Read this essay to learn about Management Information System (MIS). After reading this essay you will learn about:- 1. Introduction to Management Information System (M.I.S) 2. Definitions of Management Information System (M.I.S) 3. Need 4. Objectives 5. Characteristics 6. Applications 7. Designing 8. Development 9. Implementation 10. Levels of Management and M.I.S. 11. Failure.
Contents:
- Essay on the Introduction to Management Information System (M.I.S)
- Essay on the Definitions of Management Information System (M.I.S)
- Essay on the Need for Management Information System (M.I.S)
- Essay on the Objectives of Management Information System (M.I.S)
- Essay on the Characteristics of Management Information System (M.I.S)
- Essay on the Applications of Management Information System (M.I.S)
- Essay on Designing of Management Information System (M.I.S)
- Essay on the Development of Management Information System (M.I.S)
- Essay on the Implementation of Management Information System (M.I.S)
- Essay on the Levels of Management and M.I.S.
- Essay on the Failure of Management Information System (M.I.S)
Essay # 1. Introduction to Management Information System (M.I.S):
On one side, science and technology are advancing at an accelerating pace, and society is becoming more and more complex, on the other side break-through in management have been provided due to revolution in the field of Management Information System. This has helped to overcome the problems of planning and control due to huge size, complexity and number of personnel.
The success of management lies in its ability to identify its critical problems and then to solve them by using proper decision making process with the help of collection of proper information related to these problems. An effective Management Information System (M.I.S.) is necessary for providing rational approach towards decision making for critical problems.
Thus real role of M.I.S. is to provide information for decisions and for planning and controlling operations. M.I.S. supplies the managers with the information that would permit them to plan and control operations. With the induction of computer, higher speed, accuracy and increase volume of data improved the quality and timeliness of decisions.
In the age of competition, to remain ahead of competitors and to keep pace with the technological revolution and its impact on firm’s products or services, the manager must keep abreast of selected information and organise it for decision making. Management’s most important task is to get the right information in the right form at the right time.
Right information is that which is necessary for effective functioning of the management. Lack of information renders decision making to be made under conditions of risk and uncertainty, while adequate information help in making decisions under certainty.
Although acquiring information itself is expensive both in terms of time and money, but the outcome of decisions, because of their quality, more than compensate for this expense. Correct and timely information when made available tell the manager something which was not known earlier, and help in taking decisions under certainty.
If the management is to make correct decisions and take correct course of actions, it is necessary that there should not be any confusion by:
(a) Superflous,
(b) Delayed, or
(c) Confusing informations.
An effective management information system is necessary for providing rational approach towards decision making for critical problems.
As we know that Management consists of two major interrelated phase, viz., planning and Control.
Management Information System is utilisation of organised information for managerial decision making. The need for using information in an organised manner is further increased in modern complex organisations, particularly when all such organisations are flooded with an enormous amount of data related to personnel, financial, marketing, materials, production, service etc.
M.I.S. is a network of communication channels and information processing centers collecting information from its sources of origin, and supplying the processed information to the various users managing the organisation.
The design of M.I.S. starts with the identification of the information needs of the users. Each manager is required to take various decisions from time to time which are in the best interest of the objectives of the organisation as a whole.
For performing this role, he needs specific information that influences his decisions. The elements of information may relate to the external environment around the organisation. The organised flow of relevant information has to be built into the M.I.S. M.I.S. does not wait for the initiative of the managers to ask for specific items of information.
The design and selection of appropriate information system depends on the process of decision making and the nature of decisions.
Generally, new enterprises start with a forecast which leads to planning and then in order to implement the plan, organisation is done. These tasks of forecasting, planning and organising are taken in planning phase. Control phase starts after the planning phase is over.
Once the work of organising is completed, the functional or action processes are required to be done in which men and machines are put into action and the management is required to perform the work of directing, co-ordinating and controlling as shown in the above sketch.
Management needs information so that it can plan intelligently for further; take right and proper decisions at proper time and control various activities.
Essay # 2. Definitions of Management Information System (M.I.S):
To understand M.I.S. better, it is necessary to understand each part of the term first.
Management:
Management can be defined in several ways. It is a multi-purpose organ of an organisation that manages the work and personnel at work. It is a creative and innovative force striving to secure the maximum result by the use of available resources. Management provides new ideas and vision to the work group and makes efforts to achieve best results.
Management comprises the activities that describe what managers do in the functioning of their organisation i.e., plan, organise, initiate and control. They plan by setting strategies and goals and select the best course of action to achieve the plan. They organise the tasks necessary to implement the plan, by assigning authority and responsibility. They control the performance of work by setting the standards and avoiding deviations.
Since each of these functions involve decision making, for which M.I.S. is necessary as it helps in making right decisions.
Information:
Information is something which management expects to know at a given time. The information is needed to plan, organise, direct and control the business; Effectiveness of any information depends on the timing and correctness of the information presented, because manager’s decision is based on this information.
Information is required at all levels of management, but the same information is not useful at every level. At the top management level, a very broad survey relating to areas where results have deviated from the plan i.e., management by exception, whereas middle level needs summary reports and lower level needs detailed information report.
Information can be presented in the form of graphs, charts, statements etc. The timing and frequency of formations depends upon the nature of reports and extent of control is to be exercised.
Data v/s Information:
Data and information are two separate things. Data are facts and not currently being used in a decision process and generally take the form of records and are filed, whereas, information consists of data that have been retrieved, processed and used for inference purposes or as a basis for forecasting or decision making.
Available data’s or facts are collected, screened, collated, and processed in order to develop meaningful information for decision making. Raw facts about activities are called data, whereas meaningful presentation of data is called information. Information is something which induces change/ action.
Data represents observed attributes of a physical activity, while information is processed data and is presented in a meaningful manner to enable decision to be taken. We can compare the data and information with raw material and finished product respectively. Data is collected at low level of hierarchy i.e., at operating level, whereas it is converted to the information at higher level.
Meaningful information means that information should be relevant, timely, adequate and accurate. Relevant means it should be of help in taking decisions, timeliness means it should be available when required, adequate means sufficient in quantity, while accuracy means correctness for making basis of sound decisions.
Systems:
A system can be defined as an established arrangement of components which leads to the attainment of particular objectives according to plan. System refers to a group of components which interact to provide management with the information it requires. Components of a system are: Inputs, outputs and processing devices.
In simple words, a system is a set of elements, such as people, things, and concepts that are related to achieve a mutual goal. In a broad sense, an organisation is a system, while its divisions, departments, sections, units, wings etc. are the sub-systems.
System can also be defined as, an organised collection of men, machines and methods required to accomplish a set of specific functions.
Information System:
System which collects and processes data and disseminates information in an organisation is called information system.
Management Information Systems:
Management Information System reduces uncertainty in decision making. An ideal M.I.S. would be one which optimises the value of information and intelligence within the organisation itself. The system provides facts upon which most decision-making depends. Therefore, M.I.S. should be properly engineered and maintained up-to-date.
Management Information Systems in organisations are designed to provide specific information for decision-making at various levels of managerial hierarchy in the organisation. The information system has to be related to the decision-making system in the organisation. The design and selection of appropriate information system depends on the process of decision-making and the nature of decisions it supports.
M.I.S. can be defined in several ways, out of which, some are:
(i) A system of obtaining, abstracting, storing, retrieving and analysis data to produce information for use in planning, organising, and controlling, through decision making by yielding information for managers, at the time they can most effectively use it.
(ii) M.I.S. is an organised method by which managers at all levels in the organisation are presented with needed information in the right form and at the right time so that they are in a position to perform their tasks well.
(iii) M.I.S. is a powerful method for aiding managers in solving problems and making decisions.
(iv) M.I.S. is a system which provides the information for making decisions regarding the integration of the organisation through the process of management.
(v) A group of people, a set of manuals, and data processing equipment, select, store, process and retrieve data to reduce the uncertainty in decision making by yielding information for managers at the time they can most efficiently use it.
(vi) M.I.S. is a network of communication channels and information processing centres collecting information from its sources of origin; and supplying the processed information to various users managing the organisation.
Essay # 3. Need for Management Information System:
Information system incorporates:
(i) Policy flow from management, and
(ii) Information flow to management.
An information flow is a must for economic and effective control of inventory production cost, management decision, scheduling etc. In the present day situation quick and correct information flow is essential for survival of an organisation, because it helps the organisation to proceed from a state of uncertainty, to a state of certainty. The Managers need information to manage and to carry out his major functions of planning, organising, directing, staffing and controlling etc.
It is necessary that only relevant information are supplied to management, because unrelated or even undigested information tends to confuse the management. When too much information are collected but not used will lead to a costly waste.
Manager takes the decision on the basis of information available, hence the effectiveness of the decision-maker is dependent upon the completeness, quality, accuracy and timeliness of the information.
Informational needs of management with reference of overall function of an enterprise may fall under the following categories:
(а) Environmental Information:
This information include the information related to political, social and economic climate, in which the enterprise is expected to operate in future. These data may be for unemployment, foreign trade, population, average income, price level, availability of labours and political atmosphere.
(b) Competitive Information:
Information about past performance and current activities pertaining to all competitors to a particular field would provide the ingredients for effective external competition.
(c) Internal Information:
It represents the data to identity the strengths and weakness of the enterprise so that future plans for the organisation may be mapped out efficiently and effectively.
Category (a) and (b) are also known as External Information.
Essay # 4. Objectives of Information System:
Following are the main aims of an information system:
1. Effective communication with the user.
2. Reliable and logical data supply.
3. Essential information and feedback.
4. Clear interpretation of past experience.
5. Rational analysis of information.
6. It should be treated as continuously developing in nature.
7. To bring the new facts to the knowledge.
8. To provide timely and effective information for the management.
9. To provide information for decision-making on planning, organising and controlling the operations of the sub-systems of the firm.
10. To provide right information in the right form at the right time.
Essay # 5. Characteristics of Good M.I.S.:
Management Information System should possess the following main characteristics:
(i) Completeness:
Information must possess all the elements needed for making a decision and also it must offer alternatives to assist the decision-making.
(ii) Clarity and Conciseness:
Information presented should be clear and concise.
(iii) Accuracy and Reliability:
Information must be accurate and should be presented in such a manner so as to avoid misunderstanding and misinterpretation.
(iv) Timeliness:
Most current information with latest data must be made available to management.
(v) Relevancy:
Information must be relevant and unnecessary information is not supplied.
(vi) Simplicity:
Management Information System must be simple and easy to understand and handle.
(vii) Consistency:
Information must be identical if it is gathered by different persons and same answers or results are obtained if two groups perform the same work or data collection.
(viii) Good Structure:
Organisational structure of the system should be such that the responsibility is felt by all.
(ix) Predictive Ability:
System must be capable to high-light the problem areas before their actual occurrence.
(x) Effectiveness:
Information system must assist in the process of decision making and taking corrective action effectively and timely. The system must suit the needs of the concern.
Essay # 6. Applications of MIS:
These information and other data are collected from various sources in order to provide help in taking decisions by the management in the following fields:
1. To know market potential.
2. To provide information about competitor for taking decision about the product for quality, quantity to be produced and sales price.
3. To know about likings of the customer.
4. To know about supplies of raw material for future availability, price quality etc.
5. To know about new process and technology available.
6. To have knowledge as regards to product problems, costs, and for processing operations.
7. To know about government policies related with the concern.
8. To prepare long range plans.
9. To be warned for major troubles that are likely to come.
10. To assess new opportunities.
11. To allocate capital resources.
12. To exercise the necessary control over day to day operations.
13. To permit management by exception.
14. To provide aid for coaching and educating the subordinates.
Essay # 7. Designing of M.I.S.:
Following are the steps to be followed while designing an information system:
1. Determine management needs to monitor the enterprise as a whole and outside fragmentary data relevant to the enterprise.
2. Design fundamental information flow with reference to need of information.
3. Develop the information system in detail.
4. Determine data for the required function and action requirement.
The management information system is required to be designed and assigned for assisting the management mainly in the field of planning and control, production and operations, marketing and personal information.
(i) Planning and Control:
Planning is based on the results obtained by:
(i) Analysis of environment, i.e., economic, technological, competitive market, Government and social fields,
(ii) Identification of strength and weakness related to the product, markets, processes, management, financial, research and design and production.
To exercise control, management approves financial budget and sets standard from time to time. Financial system is the most important single management information system which provides significant effect on other systems. Feedback is provided to exercise full control and to see its results.
(ii) Production and Operations:
This is connected with the physical flow of goods and their services. It covers various activities like <197> production, planning and control, transportation and man-machine system.
(iii) Marketing:
In this field, information’s are required to help in making decisions about precision advertising policy, product policy, sales force efforts etc. Marketing information system should be useful for making planning (i.e., forecasting, purchasing and credit management), market research (i.e., for pricing policy, advertising policy), and making costs, sales performance, sales and distribution. This information system should essentially have feedback from the market.
(iv) Personal Information:
The personal information system is mainly concerned with the recruitment, placement, training, compensation, labour grievances, relation with labour etc. and feedback.
Essay # 8. Development of MIS:
Principal sources for obtaining information for the development of Management Information System are:
1. Task force meetings.
2. Personal interviews.
3. Internal and External Sources of Documents. External source of document provides economic, marketing, industry and financial information related to the firm.
4. Personal observation of operations and communications when feasible.
It has been stated earlier that Management Information System is a system for selecting, storing, retrieving and processing the data to reduce uncertainty in decision making by yielding the information for managers at proper time.
In order to achieve these objects, Information System should be developed in the following stages:
1. First Stage:
In this stage, main function of the Information System is to acquaint and train people in the design and use of the system and limitation of the system.
2. Second stage:
In this stage, collected basic data are utilised for data processing, i.e. analysis, trends etc. (for the purpose of sales analysis, sales forecasts, production scheduling, cost control, cash flow, profitability etc.) giving compiled reports and interferences.
3. Final Stage:
This stage is also known as advance stage. In this stage, full scale operation research, studies and other modern techniques include linear programming and, multiple correlation techniques can overcome modern business complexities.
M.I.S. for Programmed Decisions:
As we know that decisions are of two types: programmed decisions and non-programmed decisions. Programmed decisions are repetitive and routine decisions, and a definite procedure is worked out for their handling so that they do not have to be treated ‘de novo’ each time they occur.
Non-programmed decisions are novel, unstructured and unusually consequential and there is no definite method for handling such problems because they have not arisen before, or because of its precise nature, structure and importance they deserve a custom-tailored treatment.
Programmed decisions are also described as ‘structured’ while non-programmed decisions are described as ‘unstructured’ decisions. Structured decisions are easily amenable to automation as the procedure, types of computation and analysis, and the information to be used can be predefined for them.
Structured decisions are taken at the lower level. Examples of such decisions are: keeping of accounts, selling of products, seeking the orders, raising the bills, deciding the salary, procuring raw materials.
Semi-routine decisions are taken by middle level management. Examples of such decisions are: cash-flow management, market research, order forecasts, credit management, personnel management, production planning, inventory management and vendor analysis.
Non-routine decisions are taken by apex level (top level) management. The areas of such decisions are; devising new financial instruments, industry profile, customer profile, plan of working capital and venture capital, personnel planning and skills forecasting, setting up new- production lines and/or deleting the existing ones. These decisions have a far reaching implication and can be least structured.
Essay # 9. Implementation of M.I.S.:
M.I.S. systems are implemented in following two ways:
(a) Installing a system in new operation i.e., in new organisation.
(b) Operate in parallel till it is checked, and then the current system is cut out.
Major steps for implementing the M.I.S. are:
i. Planning the implementation activities. Training of personnel, preparation of software can be done simultaneously with other implementation activities.
ii. Acquiring space and plan lay out.
iii. Organise the personnel for implementation.
iv. Implementation procedure is developed.
v. Train the operating staff.
vi. Acquire the hardware, software and other materials. In large companies, most of the software’s are developed internally or under contract.
vii. Develop forms for data collection and information dissemination.
viii. Developed the files.
ix. Testing the system. The tests include component tests, subsystem tests, and total system acceptance tests. These also consist of computer, software programs, forms, data collection methods, work procedure and reporting formats etc.
x. Cut over. Cut over is the point at which the new system replaces the old one.
xi. Documenting the system. This is the preparation of written description of the scope, purpose information flow, components, and operating procedure of the system. These documents serve as a guide line in future.
xii. Evaluation the M.I.S. After the M.I.S. has been operating smoothly for a short period of time, an evaluation of each step in the design and of the final system performance is made. This is a feedback about the system.
xiii. Controlling the system. System should be operated in the same way for which it was designed, and do not allow the operators to develop their own procedures or short cut procedures
xiv. Maintenance of the system. This is necessary to keep M.I.S. at the highest levels of effectiveness and efficiency with in the cost constrains. The idea of maintenance of the M.I.S. is to reduce the errors due to design or environmental changes.
Errors due to design changes may occur due to the following activities:
i. Changes in policy statement, forms or procedure.
ii. Changes in operating system, in hardware or in software.
iii. System controls and security needs.
Changes in inputs from the environment, i.e., due to change in government policies, regulations and legislation, change in economic condition of the firm, change in industry and competitive conditions, development in technology.
Essay # 10. Levels of Management and M.I.S.:
It is important in thinking about management information to distinguish between the needs of different levels of management.
Three levels of activities in an organisation are distinguished:
Level 1: Reflex Actions or Routine Operation:
These can be handled by low level mechanisms that do not involve thinking in the central brain. In pre-computer days, these were done by clerks or junior management.
In computerized concerns they may be completely automated, with human intervention occurring only when something goes wrong:
(i) Breakdown into parts and subassemblies.
(ii) Determining net requirements of parts and materials.
(iii) Shop floor data collection.
(iv) Maintaining inventory records.
(v) Production of purchase orders.
(vi) Payment of suppliers.
(vii) Accounts payable.
(viii) Good shipping.
(ix) Invoicing.
(x) Accounts receivable.
(xi) Budget Accounting.
(xii) Costing.
(xiii) Payroll.
(xiv) Quality control.
Level 2: Operations involving well defined thinking:
Before computers these would have been performed by middle management function but the machine doing so much of the work or providing well specified information for a human to make decisions:
(i) Setting working budgets.
(ii) Planning making capital.
(iii) Determine prices.
(iv) Choosing suppliers.
(v) Sales management.
(vi) Short term forecast.
(vii) Production Scheduling.
(viii) Shop floor expediting.
(ix) Maintenance management.
(x) Routine personnel administration.
(xi) Formulating rules for routine administration.
Level 3: Operations involving Creative Thinking or Strategic Planning:
These are the domain of top management and the corporate staff. Even in a highly computerised organisation they remain eminently human tasks. The computer will help in many areas, but it is more difficult to provide computerised information or assistance at this level for two reasons.
First, the level of thinking is often complex and ill-structured, and, second, the needs are unpredictable:
(i) Determination of markets,
(ii) Long range forecasting.
(iii) Directing research.
(iv) Choosing new product line.
(v) Setting financial policies.
(vi) Setting personnel policies.
Data for 3 levels:
Data needed for 3 levels are likely to differ in their structure. The data for routine processing may be in files lightly designed for these operations. These feed summary information for routing human operations; these may feed information to subsystems for top management. This level data contains the mass of details out of this only some of the information will be made available for level 2 inquiries.
Essay # 11. Failure of M.I.S:
Management Information System cannot be successful in following circumstances:
i. Inadequate requirements definition.
ii. Project development team is always anxious to start the job without allowing the user to specify the problem precisely.
iii. Project development team and users do not communicate efficiently because they do not speak same language.
iv. No clear definition of mission and purpose.
v. M.I.S. cannot establish, repair or modify the management system, as this can be done only by manager user.
vi. Lack of management participation.
vii. Mis-organisation.
viii. Poor performance of key personnel.
ix. Mis-response to business plans.
x. Lack of planning for;
(a) Facing the constraints,
(b) Setting the project and system objectives,
(c) Maintenance of the system.
xi. Testing is not properly carried out. Testing must be done at the functional level, component level and the system level and sort the problems, if found.