MIS –

Subsystems
& Types

By
Arun Mishra
Subsystems of an MIS
 Two approaches to define
subsystem
Organisational Function
Subsystem: Supports the various
functions of an Organisation. Ex.
Marketing, Production, Personnel
etc.
Activity Subsystem: Supports the
activity for which they are used.
Ex. Transactions, Operations etc.
 MIS Subsystems
Organisational
Functions

PROCESSING

MANAGEMENT
INFORMATION
PERSONNEL
MARKETING
PRODUCTION

LOGISTICS

FINANCE

TOP
STRATEGI

ACTIVITIES
C
PLANNING
MANAGEMENT
CONTROL

OPERATIONA
L CONTROL

TRANSACTION
PROCESSING

MIS Subsystems
 Organisational Function
Subsystems
Major Functional Some Uses
Subsystems
Marketing Information Sales forecasting, Sales
System planning, Sales analysis
Manufacturing Production planning &
Information System scheduling, cost control
analysis
Personnel Information Salary Admn., Planning HR
System requirement, performance
analysis
Accounting Information Financial Analysis, cost
System analysis, Capital planning,
etc.
Logistics Information Planning & control of
System Purchasing, inventories,
distribution.
Information Processing Planning of Information
 Activities Subsystems
Activity Subsystems Some Uses

Transaction Processing Processing of orders,

System shipments, & receipts

Operational Control Scheduling of activities and

System performance reports

Management Control Formulation of Budgets &

System resource allocation

Strategic Planning SystemFormulation of Objectives &

strategic plan
 Types of
Information
Systems
 Levels of Management

Upper or Top or Strategic Management

Strategic

Middle or Tactical Management

Tactical

Operational
Lower level Management

Three levels of management

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
 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
procedures. In most cases a semi structured
decision is complex, requiring detailed analysis
and extensive computations.
 Upper or Top or Strategic
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.
Types of Information Systems
 Operations Support
Systems
1. TRANSACTION PROCESSING SYSTEMS
i. Transaction processing systems record and process
data resulting for business transactions.
ii. Typically examples are information systems that
process sales, purchases, and inventory changes.
iii. These can be processed and used by management
information systems, decision support systems, and
executive information systems.

2. PROCESS CONTROL SYSTEMS

i. Operation support systems also make routine
decisions that control operational processes.
ii. Examples are automatic inventory reorder
decisions and production control decisions.
 Operations Support
Systems
3. ENTERPRISE COLLABORATION
SYSTEMS
i. Enterprise collaboration systems are
information systems that use a variety of
information technologies to help people
work together.
ii. Enterprise collaboration systems help us
collaborate to communicate ides, share
resources, and coordinate our cooperative
work efforts as members of the many
formal and informal process and project
teams and other workgroups.
 Management Support
Systems
1. MANAGEMENT INFORMATION SYSTEMS:
i. Management information systems (MIS) are the
most common form of management support
systems.
ii. They provide managerial end users with
information that support much of their day-to-
day decision-making needs.
iii. M IS provide a variety of reports and displays to
management.
 Management Support
Systems
2. DECISION SUPPORT SYSTEMS:
i. A natural progression from information reporting systems
and transaction processing systems.
ii. Decision support systems are interactive, computer-based
information systems that use decision models and
specialized database to assist the decision making process
of managerial end users.

2. EXECUTIVE INFORMATION SYSTEMS:

i. EIS are management information systems tailored to the
strategic information needs of top management.
ii. Top executives get the information they need from many
sources, including letters, memos, periodicals, and reports
produced manually as well as by computer systems.
 ASSIGNMENT #2
 Explain Subsystems of an
MIS.
 Describe Briefly Types of
Systems.
 HOW SYSTEMS
ARE BUILD FROM
SUBSYSTEMS
 Decomposition
 A complex system is very difficult to
understand as a whole.
 Therefore, it is decomposed or divided
into subsystems. The sum of
subsystems constitutes the entire
system.
 The process of decomposition is
continued to with subsystems divided
into smaller subsystems until the
smallest subsystem are of manageable
size.
 These subsystems generally form
hierarchical structure.
Hierarchical relations of subsystems
 An example of Decomposition
1. Information system divided into subsystem such as:
a. Sales & Order entry
b. Inventory
c. Production
d. Personnel & Payroll
e. Purchasing
f. Accounting & Control
g. Planning
2. Each subsystem is further divided into subsystems.
Ex. Personnel & Payroll:
a. Personnel Reports
b. Payroll data entry & validation
c. Hourly Payroll processing
d. Salaried payroll processing
e. Payroll Report for management
f. Payroll report for Government
3. The subsystems defined in (2) might be further
subdivided into smaller subsystems or modules. For
Example, the hourly payroll processing might be
divided into modules for calculation of deductions &
net pay, payroll register & audit controls preparations,
register & controls outputs.
 Simplification
 The process of decomposition could
lead to a large number of subsystem
interfaces to define.
 Each interconnection is a potential
interface for communication among
subsystems.
 Simplification is the process of
organizing subsystems so as to reduce
the number of interconnections.
Methods of simplification are:
 Clusters
 Decoupling
All systems interconnected

A1 A2 B1 B2

A3 A4 B3 B4
 Cluster Method
 Clusters of subsystems are
established which interact with
each other, then a single
interface path is defined from the
cluster to other subsystems or
clusters of subsystems.
 For Example: A database assessed
by many programs, but the
interconnection is through a
database management interface.
 Systems connected within cluster &
clusters interconnected with single
interface

A1 A2 B1 B2

A3 A4 B3 B4
 Decoupling Method
 If two different subsystems are connected
very tightly, very close coordination &
timing between them is required.
 Because, they are somewhat independent,
it is difficult to make them operate
completely in synchronized fashion.
 The solution is to decouple or loosen the
connection so that the two systems can
operate in the short run with some
measures of independence.
 Some means of decoupling are:
 Inventories, buffer or waiting line
 Slack & flexible resources
 Standards
Means of Decoupling
 What is Information?
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 action or decision.
Information reduces uncertainty.
Information tells something the receiver
did not know or could not predict.
 Data Vs. Information
 Data Raw facts in isolation. These are
isolated facts convey meaning but
generally are not useful by
themselves.
 Information is data that has been
manipulated to be useful to someone.
In other words, information must
have value, or it is still data.
Information tells people something
they don’t already know or confirms
something that is suspect.
 Value of Information
 The value of Information is
described most meaningfully
in the context of a decision.
 The definition discussed
earlier recognizes both;
 the value of information in a
specific decision and,
 the value of information in
motivation, model building, &
background building affecting
the future decisions & actions.
 Value of Information in
Decision Making
 Decision theory provides approaches
for making decisions under certainty,
risk, & uncertainty.
 Decision making under certainty
assumes perfect information as to
outcomes;
 Risk assumes information as to the
probability of each outcome; and
 Uncertainty assumes a knowledge of
possible outcomes but no information as
to probability.
 Value of Information in
Decision Making
 In decision theory the value of information is the
value of change in decision behaviour caused by the
information less the cost of obtaining the
information.
 In other words, out of set of possible decisions, a
decision maker will select one on the basis of
information at hand.
 If the new information causes the different decision,
 the value of new information is the difference in value of
outcome of the old decision & that of the new decision,
 less the cost of obtaining the new information.
 If the new information does not cause different
decision then value of information is Zero.
 Value of Information in
Decision Making
 Value of Perfect Information: is
computed as the difference between
the optimal policy without perfect
information & the optimal policy with
perfect information.
 Almost no decisions are made with
perfect information because:
 The needed information is unavailable.
 The effort to acquire the information is too
costly.
 There is no knowledge of the availability of
the information.
 The information is not available in the form
needed.
 Value of Information in
Decision Making
 Value of Information & Sensitivity Analysis:
Sensitivity analysis consists of procedures to
determine the degree of impact on a solution or a
model of changes in one or more variables. For
Example:
 What is the effect on the profit of a 10% increase in sales or 10%
decrease in sales?
 Will the project be justified of the cost increases 10%?
 If the decision is not sensitive to the value of variables,
additional information on the future value of variable will
have no effect on decision (have no Value.)
 If the decision is highly sensitive to change in the future
value of variable, sensitivity analysis also indicates the
degree of sensitivity. The effect shows the value of more
information to reduce uncertainty.
 Value of information
other than in a Decision
Motivation: Some information is
motivational, it provides the information
with a report on how well they are
doing. This feedback information may
motivate decisions.
Model Building: The management &
operation of a enterprise function with
models of the enterprise. Information
that is received be these managers may
result in change or reinforcement of
their models.
 Value of information
other than in a Decision
Background Building: In decision
theory the value of information is the
value of change in decision behaviour,
but the information has value only to
those who have the background
knowledge to use it in a decision. The
most qualified person generally uses
information most effectively but may
need less information since experience
has already reduced uncertainty.