management information system - himpub.com university syllabus of mba – iiird semester management...

Management Information System(Text and Cases)

Dr. Debasish BiswasM.Com., M.B.A., M.Phil., DLL, PGDHM, GDCA, PGDMM, Ph.D.

Assistant Professor,Dept. of Business Administration,

Vidyasagar University.

Dipanjan MoitraMCA

Assistant Professor,Dept. of Management,

University of North Bengal.

MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNELUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR KOLKATA

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First Edition : 2016

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PREFACEWe feel great pleasure in placing the first edition of this book before our esteemed readers. Itis the outcome of a great deal of encouragement from our colleagues and request fromstudents.

This book is appropriate for Commerce, Management and Engineering students at graduateand postgraduate level of different Indian Universities.

Our sincere and deliberate efforts have been devoted to give the book a comprehensive form.All chapters have been discussed in a very simple and lucid language so as to make thesubject easily understandable to our beloved students. We have also incorporated relevantcase study at the end of each chapter.

We are grateful to the esteemed teachers who always provided us with their valuablesuggestions from time-to-time. We are thankful to our students who always shown a keeninterest in our publication. We offer our heartfelt congratulations to Himalaya PublishingHouse Pvt. Ltd., for quick publication of the book.

We welcome suggestions from esteemed teachers and our students for enrichment andimprovement of the book.

We are confident; this edition will prove all the more useful to Commerce, Management andEngineering students at graduate and postgraduate level of different Indian Universities aswell as Foreign Universities.

Dr. D. Biswas and D. Moitra

ACKNOWLEDGEMENTSFirst of all, we would like to express our sincere gratitude to Dr. Debasish Sur, Professor ofCommerce, University of Burdwan, who has been our motivator since the beginning of ourwrite-up. He provided us with many helpful suggestions, important advice and constantencouragement during the course of this work.

We are grateful to Prof. Katrick Chandra Paul, Department of Business Administration,Vidyasagar University for his valuable suggestions.

We are also indebted to all of our beloved students and colleagues for their wholeheartedcooperation for this book.

We also thank to Prof. Debabrata Mitra and Dr. Amlan Ghosh for extending their help inconducting the task.

We owe a deep gratitude to the authorities of the Vidyasagar University, different librariansand all those who inspired and helped us in this work. We must thank Mr. Subhasish Khanand Somnath Ghosh for preparing a neat typed copy of the book.

Finally, our sincere thanks to our publisher, Himalaya Publishing House Pvt. Ltd., for theiruntiring effort and support in bringing out this book.

The responsibility for errors remains us alone.Dr. D. Biswas

andD. Moitra

Pune UniversitySyllabus of MBA – IIIrd Semester

Management Information Systems

1. Management Information Systems: Need, Purpose and Objectives – ContemporaryApproaches to MIS – Information as a Strategic Resource – Use of Information forCompetitive Advantage – MIS as an Instrument for the Organisational Change (8)

2. Information, Management and Decision Making: Models of Decision Making – Classical,Administrative and Herbert Simon’s Models – Attributes of Information and its Relevanceto Decision Making – Types of Information (8)

3. Information Technology: Definition, IT Capabilities and their Organisational Impact –Telecommunication and Networks – Types and Topologies of Networks – IT EnabledServices such as Call Centres, Geographical Information Systems, etc. (6)

4. Database Management Systems: Data Warehousing and Data Mining (6)

5. Systems Analysis and Design: Systems Development Life Cycle – Alternative SystemBuilding Approaches – Prototyping – Rapid Development Tools – CASE Tools – ObjectOriented Systems (Only Introduction to These Tools and Techniques) (8)

6. Decision Support Systems: Group Decision Support Systems – Executive InformationSystems – Executive Support Systems – Expert Systems and Knowledge Based ExpertSystems – Artificial Intelligence (8)

7. Management Issues in MIS: Information Security and Control – Quality Assurance –Ethical and Social Dimensions – Intellectual Property Rights as related to IT Services/ITProducts – Managing Global Information Systems (8)

8. Applications of MIS in functional areas as well as in the service sector should be coveredwith the help of minimum five case studies (8)

Shivaji UniversityManagement Information Systems

1. Scope and Objectives of MIS: The role and Importance of Information Systems, the Placeof Information Systems in the Organisation, the Power of MIS, Strategic role of InformationSystems, Uses of MIS.

2. The Challenge of Information System: Difference between computer literacy andinformation system literacy. Information needs of different organisation levels. Major typesof information system in organisation and relationship between them, enhancingmanagement decision making, decision support systems (DSS) – understanding DSS,characteristics components, major DSS applications. Group decision support systems(GDSS) – elements, characteristics, how GDSS can enhance group decision making.

Executive support systems (ESS) – role of ESS in the organisation, developing ESS, benefitsof ESS.

3. Foundations of Information System: Devices and tools for interacting with MIS –hardware, software and telecommunication. Managing data resources – organising data in atraditional file environment and problems, modern database environment, logical andphysical view of data, advantages of database management system. Designing database –3 models: Hierarchical data model, Network data model, Relational data model, advantagesand disadvantages of this model, database trends – distributed processing and distributeddatabases, object oriented and hypermedia databases, management requirements for databasesystems – data administration, data planning and modelling methodology, challenges indatabase management.

4. Strategic Role of Information Systems and Building Information Systems: Informationas a strategic resources and concept of strategic information system. Contribution ofinformation systems to pursue competitive strategies. Building information systems:Contemporary approaches. Systems as a planned organisational change. Systemdevelopment and organisational change, Overview of system development – System analysis,system design, completing this system development process. Alternative system buildingmethods – system life cycle, prototyping, application of software packages, end userdevelopment and outsourcing.

5. Information System Success and Failure: Major problem areas in information system,causes of information system success and failure, evolution of success of informationsystems. Principle causes of information system failure, appropriate strategies to implementthe process.

6. Application of MIS in Various Functional Areas: Marketing information systems,financial information systems, human resource information systems, production informationsystems.

Jawaharlal Nehru Technological UniversityManagement Information Systems

MCA – IIIrd Semester

Unit I:

The meaning and role of MIS: What is MIS? Decision support systems, systems approach, the systemsview of business, MIS organisation within the company, Managers’ view of information systems.

Unit II:

Management organisational theory and the systems approach, Development of organisational theory,management and organisational behaviour, management, information and the systems approach, usinginformation systems for feedback.

Unit III:

Information systems for decision making: Evolution of an information system, Basic informationsystems, decision making and MIS, MIS as a technique for making programmed decisions, decisionassisting information systems, Communication systems basics.

Unit IV:

Strategic and project planning for MIS: General business planning, appropriate MIS response, MISplanning – general, MIS planning – details.

Unit V:

Conceptual system design: Define the problems, set system objectives, establish system constraints,determine information needs, determine information sources, develop alternative conceptual designsand select one, document the system concept, prepare the conceptual design report.

Unit VI:

Detailed system design: Inform and involve the organisation, aims of detailed design, projectmanagement of MIS detailed design, identify dominant and trade-off criteria, define the subsystems,sketch the detailed operating subsystems and information flows, determine the degree of automationof each operation, inform and involve the organisation, inputs, outputs, and processing, early systemtesting, software, hardware and tools, propose an organisation to operate the system, document thedetailed design, revisit the manager-user.

Unit VII:

Implementation, evaluation and maintenance of the MIS: Plan the implementation, acquire floor spaceand plan space layouts, organise for implementation, develop procedures for implementation, train theoperating personnel, computer related acquisitions, develop forms for data collection and informationdissemination, develop the files, test the system, cutover, document the system, evaluate the MIS,control and maintain the system.

Unit VIII:

Pitfalls in MIS development: Fundamental weaknesses, soft spots, in planning, design problems,implementation: the TAR PIT. Applications of information systems to business. Security and ethicalissues of information systems.

CONTENTS1. Introduction to MIS 1 – 11

1.1 Definition to MIS

1.2 Evolution of MIS

1.3 Logical Foundations of MIS

1.4 MIS Personnel

1.5 Management of MIS

1.6 The MIS Function in Organisation

1.7 Role of MIS

1.8 Objectives of MIS

1.9 Limitations of MIS

1.10 Future of MIS

1.11 Summary1.12 Key Terms

1.13 Exercises

1.14 Project Assignments

1.15 Case Study

2. Structure of MIS 12 – 23

2.1 Elements of MIS

2.2 MIS and Organisational Hierarchy

2.3 MIS and Control Process

2.4 Issues of MIS

2.5 Summary

2.6 Key Terms

2.7 Exercises


2.9 Case Study

3. System and Models 24 – 46

3.1 Concept of System

3.2 Components of System

3.3 Environment

3.4 Open System

3.5 Closed System

3.6 System Concepts and Organisations

3.7 Types of Models

3.8 Strategic Planning Model

3.8.1 Model One – Vision-based or Goals-based Strategic Planning

3.8.2 Model Two – Issues-based Planning

3.8.3 Model Three – Alignment Model

3.8.4 Model Four – Scenario Planning

3.8.5 Model Five – ‘Organic’ (or Self-organising) Planning

3.8.6 Model Six – Real-time Planning

3.9 Models of Organisation3.10 System Analysis and Design

3.10.1 Role of System Analyst

3.10.2 Users of System

3.10.3 System Development Life Cycle (SDLC) Models

3.10.4 SDLC Activities

3.11 Application of System Concepts to Management

3.12 Summary

3.13 Key Terms

3.14 Exercises


3.16 Case Study

4. Transaction Processing 47 – 61

4.1 Concept of Transaction Processing4.2 Features of Transaction Processing

4.3 Transaction Processing Cycle

4.4 Methods of Processing Transaction

4.5 Transaction Processing Models

4.6 Controls for Transaction Processing

4.7 Retrieval in Transaction Processing

4.8 Transaction Processing Subsystems

4.9 Transaction Processing Activities

4.10 Role of IT and Transaction Processing

4.11 Summary

4.12 Key Terms

4.13 Exercises


4.15 Case Study

5. Management and Decision Making 62 – 82

5.1 Levels of Management

5.1.1 Top Level Management

5.1.2 Middle Level Management

5.1.3 Lower Level Management

5.2 Managerial Roles

5.3 Concept of Organisational Planning5.4 MIS and Planning Process

5.5 Control Process in Organisation

5.6 Managerial Styles

5.7 Concept of Decision Making

5.8 Types of Decisions

5.9 Phases of Decision Making

5.10 Models of Decision Making

5.11 Evaluating Decision Making

5.12 Application of Model of Decision Making

5.13 Summary

5.14 Key Terms

5.15 Exercises5.16 Project Assignments

5.17 Case Study

6. Decision Support System 83 – 99

6.1 Decision Support System

6.2 Characteristics of DSS

6.3 Types of DSS

6.4 Components of DSS

6.5 Functions of DSS

6.6 Expert System

6.7 DSS Models

6.8 Development of DSS

6.9 Applications of DSS

6.10 Approaches to DSS

6.11 Summary

6.12 Key Terms

6.13 Exercises


6.15 Case Study

7. Management Reporting System 100 – 106

7.1 Concept of Management Reporting System7.2 Characteristics of Management Reporting System

7.3 Types of Report

7.4 Contents of Report

7.5 Summary

7.6 Key Terms

7.7 Exercises


7.9 Case Study

8. Database Management System 107 – 116

8.1 Database and Database Management System

8.2 Objectives of Database

8.3 Data Model Concepts

8.4 Requirement of Database

8.5 Limitations of Database

8.6 Summary8.7 Key Terms

8.8 Exercises


8.10 Case Study

9. MIS in Functional Areas of Business 117 – 125

9.1 Financial Information System

9.2 Manufacturing Information System

9.3 Marketing Information System

9.4 Human Resource Information System (HRIS)

9.5 Summary

9.6 Key Terms

9.7 Exercises


9.9 Case Study

10. Enterprise Resource Planning (ERP) 126 – 141

10.1 Concept of ERP

10.2 Evolution of ERP

10.3 Features of ERP10.4 Functional Architecture of ERP

10.5 Benefits of ERP

10.6 BPR and ERP

10.7 Material Requirements Planning

10.8 Manufacturing Resource Planning

10.9 ERP Implementation

10.10 SAP R/3 Solution

10.11 Supply Chain Planning

10.12 Summary

10.13 Key Terms

10.14 Exercises

10.15 Project Assignments10.16 Case Study

11. Supply Chain Management 142 – 151

11.1 Concept of SCM

11.2 Features of SCM11.3 Types of SCM

11.4 Stages of SCM

11.5 Benefits and Challenges of SCM

11.6 Development of Logistics

11.7 Logistics-Marketing Interface

11.8 Summary

11.9 Key Terms

11.10 Exercises


11.12 Case Study

12. Future of Information Technology on 152 – 158Organisation and Society

12.1 Development in Telecommunications

12.2 Impact of Information Technology on Individual Jobs

12.3 Impact of IT on Organisation Structure

12.4 Impact on Lifestyle

12.5 Summary

12.6 Key Terms

12.7 Exercises


12.9 Case Study

13. Data Warehousing and Data Mining 159 – 186

13.1 Introduction

13.1.1 The Data Warehouse

13.1.2 Components and Processes

13.2 Multidimensional Data Modelling

13.3 Business Intelligence and Data Warehousing

13.3.1 Decision Support Systems (DSS)13.3.2 Online Analytical Processing (OLAP)

13.4 Building of Data Warehouse

13.5 Data Marts

13.6 Data Mining

13.7 Summary

13.8 Key Terms

13.9 Exercises


13.11 Case Study

14. Data Communication and Network 187 – 209

14.1 Introduction

14.2 Fundamentals of Communication Concepts

14.2.1 Data Communication Terminology

14.2.2 Types of Data Transmission Signals

14.2.3 Comparison between Analogue and Digital Signal

14.2.4 Modes of Transmission

14.2.5 Types of Data Transmission

14.2.6 Methods of Data Transmission

14.2.7 Transmission Medium14.2.8 Communication Channel Configuration

14.2.9 Multiplexers

14.3 Network Basics

14.3.1 Components of a Network

14.3.2 Types of Network

14.4 Network Structures

14.4.1 OSI Model

14.4.2 TCP/IP Model

14.5 Network Management

14.6 Applications of Network

14.7 Summary

14.8 Key Terms14.9 Exercises


14.11 Case Study

15. Computer Fundamentals 210 – 236

15.1 Introduction

15.2 Components of a Computer

15.2.1 History of Computer

15.2.2 Storage and Storage Devices

15.2.3 Input Devices

15.2.4 Output Devices

15.2.5 Plug and Play Devices

15.3 Types of Computers

15.4 Software

15.4.1 Operating Systems

15.4.2 Language Translators

15.4.3 Utility Programmes

15.4.4 Application Software

15.4.5 Programming Languages

15.4.6 Open Source Software15.5 Applications of Computers

15.6 Computer Threats

15.6.1 History of Viruses

15.6.2 Classification of Viruses

15.6.3 Types of Viruses

15.6.4 Computer Security

15.7 Summary

15.8 Key Terms

15.9 Exercises


15.11 Case Study

Glossary 237 – 248

Index 249 – 254

Bibliography 255 – 259

Abbreviations 260 – 262

Question Papers 263 – 271

Introduction to MIS1

CHAPTER HIGHLIGHTS1.1 Definition to MIS

1.2 Evolution of MIS

1.3 Logical Foundations of MIS

1.4 MIS Personnel

1.5 Management of MIS

1.6 MIS Function in Organisation

1.7 Role of MIS1.8 Objectives of MIS

1.9 Limitations of MIS

1.10 Future of MIS

1.11 Summary

1.12 Key Terms

1.13 Exercises


1.15 Case Study

Authors’ DefinitionManagement Information System (MIS) refers to the computer-based information processing

system which supports the operations, management, and decision-making functions of an organisation.

Learning Objectives

After reading and studying this chapter, you should be able to:

1. Understand the concept, evolution, logical foundation and management of MIS.2. Explain the function of MIS, role, objective and future of MIS in organisation.3. Identify the basic functions of MIS personnel.

2 Chapter – 1

1.1 DEFINITION OF MISManagement Information System (MIS) is a set of computer-based systems and procedures

designed to improve the managerial decision-making process that involves collection, organisationand storage of information for analysis and control.

The term ‘System’ is evolved from the ancient Greek word ‘Systema’ means an orderlyintegration of interdependent components in order to perform a certain task.

Information is a refined form of data. In isolation, data (e.g., Ram, 32, etc.) does not bear anyuseful meaning. But after processing of data we can get some meaningful information like “Ram is 32years old”. Processed data is called information.

Management is the decision-making curriculum by using information system. As a whole, MISmay be seen as “supply of right information, in right time, at right level”. MIS gives informationsupport to the management of any organisation with the help of commercial computer applications.MIS only deals with the formal decisions that can be codified in the form of systems and procedures.Informal decisions like innovative or emotional or personal decisions are beyond the scope of MIS sofar.

MIS can be defined as a system that:

(a) Provides information to support managerial functions like planning, organising, directing,controlling.

(b) Collects information in a systematic and a routine manner which is in accordance with a welldefined set of rules.

(c) Includes files, hardware, software and operations research models of processing, storing,retrieving and transmitting information to the users.

1.2 EVOLUTION OF MISThe older version of MIS was Electronic Data Processing (EDP) systems. The main activity of

EDP was record keeping under accounting department of an organisation. One example of EDP is thepayroll software package used by any organisation.

The philosophical shift from data to information developed the concept of MIS. The main aim ofEDP was to compile a chunk of data, whereas MIS took the responsibility to process those data andgenerate fine tuned information.

With the revolution in personal computing, the management could directly access theinformation base instead of depending on the EDP or MIS departments. This enhanced the decisionmaking capabilities of management and gave birth to Decision Support Systems (DSS) pioneered byKeen. The direct use of information base created the ‘What-if’ analysis capability with the help ofmodern software packages like Spreadsheet, Word Processing and Database Management Systems(DBMS), etc.

Introduction to MIS 3

The spectacular growth in Artificial Intelligence and Expert Systems generated KnowledgeBased System (KBS). Combined with DSS, the expert systems could supply a superior class of MISby providing software packages having self-learning capabilities.

The philosophy of DSS, combined with the power of the Operation Research models togetherwith Management Science transformed the ‘What-if’ capability to ‘What-is-best’. This came to beknown as Model Management Systems (MMS) help the management to take the optimal decisionfrom several available alternatives.

The EDP targeted the lower level of management. The MIS/DSS/MMS targeted the middle levelof management. The Executive Information System (EIS) or Executive Support System (ESS) servesthe top level of management whose time value is extremely high. Here the user interface must besuperior such as, Natural Language Interface, Voice Processing and Response, Multi-Media (Graphics,Sound and Video), etc.

1.3 LOGICAL FOUNDATIONS OF MISWith the refinement of data processing into MIS and later DSS, there was increasing demand for

‘What-if’ capability or evaluation of different scenarios. Such a demand necessitates the extensive useof mathematical, statistical, optimisation and simulation models collectively known as the models ofOperations Research and Management Science. Thus the quantitative tools of Operations Researchand Management Science form the first logical foundation of MIS.

Since MIS is primarily concerned with managerial decision making, the theory of organisationalbehaviour and the underlying understanding of human behaviour in the organisational context formthe second logical foundation of MIS. As every major MIS developed today is built around somecomputational device, a clear understanding of the various facets of computing becomes an essentialpre-requisite for a successful MIS implementation. Thus Computer Science would form the thirdlogical foundation of MIS.

Information theory would form the fourth logical foundation of MIS. It provides insight into thefundamental aspects of information processing at an abstract level. This area has also developedrelated areas like noise reduction, error detection, signal processing, image processing, compressionschemes, optical character recognition, etc. The related areas of system analysis, system design andsystem engineering provide further theoretical framework for structuring the information.

1.4 MIS PERSONNELAn organisation has a separate MIS function which is responsible for acquiring and operating

system hardware, developing software, and managing the entire MIS resources. Individuals fromvarious disciplines have joined the MIS profession and have been successful in varying degrees. Thefield is now expanding in different divergent areas where some formal education is required for abright career in information systems.

4 Chapter – 1

MIS stands for ‘management information systems’ that is used for the computer systems in anyenterprise that provide information about its business operations; the person who is responsible for allthese information is known as MIS professional who collects data from multiple sources in anorganisation, compiles it, organises it and then does the calculations as per organisation’s needs. Inother words, the post of MIS is to make easier campus-wide business service through the appropriateapplication of information technology. Earlier, the profession is used for calculating the payroll andkeeping track of accounts payable and receivable and also for collecting the information about sales,inventories and other data that would help in managing the enterprise. Now the term is used widely fornumber of contexts like: resource and people management applications, project management, decisionsupport systems and database retrieval applications.

Management Information Systems (MIS) professionals contribute to and interact with internalcustomers at every level in an organisational structure. MIS professionals translate business needs intotechnology-based solutions and translate new technology advances into business capabilities. As anMIS professional, you will become a valued partner helping your organisation to achieve its mostimportant goals.

MIS encompasses analysis, design, implementation and management of information systems.Information systems support decision making and business processes in all functional areas of anorganisation. Successful information system professionals need excellent communication skills,excellent analytical and problem-solving skills, technical expertise, business knowledge and the abilityto work well with technical and non-technical people.

Knowledge of Computer Science as well as basic understanding of organisational functions arethe essential skills of MIS professional in order to perform the MIS function in an efficient andeffective way.

Different business houses follow different methods in establishing an MIS/EDP (Electronic DataProcessing) within the organisation. Three forms of setups are very popular:

(a) Part of the Financial Department: EDP personnel headed by an EDP Manager are engagedunder the supervision of the finance officer or the chief accounts officer or the audit and accountsofficer. As EDP is the elementary stage of MIS, organisations involve MIS personnel along with theaccounts and clerical personnel. Usually small organisations follow this type of structure.

(b) EDP/MIS as a Separate Entity: Officers having separate designations like EDP Manager orDirector of MIS, enjoy the status equal to any other chief of any functional division within theorganisation. Normally, business giants who give MIS/EDP extreme importance, adopt this kind ofsetup.

(c) Third Party MIS/EDP Support: Consultancy units or subsidiaries of conglomerate ofcompanies go for MIS/EDP outsourcing. This approach is very useful for the speedy and rapid growthof systems design and other data processing tasks.


1.5 MANAGEMENT OF MISManagement should try to design the MIS for their enterprise with utmost care. If they allow the

MIS to develop without any formal planning, the MIS will almost certainly be inefficient because datawill be obtained and processed in a random and disorganised way and the communication ofinformation will also be random and hit and miss.

Whether a MIS is formally or informally constructed, it should have certain essentialcharacteristics:

(a) The functions of the individuals and their areas of responsibility in achieving companyobjectives should be well defined.

(b) Areas of control within the company should also be clearly defined.

(c) Information required for an area of control should flow to the manager responsible for it.

1.6 THE MIS FUNCTION IN ORGANISATIONThe structure of MIS can also be described in terms of organisational functions which make use

of information. The term organisational function information systems is used to describe a variety ofinformation system that support an organisational function such as accounting, finance, production,marketing, human resource management, etc. Each of these functions has its own information needs.

MIS is a typically an integrated combination of functional information systems that is designedto meet the information requirements of the functional subdivisions of an organisation. Each of thesefunctions is considered as a subsystem. These subsystems have information application related to thatfunction only. In addition, there are common programmes applicable to all functional subsystems.With in each of these functional subsystems, there will be application for transaction processing,operation control, managerial control and strategic planning.

In a nutshell, we can say that the whole gamut of the functional areas of MIS consist oforganisational function subsystems and activities subsystems. Organisational subsystems includeaccounting, finance, production, marketing, human resource management, logistics, informationprocessing, etc. On the other hand, activities subsystems include transaction processing, operationcontrol, managerial control and strategic planning.

Functional SubsystemsThe important functional subsystems are the following:

1. Production Subsystem

Production information system supports the production function which includes all activitiesconcerned with the planning and control of the processes that produce goods or service. In theproduction subsystem, there are transaction processing, operation control, managerial control and

6 Chapter – 1

strategic planning. The typical information required at the transaction processing level is productionorder. The production order is generally based on the sales orders required by the company.

At the same time operational control level requires detailed reports comparing actualperformance with the production schedule and identifies the weak areas. However, managementcontrol requires a summary report which compares the overall performance to actual performance.Strategic planning is concerned with simplifying, automating, integrating many of the activitiesneeded to produce goods.

2. Marketing Subsystem

Marketing is another important function of an organisation. The success of an organisationdepends on the efficiency of marketing. The marketing function of an organisation is concerned withthe planning, promotion and sale of existing products in existing markets and the development of newproducts and new markets to satisfy existing and potential customers. Thus marketing performs a vitalfunction in the operation of the business enterprise.

MIS helps to analyse demand for different products in different regions. It is mainly concernedwith the marketing right product to target customers. Marketing information system providesinformation for planning, control and transaction processing in the marketing function. Strategic andoperational information system assists marketing managers in product planning, pricing decisions,advertising and sales promotion strategies. MIS provides information that helps management to decidethe number of sales executives to assign specific products in specific geographical areas.

The basic transaction is to be processed at transaction processing level is customer’s orders andprepares invoice and bills. The operational control activity includes the day-to-day scheduling of salesand promotional activities. Managerial control level is concerned with comparison of overallperformance with the marketing plan. They require information relating to customers, competitors, etc.Consideration of new markets and new product marketing strategies are the issues dealt at the strategicplanning level.

3. Human Resource Subsystem

The HRM function is concerned with the recruitment, placement, compensation and developmentof employees in an organisation. It mainly helps in record keeping and employee evaluation. Everyorganisation must maintain correct record of its employees.

Produce pay cheques and pay reports, maintain personal records and analyse the use of personnelin business operation are the important activities done at the transaction processing level. Managementcontrol level conducts budget analysis, turnover analysis, etc., and showing the variances resultingfrom planned and actual performance. Strategic planning of personnel involved with the planning ofalternative strategies for recruiting, training and compensating employees. In this regard, they have tocollect different types of information from external sources.


4. Finance and Accounting Subsystem

Financial subsystem undertakes the function of arranging adequate finance to the business atminimum cost. This function includes granting credit to customers, cash management and financialarrangement. Accounting information system records and reports the flow of funds through theorganisation on a historical basis and prepares important financial statements like profit and lossaccount and balance sheet.

Transaction processing system engaged in the legal and historical record keeping and producesfinancial statements. They undertake activities like order processing, inventory control, payroll andgeneral ledger systems. Management control level focuses on planning and control of businessoperations and they compare the actual cost of financial resources with the targeted cost. The strategicplanning level for accounting and finance involves in the long-term strategies connected with financialand accounting matters.

5. Logistics Subsystem

The logistic subsystem includes activities like purchasing, receiving, inventory control anddistribution. The transactions to be processed are purchase requisitions, manufacturing orders,receiving reports and shipping orders. The operational control function makes use of informationcontained in reports like out of stock items, over stocked items, inventory turnover reports, etc.Managerial control level compares the planned and actual inventory levels, cost of purchased items,stock outs, etc. Analysis of new distribution strategies, adoption of new policy towards the sellers aresome of the common tasks dealt at the strategic planning level.

6. Information Processing Subsystem

It is the responsibility of the information processing subsystem to provide the necessaryinformation processing services and resources. Typical transactions for information processing arerequests for processing, changes in data and programme. Managerial control over informationprocessing requires data on planned and actual performance. Acquisition of hardware and softwareand automation of information processing, etc., are some of the strategic decision to be taken at the toplevel management.

1.7 ROLE OF MISThe role of MIS in an organisation can be compared to the role of the heart in the body. The

information is the blood and MIS in the heart. In the body, the heart plays the role of supplying pureblood to all the elements of the body including the brain. The heart works faster and supplies moreblood when needed. It fulfils the needs of blood supply to human body in normal course and also incrisis.

MIS plays exactly the same role in the organisation. The system ensures that an inappropriatedata is collected from various sources, processed and sent further to all the needy destinations. Thesystem is expected to fulfil the information needs of an individual, group of individuals, managers, etc.MIS satisfies diverse needs through a variety of systems such as query system, analysis system,

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modelling systems, decision support systems. MIS also helps in strategic planning, managementcontrol, operational control and transaction processing. MIS helps junior management by providingoperational data for planning, scheduling, controlling, and also helps them further in decision makingat the operational level to correct an out of control situation. MIS helps middle management in short-term planning, target setting and controlling the business functions.

MIS also helps top management in goal setting, strategic planning and also evolving the businessplanning in addition to their implementation. MIS in fact plays the role of information generation,communication, problem identification and helps in the process of decision making. Thus, MIS playsa vital role in management, administration and operations of an organisation.

1.8 OBJECTIVES OF MISAn effective MIS has the following objectives:

(a) Facilitate the decisions-making process by furnishing information in the proper timeframe.This helps the decision maker to select the best course of action.

(b) Provide requisite information at each level of management to carry-out their function.

(c) Help in the highlighting the critical factors to closely monitored for successful functioning ofthe organisation.

(d) Support decision making in both structured and unstructured problem environments.

(e) Provide a system of people, computers, procedures, interactive query facilities, documentsfor collecting, storing, retrieving and transmitting information to the users.

1.9 LIMITATIONS OF MIS(a) MIS cannot replace managerial judgements in decision making. It is merely an effective tool

for the managers in decision making and problem-solving.

(b) The quality of output of MIS is directly proportional to the quality of input processes.

(c) MIS cannot provide tailor-made information packages. It is required to analyse the availableinformation before decision making.

(d) In a fast changing and complex environment, MIS may not have enough flexibility to updateitself quickly.

(e) MIS considers only quantitative factors into account.

(f) MIS is less useful for making non-programmed decision.

(g) MIS is less effective in organisations where information is not being shared with others.

(h) MIS is less effective due to frequent changes in top management, organisational structureand operational staff.


1.10 FUTURE OF MISThe dominant profession of mankind used to be agriculture for many centuries. After the

industrial revolution, there was a substantial growth in manufacturing oriented jobs. With the onset ofInformation Revolution the fastest growing sector is now the service sector which includes banking,financial organisations, health care institutions, entertainment, travel and tourism and education. Theworkers in this category are generally known as ‘knowledge workers’ who depend heavily on theinformation service. Consequently, the share of total business by Information Technology (IT)industry is likely to foreshadow the oil and automobile industry in near future. The recent trend in theworld scene also suggests a strong growth pattern for the information services.

In near future, information management can substantially improve the quality of life in the Indiancontext in the following manner:

(a) Better land record management leading to less litigation in the rural areas.

(b) Better natural resource planning leading to optimum utilisation of water, oil, electricity, etc.(c) Better banking and financial services will lead to better money management and better

service to the customers.

(d) Improved legal delivery system will help common people by speedy disposal of cases.

(e) Networked educational and health care institutions will lead to better sharing of resourcesamong larger number of countrymen.

1.11 SUMMARYInformation Systems Management (ISM) is the application of information technology to support

the major functions and activities of either a private sector business or public sector institution. In thepast, organisations recognised the importance of managing resources such as labour, capital, and rawmaterials. Today, it is widely accepted that managing the information resource is very often equallyimportant. ISM supports the process of collection, manipulation, storage, distribution and utilisation ofan organisation’s information resources.

1.12 KEY TERMSThe page number of their first explanation is in parentheses.

1. EDP (3)

2. Evolution of MIS (3)

3. Finance and Accounting subsystem (9)

4. Foundation of MIS (4)

5. Future of MIS (11)

6. Human Resource subsystem (8)

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7. Information processing (9)

8. Limitations of MIS (11)

9. Logistic subsystem (9)

10. Marketing subsystem (8)

11. MIS function (6)

12. MIS personnel (5)

13. MIS (2)

14. Objectives of MIS (10)

15. Productive subsystem (7)

16. Role of MIS (10)

1.13 EXERCISES1. What is MIS? Briefly describe the evolution of MIS.

2. Write down the qualities of MIS personnel.3. State the objectives and role of MIS.

4. What are the limitations of MIS?

5. Mention the major functional areas of MIS.

6. Describe the future prospect of MIS.

1.14 PROJECT ASSIGNMENTS1. You have applied for a job as an MIS Manager for a large Government department and have

been invited to attend an interview. All applicants are required to make a presentation to theinterview panel in order to display their knowledge of the three main requirements of the job,namely an understanding of:

● The ideal personal qualities needed for a MIS Manager;

● The role of the end-user during a traditional development life cycle;

● How project success can be achieved.

Prepare one slide for each of the above and provide appropriate speaker notes.

1.15 CASE STUDYRead the case given below and answer the questions given at the end.

A waiter takes an order at a table, and then enters it online via one of the six terminals located inthe restaurant dining room. The order is routed to a printer in the appropriate preparation area: the colditem printer if it is a salad, the hot-item printer if it is a hot sandwich or the bar printer if it is a drink.


A customer’s meal check-listing (bill) the items ordered and the respective prices are automaticallygenerated. This ordering system eliminates the old three-carbon-copy guest check system as well asany problems caused by a waiter’s handwriting. When the kitchen runs out of a food item, the cookssend out an ‘out of stock’ message, which will be displayed on the dining room terminals whenwaiters try to order that item. This gives the waiters faster feedback, enabling them to give betterservice to the customers. Other system features aid management in the planning and control of theirrestaurant business. The system provides up to the minute information on the food items ordered andbreaks out percentages showing sales of each item versus total sales. This helps management planmenus according to customers’ tastes. The system also compares the weekly sales totals versus foodcosts, allowing planning for tighter cost controls. In addition, whenever an order is voided, the reasonsfor the void are keyed in. This may help later in management decisions, especially if the voidsconsistently related to food or service. Acceptance of the system by the users is exceptionally highsince the waiters and waitresses were involved in the selection and design process. All potential userswere asked to give their impressions and ideas about the various systems available before one waschosen.

Questions1. In the light of the system, describe the decisions to be made in the area of strategic planning,

managerial control and operational control. What information would you require to makesuch decisions?

2. What would make the system a more complete MIS rather than just doing transactionprocessing?

3. Explain the probable effects that making the system more formal would have on thecustomers and the management.

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