquisition of tactics, plant location, new product development, establishing and monitoring of budgets, etc. This level requires information about the targets and the actuals corresponding to these expected performances it variations between them are significant. At the operational planning and control level the responsibilities of management include effective and efficient use of existing facilities and resources, to carry out activities within budget constraints. It requires very short-term information relating to day today to a week. Since the data for this information arises internally, a high degree of accuracy and effective control on its timely availability can be ensured. 4. Decision Support A decision support system (DSS) is a computer-based information system that supports business or organizational decision-making activities. DSSs serve the management, operations, and planning levels of an organization and help to make decisions, which may be rapidly changing and not easily specified in advance.

Decision situations are broadly classified into structured and unstructured on the basis of whether the procedure can be well defined or not. In case of structured decisions, MIS provide all the information required to make them it can even handle such decisions automatically. In the case of unstructured decisions, the users cant even specify the information requirements at the various decision stages and hence MIS cannot anticipate information requirements for such decisions. Hence, the system extends facilities to the manager to interact with the database and model base for analyzing the problem and explore feasibilities of alternative solutions. Synthesis of MIS Structure Davis and Olson combined all the four approaches to MIS structure into a conceptual structure for an organizational MIS. Conceptually each function system is having its own files. The organizational MIS is having database, models for planning, decisions and investment in the model base and commonly shared application software. The common database is managed by database management software (DBMS). Conceptually it is a federation of subsystems integrated through the database software. A Database Management System (DBMS) is a set of computer programs that controls the creation, maintenance, and the use of a database. It allows organizations to place control of database development in the hands of database administrators (DBAs) and other specialists. A DBMS is a system software package that helps the use of integrated collection of data records and files known as databases. It allows different user application programs to easily access the same database. DBMSs may use any of a variety of database models, such as the network model or relational model. In large systems, a DBMS allows users and other software to store and retrieve data in a structured way. Instead of having to write computer programs to extract information, user can ask simple questions in a query language. Thus, many DBMS packages provide Fourth-generation programming language (4GLs) and other application development features. It helps to specify the logical organization for a database and access and use the information within a database. It provides facilities for controlling data access, enforcing data integrity, managing concurrency, and restoring the database from backups. A DBMS also provides the ability to logically present database information to users.

Unit-4 Information Systems Modern business organizations become more and more dependent on their information systems to deal with the complexity and changeability of the context (markets) in which they operate and consequently their internal organization structures. Up-to-date, complete

and accurate information has become a necessity to survive in an increasingly competitive world. I. Transaction Processing Systems

A transaction processing system is a type of information system. A Transaction Processing System (TPS) is a type of information system that collects, stores, modifies and retrieves the data transactions of an enterprise. TPS is the most important and rich source of data for a business firm. TPSs collect, store, modify, and retrieve the transactions of an organization. A transaction is an event that generates or modifies data that is eventually stored in an information system. Features of Transaction Processing Systems Transaction processing systems offer enterprises the means to rapidly process transactions to ensure the smooth flow of data and the progression of processes throughout the enterprise. Typically, a TPS will exhibit the following characteristics: 1. Rapid Processing The rapid processing of transactions is vital to the success of any enterprise now more than ever, in the face of advancing technology and customer demand for immediate action. TPS systems are designed to process transactions virtually instantly to ensure that customer data is available to the processes that require it. 2. Reliability Similarly, customers will not tolerate mistakes. TPS systems must be designed to ensure that not only do transactions never slip past the net, but that the systems themselves remain operational permanently. TPS systems are therefore designed to incorporate comprehensive safeguards and disaster recovery systems. These measures keep the failure rate well within tolerance levels.

3. Standardization Transactions must be processed in the same way each time to maximise efficiency. To ensure this, TPS interfaces are designed to acquire identical data for each transaction, regardless of the customer.

4. Controlled Access Since TPS systems can be such a powerful business tool, access must be restricted to only those employees who require their use. Restricted access to the system ensures that employees who lack the skills and ability to control it cannot influence the transaction process. Types of TPS The transactions can be internal or external. When a department orders office supplies from the purchasing department, an internal transaction occurs, when a customer places an order for a product, an external transaction occurs. Internal Transactions: Those transactions, which are internal to the company and are related with the internal working of any organization. For example Recruitment Policy, Promotion Policy, Production policy etc External Transactions: Those transactions, which are external to the organization and are related with the external sources, are regarded as External Transaction. For example sales, purchase etc. Process of Transaction Processing System The six steps in processing a transaction are: 1. 2. 3. 4. 5. 6. Data entry Input data validation Transaction processing File and database maintenance Document and report generation, and Inquiry processing

II.

Decision Support Systems DSS

Decision Support Systems (DSS) are a specific class of computerized information system that supports business and organizational decision-making activities. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions. Definition: A Decision Support System (DSS) is an umbrella term used to describe any computer application that enhances the users ability to make decisions. More specifically, the term is usually used to describe a computer-based system designed to help decision-makers use data, knowledge and communications technology to identify problems and make decisions to solve those problems.

A Decision Support System is a way to model data and make quality decisions based on it. Making the right decision in business is usually based on data quality and ones ability to sift through and analyze the data to find trends that solutions and strategies can be created from/for. DSS or Decision Support Systems are usually computer applications with a human component. They can sift through large amounts of data and pick between the many choices. Decision Support Systems are used to collect data, analyze and shape the data that is collected, and make sound decisions or construct strategies from analysis. Whether computers, databases, or people are involved usually does not matter. It is important to note that although computers and artificial intelligence are at work, it is ultimately up to humans to execute these strategies or formulate the data into a usable hypothesis. Characteristics of DSS 1. It is designed and run by managers. 2. It contains a database drawn from internal files and external environment. 3. It focuses on decision process rather than on transaction processing. 4. It is concerned with a small area of managerial activity or small part of a large problem. 5. It permits managers to test the probable results of alternative decisions. 6. It supports decision-making, usually in solving semi-structured complex problems. 7. It helps in refining managerial judgment applied to problem solving. 8. It improves managerial decisions and thereby managerial effectiveness. 9. The decision maker retains cover decisions throughout the decision process.

Types of DSS In an effort to clarify the term, DS systems can be separated into seven broad categories, each aiding decision making by different methods. 1. Communications Driven DSS A C-D DSS is a type of DSS that enhances decision-making by enabling communication and sharing of information between groups of people. At its most basic level a C-D DSS could be a simple threaded e-mail. At its most complex it could be a web-conferencing application or interactive video.

Communication-Driven DSS will exhibit at least one of the following characteristics: Supports coordination and collaboration between two or more people; Facilitates information sharing; Enables communication between groups of people; Supports group decisions. 2. Data-Driven DSS Data-driven DSS are a form of support system that focuses on the provision of internal (and sometimes external) data to aid decision making. Most often this will come in the form of a data warehouse a database designed to store data in such a way as to allow for its querying and analysis by users. Another example of a data-driven DSS would be a Geographic Information System(GIS), which can be used to visually represent geographically dependant data using maps. 3. Document-Driven DSS Document-driven DSS are support systems designed to convert documents into valuable business data. While data-driven DSS rely on data that is already in a standardised format that lends itself to database storage and analysis, document-driven DSS makes use of data that cannot easily be standardised and stored. The three primary forms of data used in document driven DSS are: Oral (i.e. transcribed conversations); Written (i.e. reports, memos, e-mail and other correspondence); Video (i.e. TV commercials and news reports). None of these formats lend themselves easily to standardised database storage and analysis, so managers require DSS tools to convert them into data that can be valuable in the decision making process. Document-driven DSS is the newest field of study in Decision Support Systems. Examples of document-driven tools can be found in Internet search engines, designed to sift through vast volumes of unsorted data through the use of keyword searches. 4. Knowledge-Driven DSS Knowledge-driven DSS are systems designed to recommend actions to users. Typically, knowledge-driven systems are designed to sift through large volumes of data, identify hidden patterns in that data and present recommendations based on those patterns.

5. Model-Driven DSS Model-driven support systems incorporate the ability to manipulate data to generate statistical and financial reports, as well as simulation models, to aid decision-makers. Model-based decision support systems can be extremely useful in forecasting the effects of changes in business processes, as they can use past data to answer complex what-if questions for decision makers. In addition to these basic types of DSS there are also two additional factors: whether the DSS is spreadsheet-based, web-based or something else entirely. 6. Spreadsheet-based DSS Model- and Data-driven DS systems can be built using spreadsheets. Spreadsheets offer decision-makers easy to understand representations of large amounts of data. Additionally, spreadsheet data is arranged in such a way as to make it easy to convert the data into visualisations to further aid decision-makers. 7. Web-based DSS Any type of DSS can be web-based. The term simply describes any decision support system that is operated through the interface of a web browser, even if the data used for decision support remains confined to a legacy system such as a data warehouse. Components of DSS Components of DSS include the following: 1. DSS database: DSS requires a database of its own. It can use data in organizational database. But this will slow down the application. There is also a risk of DSS application modifying data in the organizational database. Hence, DSS generally use data from organization data drawn from organizational database and other relevant data collected from outside. 2. Model base: It contains a collection of mathematical and analytical models that the DSS user may want to analyse the data. Each DSS is designed for a specific purpose such as firefighting, diagnostics, oil exploration, etc. hence the model in the model base will vary from DSS to DSS. 3. The Hardware: DSS requires hardware to provide the capability to the users to interact with the database and models using DSS applications. 4. The user interface: The user interface of DSS supports interaction between the user and the data using the mode. 5. Analysis tools: These include many tools which can be use at any level of management.

III.

Expert Systems

Definition: An expert system is a computer programme where data is stored and manipulated by the programme to come up with advises, hints, directions in reaction of input by users of data acquisition devices. An expert system is one of the off springs of Artificial Intelligence programming. Expert systems are used in professional areas like Diagnostics (Medicines), Construction, and Simulation. Since the growth rate in this specific field is 100 percent it is to be expected that expert systems will be applied in other areas. In principle is an expert system a further development of the (conventional) third generation programming languages. And as such a system like that can hardly be called an extension of Artificial Intelligence. Expert system was originally developed to replicate abilities of human experts. The system captures and stores human knowledge in a area of expertise called domain and uses it to solve problems which otherwise requires the help of human experts. The solution suggested by the system is expected to be superior that by any single expert. Expert systems are designed to solve real problems in a particular domain that normally would require a human expert. It can solve many problems. Development of an expert system involves extracting relevant knowledge from human experts in the area of problem, called domain experts. The expert system consists of two major parts: the development environment and consultation environment. The expert system builder uses the development environment to build the components and store expertise into the knowledge base. Non-expert users use the consultant environment to get the expert opinion and advice from the expert system. Components of Expert System 1. Knowledge Acquisition Facility: domain experts acquire expertise by constant interaction with similar experts, observation and personal experience in the domain. This facility adds new knowledge and rules to the existing knowledge base and ensures its growth to meet emerging needs. Usually knowledge engineers do this work. 2. Knowledge Base: it stores knowledge, rules and explanations associated with the knowledge like database. The knowledge must meaningfully represent in the system so that the system can relate to real world problems.

3. Knowledge-based management System: it is similar to database management system in an information system. Its major task to update the knowledge base with knowledge and rules. 4. Work Space: the workspace or black board is a memory area used for describing the current problem and storing intermediate results. 5. Explanation Facility: it explains how recommendations are derived. The user can know how the expert system arrived at the solution, why some alternatives were rejected, why some information was asked for etc. the explanation facility answers these questions by referring the system goals, data input and the decision rules. 6. Inference Engine: the inference engine works like the model base in decision support system. It manipulates a series of rules using forward chaining and backward chaining techniques. 7. User interface: the system provides an interface for the user to interact with the system to generate solutions. It is similar to the dialogue facility in decision support system. The artificial intelligence technology tries to provide a natural interface to users. Characteristics of Expert System Expert system is capable of handling challenging decision problems and delivering solutions. Expert system uses knowledge rather than data for solution. Much of the knowledge is heuristic-based rather than algorithmic. The knowledge is encoded and maintained separately from the control program Expert system has the capability to explain how the decision was made. It can also state why a particular piece of information was needed for the solution.

Use of Expert System An expert system can be used for problem solving if the following conditions are met. The problem cannot be specified in terms of a well-defined algorithm. The problem requires consistency and standardization. The domain or problem area is narrow or limited. When the task is hazardous. There is scarcity of experts in the area. The problem involves complex logic or a large number of rules. Human expert have successfully solved similar problems.