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► INTRO -1 MIS Management Information System

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1 ► INTRO -1

2 MIS Management Information System

3 MANAGEMENT ► Management in all business and human organization activity is simply the act of getting people together to accomplish desired goals and objectives. ► Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. planningorganizingstaffingleadingcontrollingorganizationplanningorganizingstaffingleadingcontrollingorganization ► Resourcing encompasses the deployment and manipulation of human- resources, financial resources, technological resources, and natural resources. human- resourcesfinancialtechnologicalnatural resourceshuman- resourcesfinancialtechnologicalnatural resources

4 MANAGEMENT ► Frenchman Henri Fayol considers management to consist of seven functions: Henri FayolfunctionsHenri Fayolfunctions ► planning planning ► organizing organizing ► leading leading ► coordinating coordinating ► controlling controlling ► staffing staffing ► motivating motivating

5 Information ► As a concept has a diversity of meanings, from everyday usage to technical settings. Generally speaking, the concept of information is closely related to notions of constraint,communication, control, data, f orm, instruction, knowledge, meaning, ment al stimulus, pattern,perception, and representation. conceptconstraintcommunicationcontroldataf orminstructionknowledgemeaningment al stimuluspatternperceptionrepresentationconceptconstraintcommunicationcontroldataf orminstructionknowledgemeaningment al stimuluspatternperceptionrepresentation

6 System ► System (from Latin systēma, in turn from Greek ) is a set of interacting or interdependent entities, real or abstract, forming an integrated whole. LatinGreekentitiesLatinGreekentities

7 MIS ► Management Information ► Management information system helps middle level management planning, controlling and decision making. ► The data stored can be used or manipulated to produce differently defined reports from pre-defined reports. ► It can be presented graphically or pictorically

8 DEFINITION ► An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management. In a way it is a documented report of the activities those were planned and executed.

9 DEFINITION ► According to Philip Kotler ► According to Philip Kotler Philip KotlerPhilip Kotler ► "A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers

10 OVERVIEW ► the term "MIS" arose to describe these kinds of applications. Today, the term is used broadly in a number of contexts and includes (but is not limited to): decision support systems, resource and people management applications,project management and database retrieval application. project managementdatabaseproject managementdatabase

11 OVERVIEW ► At the start, in businesses and other organizations, internal reporting was made manually and only periodically, as a by- product of theaccounting system and with some additional statistics, and gave limited and delayed information on management performance. reportingaccountingstatisticsreportingaccountingstatistics

12 OVERVIEW ► In their infancy, business computers were used for the practical business of computing the payroll and keeping track of accounts payableand accounts receivable. As applications were developed that provided managers with information about sales, inventories, and other data that would help in managing the enterprise, payrollaccounts payableaccounts receivableinventoriespayrollaccounts payableaccounts receivableinventories

13 MIS = IS ??? ► The terms MIS and information system are often confused. information systeminformation system ► Information systems include systems that are not intended for decision making. ► MIS is sometimes referred to, in a restrictive sense, as information technology management. That area of study should not be confused with computer science. IT service management is a practitioner-focused discipline. information technology managementcomputer scienceIT service managementinformation technology managementcomputer scienceIT service management ► ► MIS has also some differences with Enterprise Resource Planning (ERP) as ERP incorporates elements that are not necessarily focused on decision support. Enterprise Resource PlanningEnterprise Resource Planning

14 Various Advantages of Information Management Systems 1. It Facilitates planning : MIS improves the quality of plants by providing relevant information for sound decision – making. Due to increase in the size and complexity of organizations, managers have lost personal contact with the scene of operations. ► 2. In Minimizes information overload : MIS change the larger amount of data in to summarized form and there by avoids the confusion which may arise when managers are flooded with detailed facts.

15 Various Advantages of Information Management Systems ► 3. MIS Encourages Decentralization : Decentralization of authority is possibly when there is a system for monitoring operations at lower levels. MIS is successfully used for measuring performance and making necessary change in the organizational plans and procedures ► 4. It brings Co ordination : MIS facilities integration of specialized activities by keeping each department aware of the problem and requirements of other departments. It connects all decision centers in the organization.

16 Various Advantages of Information Management Systems ► 5. It makes control easier : MIS serves as a link between managerial planning and control. It improves the ability of management to evaluate and improve performance. The used computers has increased the data processing and storage capabilities and reduced the cost. ► 6. MIS assembles, process, stores, Retrieves, evaluates and Disseminates the information

17 SOCIOLOGY POLITICAL SCIENCE PSYCHOLOGY COMPUTERSCIENCE OPERATIONSRESEARCH MANAGEMENTSCIENCE TECHNICAL APPROACHES MIS BEHAVIORAL APPROACHES

18 ► INTRO -2

19 Management Information Systems By Sarfraz Haider

20 Data Versus Information ► In everyday language data and information are used interchangeably. ► In everyday language data and information are used interchangeably. For example, the Oxford American Dictionary defines data as: "facts or information to be used as a basis of discussing or deciding something." "facts or information to be used as a basis of discussing or deciding something." At the same time information is defined as "facts told or discovered or facts to be fed to a computer". "facts told or discovered or facts to be fed to a computer". In both definition, data and information are assumed to be one and same concept. In both definition, data and information are assumed to be one and same concept.

21 ► Data are collection of observations, which may or may not be true. Thus data may not be facts. Data become information when they are processed. To process data one needs to ► (1) clean the data from errors and reduce sources of unreliability, ► (2) analyze data to make it relevant to decision at hand, and ► (3) organize data in ways that help understanding. ► (3) organize data in ways that help understanding.

22 Role of Information in Organizations Role of Information in Organizations ► Organizations collect and distribute information. In the process, they also distort it. Some distortions are intentional. ► Sometimes employees are asked to summarize data and report it to their supervisors. By definition, summarizing data means leaving some parts of it out. This is one type of distortion that is intentional. ► Sometimes employees are asked to summarize data and report it to their supervisors. By definition, summarizing data means leaving some parts of it out. This is one type of distortion that is intentional. ► Other times, organizations distort data so much as to changes its meaning and value. This section describes the importance of information within organization and how information is acquired and changed within organizations.

23 In this definition, information is "meaningful data." Data are the building blocks and information is the finished house. The raw materials are useless as a pile but once organized into a structure they become someone's home. Likewise data are useless for managers unless organized into information.

24 Organization ► Basically, an organization is a group of people intentionally organized to accomplish an overall, common goal or set of goals. Business organizations can range in size from two people to tens of thousands.

25 Organization as a System ► It helps to think of organizations as systems. Simply put, a system is an organized collection of parts that are highly integrated in order to accomplish an overall goal. The system has various inputs which are processed to produce certain outputs, that together, accomplish the overall goal desired by the organization.

26 Organization as a System ► There is ongoing feedback among these various parts to ensure they remain aligned to accomplish the overall goal of the organization. There are several classes of systems, ranging from very simple frameworks all the way to social systems, which are the most complex. Organizations are, of course, social systems.

27 ► Systems have inputs, processes, outputs and outcomes. To explain, inputs to the system include resources such as raw materials, money, technologies and people. These inputs go through a process where they're aligned, moved along and carefully coordinated, ultimately to achieve the goals set for the system. Outputs are tangible results produced by processes in the system, such as products or services for consumers. Organization as a System

28 Management again ► Management is the process of  leading,  controlling,  planning,  and organizing. The most important thing managers do is make quick, accurate, and decisive decisions. The manager is important because he/she is the leader of the organization that leads people to get things done.

29 Organization and information ► The issue of information requirements of an organization and their specifications span two isolated territories. One territory is that of organization and management and the other belongs to technicians. There is a considerable gap between these two territories. Research in requirements engineering (technician's side) has primarily concentrated on designing and developing formal languages to document and analyze user requirements, once they have been determined.

30 Organizational Structure ► Organizational structure is the formal system of task and reporting relationships that controls, coordinates, and motivates employees so they cooperate and work together to achieve organizational goals. ► Organizations are ► Social entities ► Goal oriented ► Deliberately structured ► Linked to the external environment

31 HEC

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33 Components of an Organization ► The environment influences organizational design. When uncertainty exists, the ability to respond quickly and creatively is important; when the environment is stable, an organization improves performance by making attitudes and behaviors predictable. Creativity and predictability are fostered by certain structures and cultures. ► Task - an organization’s mission, purpose, or goal for existing ► People - the human resources of the organization

34 Components of an Organization ► Structure - the manner in which an organization’s work is designed at the micro level; how departments, divisions, & the overall organization are designed at the macro level ► Technology - the intellectual and mechanical processes used by an organization to transform inputs into products or services that meet

35 Information System ► Information System (IS) refers to a system of people, data records and activities that process the data and information in an organization, and it includes the organization's manual and automated processes. In a narrow sense, the term information system (or computer-based information system) refers to the specific application software that is used to store data records in a computer system and automates some of the information-processing activities of the organization.

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38 Levels of decision Making ► ► Strategic Management:   Set long-term objectives, allocate resources ► ► Tactical Management:   Monitor performance, make adjustments ► ► Operational:   How to carry out specific day-to-day tasks

39 Types of Decisions ► Structured:  A routine decision whose factors are known ► Semi- structured:  A risky decision in which one or more factors is  unknown ► Unstructured:  A unique decision for which the relevant factors are  unknown; entails uncertainty and requires judgment

40 6 Major Information Sys: Types ► ► by Support Provided   Transaction Processing Systems (TPS)   Office (Automation) Systems (OAS)   Knowledge (Work) Systems (KWS)   Management Information Systems (MIS)   Decision Support Systems (DSS)   Executive Support Systems (ESS)

41 IS Types

42 Management Information Systems (MIS)   Mainly support tactical management level   Deals with structured/semi-structured decisions   Generally reporting and control oriented   Little analytical capability   Input: data stored in DB by TPS   Processing: simple models   Output: summary and exception reports   Example: inventory control systems, sales performance analysis,   pricing systems   TPS KWS OAS MIS DSS EIS

43 Types of System

44 Computer Based Information Sys: ► Computer-based information system) refers to the specific application software that is used to store data records in a computer system and automates some of the information-processing activities of the organization. Computer-based information systems are in the field of information technology. application softwareinformation technologyapplication softwareinformation technology

45 ► a technologically implemented medium for recording, storing, and disseminating linguistic expressions, as well as for drawing conclusions from such expressions

46 Decision Making ► ► Decision Making ► ► Decision making involves choosing between two or more alternatives ► ► − Remember that not making a decision is a decision ► ► − It has four major elements

47 Decision Making ► ► − Problem definition: clearly there are more issues, questions, and problems than individuals or society has the time or resources to confront. ► ► − Problems are plentiful; attention is scarce. ► ► − In order for problems to get attention they have to first get on the policy agenda ► ► − As the problem emerges and gains attention, it also tends to gain focus and take shape ► ► − See problem definition notes below.

48 Decision Making ► ► − Information search: The definition between problem definition and information is never sharp. When we are vaguely aware of some problem, our first step is often to learn more about it. This learning process often gives the problem focus. ► ► − Time is often a big factor in information search. When time is short we often satisfice rather than optimize (see discussion on bounded rationality below).

49 Decision Making ► ► − Choice: Weighing options and selecting among alternatives are often the visible part of decision-making processes. ► ► − However, choices are rarely clear and when clear alternatives are know, the consequences of these actions is often poorly understood. ► ► − Similarly, our preferences are rarely clear or constant when viewed over time.

50 Decision Making ► ► − Evaluation: Decisions do not end with a choice among alternatives. Few choices are final and most are continually reconsidered in light of new information. ► ► − Even if choices are not repeated, current choices become precedents for future decision

51 Decision Making ► ► − Most difficult aspect of evaluating choices is to establish criteria for evaluation and to not fall victim to common decision-making problems like cognitive bolstering (discussed below) where you search for information to justify rather than scrutinize past decisions.

52 Constraints on decision making   − Upper Limits of a Decision: Limitations on how far a decisionmaker can go   − Lower Limits of a Decision: Minimum that must occur for problem to be solved   − Strategic Limiting Factors: Factor whose availability in the right form, at the right place and time will establish a new system of conditions

53 ► ► Individual differences: individuals have different decision-making styles   − Different ways of thinking (e.g., some are logical, some process information serially, some are intuitive or creative, some view interconnections better than others, etc.)   − Some are more tolerant of ambiguity

54 ► ► Combination of these two factors creates four styles   − Directive style have low tolerance for ambiguity and seek rationality   − Analytical types accept ambiguity and seek rationality   − Conceptual style tend to be intuitive and accept ambiguity   − Behavioral styles work well with others, are intuitive and have a low tolerance for ambiguity

55 Organizational constraints   − Managers are strongly influenced by the criteria that they will be evaluated on   − Reward systems influences decision-makers by suggesting to them what choices are preferable in terms of a personal payoff   − Organizations often impose time constraints   − Organizations often give preference to historical precedents and decisions are often made in the context of a stream of decisions

56 ► ► Decisionmakers tend to rely on heuristics, (serving to indicate, Pattern ) judgmental shortcuts, when making decisions   − Availability heuristic: the tendency for people to base their judgments on information that is readily available to them   − Representative heuristic: Decision-makers tend to assess the likelihood of an occurrence by trying to match it with a preexisting category   − Escalation of commitment: is an increased commitment to a pervious decision in spite of negative information►

57 Improving Creativity   − Direct instruction: ask people to be creative. It works because people tend to accept obvious solutions and this often prevents people from exploring creative solutions   − Attribute listing: list attributes of alternatives and examine them fully to generate new alternatives or eliminate them   − Lateral thinking: instead of thinking beginning to end, other avenues are explored – perhaps starting with the solution and working towards the beginning

58 Cultural differences   − People from different cultures often make decisions in different ways by giving different importance to rationality, their belief in the ability of people to solve problems, and emphasis on solving problems

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60 ► INTRO-3

61 Chapter 9 Management Information Systems

62 Management Information Systems (MIS) ► Management information system (MIS) ► An MIS provides managers with information and support for effective decision making, and provides feedback on daily operations ► Output, or reports, are usually generated through accumulation of transaction processing data ► Each MIS is an integrated collection of subsystems, which are typically organized along functional lines within an organization

63 Sources of Management Information

64 Corporate databases of internal data Databases of external data Databases of valid transactions Operational databases Transaction processing systems Management information systems Decision support systems Executive support systems Expert systems Business transactions Input and error list Drill-down reports Exception reports Demand reports Key-indicator reports Scheduled reports Employees Corporate intranet Application databases

65 Outputs of a Management Information System ► Scheduled reports ► Produced periodically, or on a schedule (daily, weekly, monthly) ► Key-indicator report ► Summarizes the previous day’s critical activities ► Typically available at the beginning of each day ► Demand report ► Gives certain information at a manager’s request ► Exception report ► Automatically produced when a situation is unusual or requires management action

66 Scheduled Report Example Daily Sales Detail Report Prepared: 08/10/xx Order # Customer ID Sales Rep ID Ship Date Quantity Item # Amount P12453C89321CAR08/12/96144P1234$3,214 P12453C89321CAR08/12/96288P3214$5,660 P12453C03214GWA08/13/9612P4902$1,224 P12455C52313SAK08/12/9624P4012$2,448 P12456C34123JMW08J/13/96144P3214$720

67 Key Indicator Report Example Daily Sales Key Indicator Report This Month Last Month Last Year Total Orders Month to Date $1,808$1,694$1,014 Forecasted Sales for the Month $2,406$2,224$2,608

68 Demand Report Example Daily Sales by Sales Rep Summary Report Prepared: 08/10/xx Sales Rep ID Amount CAR$42,345 GWA$38,950 SAK$22,100 JWN$12,350

69 Exception Report Example Daily Sales Exception Report – ORDERS OVER $10,000 Prepared: 08/10/xx Order # Customer ID Sales Rep ID Ship Date Quantity Item # Amount P12453C89321CAR08/12/96144P1234$13,214 P12453C89321CAR08/12/96288P3214$15,660 P12453C03214GWA08/13/9612P4902$11,224 ………………… …………………

70 Outputs of a Management Information System Earnings by Quarter (Millions) ActualForecastVariance 2 ND Qtr 1999 $12.6$ % 1 st Qtr 1999 $10.8$ % 4 th Qtr 1998 $14.3$ % 3 rd Qtr 1998 $12.8$ % Etc. See Figure 9.2 Drill Down Reports Provide detailed data about a situation.

71 Characteristics of a Management Information System ► Provides reports with fixed and standard formats  Hard-copy and soft-copy reports ► Uses internal data stored in the computer system ► End users can develop custom reports ► Requires formal requests from users

72 Management Information Systems for Competitive Advantage ► Provides support to managers as they work to achieve corporate goals ► Enables managers to compare results to established company goals and identify problem areas and opportunities for improvement

73 MIS and Web Technology ► Data may be made available from management information systems on a company’s intranet ► Employees can use browsers and their PC to gain access to the data

74 Functional Aspects ► MIS is an integrated collection of functional information systems, each supporting particular functional areas. Schematic

75 An Organization’s MIS Financial MIS Marketing MIS Human Resources MIS Etc. Accounting MIS Drill down reports Exception reports Demand reports Key-indicator reports Scheduled reports Databases of external data Databases of valid transactions Transaction processing systems Business transactions Extranet Internet Figure 9.3 Etc.

76 Financial MIS ► Provides financial information to all financial managers within an organization. Schematic

77 Financial statements Uses and management of funds Financial statistics for control Operational databases Databases of valid transactions for each TPS Transaction processing systems Business transactions Internet or Extranet Figure 9.3 Financial MIS Business transactions Databases of external data Databases of internal data Financial DSS Financial ES Financial applications databases Customers, Suppliers

78 Inputs to the Financial Information System ► Strategic plan or corporate policies  Contains major financial objectives and often projects financial needs. ► Transaction processing system (TPS)  Important financial information collected from almost every TPS - payroll, inventory control, order processing, accounts payable, accounts receivable, general ledger.  External sources  Annual reports and financial statements of competitors and general news items.

79 Financial MIS Subsystems and Outputs ► Financial subsystems  Profit/loss and cost systems  Auditing  Internal auditing  External auditing  Uses and management of funds

80 Manufacturing MIS Schematic

81 Quality control reports Process control reports JIT reports Operational databases Databases of valid transactions for each TPS Transaction processing systems Business transactions Internet or Extranet Figure 9.6 Manufacturing MIS Business transactions Databases of external data Databases of internal data Manufacturing DSS Manufacturing ES Manufacturing applications databases Customers, Suppliers MRP reports Production schedule CAD output

82 Inputs to the Manufacturing MIS ► Strategic plan or corporate policies. ► The TPS:  Order processing  Inventory data  Receiving and inspecting data  Personnel data  Production process ► External sources

83 Manufacturing MIS Subsystems and Outputs ► Design and engineering ► Master production scheduling ► Inventory control ► Manufacturing resource planning ► Just-in-time inventory and manufacturing ► Process control ► Computer-integrated manufacturing (CIM) ► Quality control and testing

84 Marketing MIS ► Supports managerial activities in product development, distribution, pricing decisions, and promotional effectiveness Schematic

85 Sales by customer Sales by salesperson Sales by product Operational databases Databases of valid transactions for each TPS Transaction processing systems Business transactions Figure 9.9 Marketing MIS Databases of external data Databases of internal data Manufacturing DSS Manufacturing ES Marketing applications databases Pricing report Total service calls Customer satisfaction

86 Inputs to Marketing MIS ► Strategic plan and corporate policies ► The TPS ► External sources:  The competition  The market

87 Marketing MIS Subsystems and Outputs ► Marketing research ► Product development ► Promotion and advertising ► Product pricing

88 Human Resource MIS ► Concerned with all of the activities related to employees and potential employees of the organization

89 Benefit reports Salary surveys Scheduling reports Operational databases Databases of valid transactions for each TPS Transaction processing systems Business transactions Figure 9.12 Human Resource MIS Databases of external data Databases of internal data Manufacturing DSS Manufacturing ES Human resource applications databases Training test scores Job applicant profiles Needs and planning reports

90 Inputs to the Human Resource MIS ► Strategic plan or corporate policies ► The TPS:  Payroll data  Order processing data  Personnel data ► External sources

91 Human Resource MIS Subsystems and Outputs ► Human resource planning ► Personnel selection and recruiting ► Training and skills inventory ► Scheduling and job placement ► Wage and salary administration

92 Other MISs ► Accounting MISs  Provides aggregated information on accounts payable, accounts receivable, payroll, and other applications. ► Geographic information systems (GISs)  Enables managers to pair pre-drawn maps or map outlines with tabular data to describe aspects of a particular geographic region.

93 End of Chapter 9 Chapter 10


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