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Management Information System


Organizations are formal social, units devoted to the attainment of specific goals. Organizations use certain
resources to produce outputs and thus meet their goal. For example, a business firm that produces
semiconductor memory chips consumes certain resources (money, labor, machinery and information) and
aims to meet certain financial objectives. A nonprofit hospital applies its resources to provide health care
to its target population.

Although the type of organization would largely depend on the size and nature of the enterprise, yet
there are 4 common forms of organization structure, namely

Line organization
Functional organization
Line and staff organization
Committee organization

Line Organization: This is one of the oldest and simple forms of organizational structures and is also
known as scalar organization, military organization, vertical organization or departmental organization.
Under this organization structure, the line of authority flows vertically from the top most executive to the
lowest subordinate. The authority concentrates in the hands of the topmost executive who delegates it to
his subordinates, the subordinates delegate to their subordinates and so on. Thus the authority reduces at
each successive level down the organization. The line organization is thus based on the superior-
subordinate relationship.
Functional organization: As the name suggests, under this type of organizational structure, all activities
in the organization are grouped together according to basic functions like production, marketing, finance,
human resources etc. Each function is put under the charge of a specialist who is fully responsible for
carrying out the function for the entire enterprise. The authority flows functionally to the divisional heads.
The divisional heads report to one specialist with reference to one function and to another, for another
Line and staff organization: This type of organization has been evolved to achieve the advantages of the
two forms of the organizational structures mentioned above. While the line organization insists too much
on the unity of command, the functional organizational emphasizes too much on the decentralized of
control. In order to strike a balance, line and staff organizational the structure has been evolved. In this
form of organization but functional experts are provided to advise line authorities in the performance of
their duties.
Committee organization: In today’s complex business world, each activity taken out by any department
affects the work of other departments. Similarly, change in the sales policy or a new sales policy, cannot
be followed by the sales managers, without consulting the finance department or the production

It should therefore be well understood that important policy decisions, which affect other departments
should not be taken by the in-charge of the department alone, but they should be referred to a committee
consisting of the managers of the affecting departments. It ensures co-operation and better co-ordination.
Thus committee organization is extensively used to solve the multifaceted problems of large and complex
business units. Committee is a group of individuals especially designated to take the decision in matters
referred to it through free interchange of ideas among its members.

Management can be seen as a function, a process, a profession or a class of people. And along with
material, capital and labor, management is considered as a resource. It refers to the kind of tasks and
activities that are performed by managers. The specific natures of activities are determined by such
managerial functions as planning, organizing, directing and controlling. In fact, management is a process
of achieving an organization’s goals and objectives by making the fullest use of available resources like
men, materials, machines, money, methods etc.

The various functions of management are briefly defined as follows:

Planning: It is the process of deciding in advance the courses of action to be followed when and how
to undertake these actions.
Organizing: It refers to the grouping of people and activities in order to facilitate the achievement of
the organizational objectives.
Controlling: Control is the mode of checking the progress of plans and also, correcting any deviations
that may occur along the way.
Directing: It is the process of activating the plans, structure and group efforts in the desired direction.
It is needed for implementation of plans by providing the desired leadership, motivation and proper

Management can be grouped into three hierarchical levels – top, middle and junior management levels.

Top (or strategic) management establishes the policies, plans and objectives of the organization as well
as a budget framework under which various departments will operate.
Middle (or tactical) management has the responsibility of implementing the policy and overall plans of
the top management.
Junior (or operational) management has the responsibility of implementing day-to-day operations and
decisions of the middle management to produce goods and services to meet the revenue, profit and
other goals, which in turn will enable the organization to achieve its overall plans and objectives.

Levels of management

Each organization is made up several levels. These could be classified broadly into three categories: top,
middle and junior management levels.

The top management performs strategic planning and the other two levels provide support in the form of
processed information. The middle management level performs tactical planning and control, and needs
information to discharge these managerial functions. The junior level is involved in day -to- day
operational control and needs information for its working.
Strategic Planning: This level develops the strategy for deciding the objectives of the organization,
planning resources to be used in order to attain those objectives, formulating policies to govern, use and
disposition of the resources.
Management Control: It is required by managers of various departments to measure performance, decide
on control actions, formulate new decision rules and also allocate resources.
Operational Control: It is the process of ensuring that operational activities are carried out to achieve
optimum use of resources. It makes use of pre-established procedures and decision rules.

Management as a Control System

Planning, organizing, directing and controlling are the various steps in the management process. All steps
prior to a control are necessarily self assuring the results unless it is followed by a strong control
mechanism. Management experts have viewed these steps as management control system. A definition of
control is the process through which managers assure that actual activities conform to the planned
activities, leading to the achievement of the started common goals. The control process measures a
progress towards those goals, and enables the manager to detect the deviations from the original plan in
time to take corrective actions before it is too late.

The basic steps of control process are shown in figure below.

The management is a systematic effort to set the performance standards in line with the performance
objectives, to design the information feedback system, to compare the actual performance with these
predetermined standards, to identify the deviations from the standards, too measure its significance and to
take corrective actions in case of significant deviations. This systematic effort is undertaken through the
management control system.
A reliable and effective control system has the following features.

1. Early warning mechanism: This is a mechanism of predicting the possibility of achieving the
goals and standards before it is too late and allowing the manager to take corrective actions.
2. Performance standard: The performance standard must be measurable and acceptable to all
organizations. The system should recognize them and have controls instituted on them.
3. Feedback: The control system would be effective, if it continuously monitors the performance
and sends the information to the control center for action.
4. Realistic: The system should be realistic so that the cost of control is far less than the benefits.
The standards are realistic and are believed as achievable. Sufficient incentive and rewards are to
be provided to motivate the people.
5. Information flow: The system should have the information flow aligned with the organization
structure and the decision makers should ensure that the right people get the right information for
action and decision making.
6. Exception principle: The system should selectively approve some significant deviations from
the performance standards on the principle of management by exception.


Information can be defined as the data, which can be organized and presented so that the decision maker
may take the necessary action. In other words, information is the result/product of processing data. The
conversion process of data into decision is shown in the figure below.

Data Process Information Decision Action

From the above figure, it is clear that information consists of data that has been retrieved, processed or
otherwise used, for informative purposes. Information contains an element of surprise, reduces uncertainty
and triggers off action. For planning, information requirements of decision makers can be classified into
three types:

1. Environmental information: Environmental information requirements can be further classified and

described as follows:
a) Government policies: It includes information about policies or financial and tax affairs,
political stability etc is required and may have a significant effect on future planning
b) Economic trends: It includes information about:
i. Economic indicators like employment. productivity, capital investment.
ii. Prices and wage levels which affect all regardless of product or services.
iii. GNP level, trend and consumer disposable income.

c) Technological environment: The information on technological changes of advancement is

necessary for forecasting such changes in the firm and their probable effect on the same. It is
also desirable to assess the effect of technological changes on the new products and processes.

d) Factors of production: These include information about the source, cost, allocation,
availability, accessibility and productivity of the major factors of production such as:
i. Labour
ii. Materials and spare parts.
iii. Capital
2. Competitive can be classified and described as follows information: Competitive information
a) Industry demand: This refers to the demand forecast of the industry for the product
manufactured or about the area in which the firm is operating.
b) Firm demand: This implies assessment of the firms capabilities, activities and potentialities
to meet demand to relative to the capabilities and action in the competing firms.
c) Competition: This includes information about competing firms for forecasting own product
demand and making decisions and plans to achieve the forecast. Such information falls into
three categories:
i. Past performance: It encompasses information concerning profitability, return of
investment, market share etc which helps to provide a yard stick for setting
performance objectives for future.
ii. Present activity: Under the heading comes information concerning competitors
price strategies, advertising campaigns, products mix ,changes in distribution
channels etc which help to evaluate ones own weakness of strengths.
iii. Future plans: Information concerning new products, R&D efforts, availability of
raw materials etc which help to decide future plans comes under this head.
3. Internal information: It is the by product of the normal operations of a business. Generally it is
historical or static in nature; information is aimed at identification of the firm’s strengths and
weaknesses. It includes the following:
a) Sales forecast: since all other internal plans of the firm are guided by the sales plan, it is
considered as the dominant planning premise internal to the firm.
b) Financial plan: information on financial or budget plan is important because it represents a
quantitative and time bound commitment about the allocation of total resources like
employees, plant, materials, overheads, administrative expenses of the firm. It provides
information about a number of sub plans of the firm and it acts as an important link between
all activities of the firm.
c) Supply factors: information concerning availability and limitations of certain supply
factors such as labour , capital, plant and equipment is important as these factors play a
vital role in developing the financial and subsidiary plans to achieving firm’s activities.
d) Policies: Long term basic policies on product range, marketing, finance, and about
personnel do not permit flexibility in developing alternative courses of action in the short

Information Classification

a) Non action information- data/information lying unnoticed

b) Action information – data/information when processed and used
c) Recurring information – generated at regular intervals of time
d) Non recurring information – aka non repetitive and is arrived at through some special kind of study
e) Documentary information – available in some document form
f) Non documentary information – data/ information which is oral and not documented
g) Internal information – obtained from within the organization from various sources
h) External information – obtained from outside the organization from various sources
Information Characteristics

The primary characteristics which an information must posses are;

 Relevance
 Availability
 Timeliness


Classification of systems can be done in many ways.

Physical or Abstract System

Physical systems are tangible entities that we can feel and touch. These may be static or dynamic in
nature. For example, take a computer center. Desks and chairs are the static parts, which assist in the
working of the center. Static parts don't change. The dynamic systems are constantly changing.
Computer systems are dynamic system. Programs, data, and applications can change according to the
user's needs.

Abstract systems are conceptual. These are not physical entities. They may be formulas, representation
or model of a real system.

Open and Closed System

Systems interact with their environment to achieve their targets. Things that are not part of the system
are environmental elements for the system. Depending upon the interaction with the environment,
systems can be divided into two categories, open and closed.

Open systems: Systems that interact with their environment. Practically most of the systems are open
systems. An open system has many interfaces with its environment. It can also adapt to changing
environmental conditions. It can receive inputs from, and delivers output to the outside of system. An
information system is an example of this category.

Closed systems:Systems that don't interact with their environment. Closed systems exist in concept only.

Man made Information System

The main purpose of information systems is to manage data for a particular organization. Maintaining
files, producing information and reports are few functions. An information system produces customized
information depending upon the needs of the organization. These are usually formal, informal, and
computer based.

Formal Information Systems: It deals with the flow of information from top management to lower
management. Information flows in the form of memos, instructions, etc. But feedback can be given from
lower authorities to top management.

Informal Information systems: Informal systems are employee based. These are made to solve the day to
day work related problems. Computer-Based Information Systems: This class of systems depends on the
use of computer for managing business applications.

Why Information System?

The environment of business has changed from the traditional environment where management
processes are treated as a face-to-face, personal art and not a far-flung, global coordination process.
Information itself is not treated as an important asset for a firm.

But today, most of the organization recognizes the importance of information. For individuals,
information systems are needed for entertainment and as an enlightment to their life. Meanwhile for
businesses, information systems are mostly needed to help in decision making and problem solving.
Besides that, it is used to gather, store and manipulate information. There are three main factors that
contribute to the recognition of the importance of information to any organization.

The first factor is the emergence and strengthening of the global economy. Globalization of the world’s
industrial economies greatly enhances the value of information to the firm and offers new opportunities
to businesses. Information system provides the communication and analytical power that firms need for
conducting trade and managing businesses on a global scale.

The second factor is due to the transformation of industrial economies and societies into knowledge and
information based service economies. In knowledge based economies, knowledge and information are
key ingredients in creating wealth to an organization. Knowledge and information are becoming the
foundation for many new services and products. Intensification of knowledge utilization in the
production of traditional products has increased as well. New kinds of knowledge- and information-
intense organizations have emerged that are devoted entirely to the production, processing, and
distribution of information

The third factor is due to the transforming of the business enterprise. Traditional firms was and still is a
hierarchical, centralized, structured arrangement of specialist that typically relies on a fixed set of
standard operating procedures to deliver a mass-produced product or services. But the business
enterprises has change into flattened, decentralized, flexible arrangement of generalists who rely on
nearly instant information to deliver mass-customized products and services uniquely suited to specific
markets or customers

Besides the above mentioned three main factors, there are also several trends that have made the use of
information systems very important in business:

 Computers’ power has grown tremendously, while their prices have dropped.

 Computer programs’ variety and ingenuity have increased.

 Quick and reliable communication lines and access to the Internet and World Wide Web have
become widely available and affordable.

 The fast growth of the Internet has opened opportunities, as well as competition in global markets.

 An increasing ratio of the workforce is computer literate.

In this environment, organizations will quickly lag behind if they do not take advantage of this progress
and use the technologies and skills to meet their goals.

Management Information System

In order to define a management Information System, the following characteristics should be kept in

Management information systems are primarily meant for providing information from the data
processing them. The information system does not generate data. The data are generated, collected,
recorded, stored, processed and retrieved after it has been generated by business operations in an
Information system is designed for the job positions rather than for individuals. Regardless of who is the
individual holding the job position, the information systems are designed keeping in mind the job
responsibilities that the individual is supposed to perform and depends upon the information needs of the
individual in the organizational hierarchy.
The information systems are designed for different levels of management they are supposed to cater to
the information needs of decision makers at top, middle and junior levels of management.
Information systems are designed for supplying information to managers in the areas of marketing,
finance, production, personnel, material, logistic etc.


MIS can be defined as a system that:

 Provides information to support managerial functions like planning, organizing, directing,

 Collects information in a systematic and a routine manner which is in accordance with a
well defined set of rules.
 Includes file, hardware, software and operations research models of processing, storing,
retrieving and transmitting information to the users.


An effective MIS has the following objectives:

 Facilitate the decision-making process by furnishing information in the proper time frame.
This helps the decision-maker to select the best course of action.
 Provide requisite information at each level of management to carry out their functions.
 Help in highlight the critical factors to the closely monitored for successful functioning of
the organization.
 Support decision-making in both structured and unstructured problem environments.
 Provide a system of people, computers, procedures, and interactive query facilities,
documents for collecting, storing, retrieving and transmitting information to the users.

Characteristics of MIS

Management oriented: The system is designed from the top to work downwards. It does not mean
that the system is designed to provide information directly to the top management. Other levels of
management are also provided with relevant information. For example, in the marketing
information system, the activities such as sales order processing, shipment of goods to customers
and billing for the goods are basically operational control activities. This information can also be
tracked by a salesman, to know the sales territory, size of order, geography and product line,
provide the system has been designed accordingly. However, if the system is designed keeping in
mind the top management, the data on external competition, market and pricing can be created to
know the market share of the company’s product and to serve as a basis of a new product or market
place introduction.
Management directed: Because of management orientation of MIS, It is necessary that
management should actively direct the system development efforts. In order to ensure the
effectiveness of system designed, management should continuously make reviews. For example,
in the marketing information system, the management must determine what sales information is
necessary to improve its control over marketing operations.
Integrated: The word ‘integration’ means that the system has to cover all management areas of
an organization so as to produce more meaningful management information, with a view to
achieving the objectives of the organization. It has to consider various sub-systems, their objectives
information needs, and recognize the interdependence, that these sub-system have amongst
themselves, so that common areas of information are identified and processed without repetition
and overlapping. For a proper balance amongst the following factors is desired:
i. Set up costs
ii. Manpower
iii. Overtime
iv. Production capacity
v. Inventory level
vi. Money available
vii. Customer service.

Common data flows: Because of the integration concepts of MIS, common data flow concepts
avoids repetition and overlapping in data collection and storage, combining similar functions, and
simplifying operations, orders received for goods become the basis of billing of goods ordered,
setting up of the accounts receivable, initiating production activity, sales analysis and forecasting
Heavy planning elements: A management information system cannot be established overnight.
It takes almost 2 to 4 years to establish it successfully in an organization. Hence, long-term
planning is required for MIS development in order to fulfill the future needs and objectives of the
organization. The designer of an information system should therefore ensure that it will not become
obsolete before it actually gets into operation. An example of such a feature of MIS may be seen
in transportation. An example of such a feature of MIS may be seen in a transportation system
where a highway is designed not to handle today’s traffic requirements but to handle the traffic
requirements five to ten years hence.
Flexibility and ease of use: While building an MIS system all types of possible means which may
occur in future are added to flexibility is the ease to use make it flexible. A feature that often goes
with flexibility is the ease to use. The MIS should be able to incorporate all those features that
make it readily accessible to a wide range of users with easy usability.

Role of MIS
The role of MIS in an organization can be compared to the role of the heart in the body. The
information is the blood and MIS is the heart. In the body, the heart plays the role of supplying
pure blood to all the elements of the body including the brain. The heart works faster and supplied
more blood when needed. It fulfills the needs of blood supply to human body in normal course and
also in crisis.
MIS plays exactly the same role in the organization. The system ensures that an inappropriate data
is collected from various sources, processed and sent further to all the needy destinations. The
system is expected to fulfill the information needs of an individual, group of individuals, managers
etc. MIS satisfies diverse needs through a variety of system such as query systems, analysis
systems, modeling systems, decision support systems. MIS also helps in strategic planning,
management control, operational control and transaction processing. MIS helps junior
management by providing operational data for planning, scheduling, controlling and also helps
them further in decision making at the operational level to correct an out of control situation. MIS
helps in the process of decision making. Thus MIS plays a vital role in management, administration
and operations of an organization.

Impact of MIS
Since MIS plays a very important role in the organization, it creates an impact on the organizations
functions, performance and conductivity. The impact of MIS on the functions is in its management.
With a good MIS support, the management of marketing, finance, production and personnel
becomes more sufficient. The tracking and monitoring of the functional targets become easy. The
functional managers are informed about the progress, achievements and shortfalls in the activity
and targets. The manager is kept alert by providing certain information indicating the probable
trends in the various aspects of business. This helps in forecasting and long term perspective
planning. The manager’s attention is brought to a situation which is exceptional in nature,
including him to take action or a decision in the matter. A disciplined information reporting system
creates a structured database and a knowledge base for all the people in the organization. The
information is available in such a form that it can be used straight away or by blending and analysis,
saving the manger, some valuable time. MIS creates another impact in the organization, which
relates to the understanding of the business itself. MIS begins with the definition of a data entity
and its attributes. It uses a dictionary of data, entity and attributes respectively, designed for
information generation in the organization. Since all information systems use the dictionary, there
is common understanding of terms and terminology in the organization bringing clarity in
communication and also a similar understanding of an event in the organization. MIS calls for
systemization of business operations for an effective system design. This leads to streamlining of
the operations, which complicate the system design. It improves the administration of the business
by bringing a discipline in its operations, as everybody is required to follow and use systems and
procedures. This process brings a high degree of professionalism in the business objectives. Since
the goals and objectives of MIS are the products of business goals and objectives, It helps indirectly
to pull the entire organization in one direction towards the corporate goals and objectives by
providing the relevant information to the people in the organization.

A well designed system with a focus on the manager makes an impact on the managerial efficiency.
The fund of information motivates an enlightened manager to use a variety of the tools of
management. It helps him to resort to exercises such as experimentation and modeling. The use of
computers enables him to use the tools and techniques, which are impossible to use manually. The
readymade packages make this task simpler. The impact is on the managerial ability to perform. It
improves the decision making ability considerably.
Design of MIS

While designing a management information system, a general approach has to be followed so that a
suitable system can be devised to cater to the needs of different organizations as per their functions and
decision making requirements. Irrespective of the organization in question, the data gets generated at
various levels of the management. These data when processed and analyzed become information which,
when properly communicated in time to the decision-maker, helps in making decisions and taking actions.

Problem Set System Information
definition Objectives Identify Constraints sources

External Mainframe Develop

Constraints Alternative
Mini frame designs
Cost and facilities

Design and


The following steps generally taken in the design of an MIS

a) Identifying information needs at all levels of management: There are problems in every growing
business organization, but most of the time is clear definition of problems and a priority system for their
solution is not known. Thus, as a first step in MIS design, the management should identify, in detail, the
problems to be solved.

b) Listing objectives of MIS and anticipated benefits: The users must define objectives in terms of
information demands. For example, in several governments, prior to the designing of an information
system, the system objective was the automation of hundreds of reports without looking at the
management of tasks related to functional or resource system represented by the report. These are training
needs, employee relations, safety, recruitment, staffing.

Such attention is possible only by automation of records or processing of existing data, otherwise the true
objectives of the organization represented by the system are overlooked. The system objective should be
defined in terms of what a decision-maker can do and how effectively he would be able to function after
his information requirements have been complied with.

The basic questions which are asked, while listing down the objectives of the MIS system design are:
What is the purpose of the system?
Why is it needed?
What is it expected to do?
Who are the users and what are their objectives?

c) Identifying systems constraints (internal and external): The systems constraints are called problem
boundaries or restrictions under which objectives may be achieved. These constraints (or limitations) in
the design of the system are the creation of the manager-user or the designer himself, because of this
limited freedom of action in designing a system, to achieve the objectives.

The internal constrains are viewed in terms of:

i. Top management support

ii. Organizational policy
iii. Manpower needs and availability
iv. Cost and resource
v. Acceptance

The external constraints are mainly concerned with the customer. Ordered entry, billing and other systems
that interface with the systems of the customer must be designed with the customer must be designed with
the customer’s need in mind.

d) Determining information needs and resources: The system design must begin with determining the
real information needs of the management: information that can increase the perception of managers in
critical areas such as problems, alternatives, opportunities and plans. In other words, if a decision maker
can define his objectives and spell out the items of information that are needed to attain the objectives,
then he/she is at least half way through in a good system design.

A decision maker needs information for a variety of reasons concerned with the management process.
The type of information which is required at various times and for various purposes depends on two

Personal managerial attitudes like knowledge of information systems, managerial style,

perception of information needs, etc of the individual manager.
Organizational environment like nature of the company, level of management, structure of the

After estimating the need of information and clearly defining the objectives, the next step in MIS system
design is to determine the sources of information. The sources of information may be categorized as

Internal sources: It is in the form of written materials like file records, letters, reports containing
information about the existing system etc.
External sources: It may be in the form of trade and government publications, personal
interviews of managers and personal interactions with decision makers.

e) Developing alternative conceptual design and selecting one: The conceptual design of MIS is
considered as a skeleton of the MIS, which guides and restricts the form of the details design. The concept
of design of an MIS consists of patterns of information flow, channels of information, role of decision
makers and competitors etc.
The alternative concepts of a system can be evaluated on the basis of the following:

Compare anticipated performance of the conceptual design with respect to objectives of the system
developed earlier;
For quantified comparison amongst systems, prepare a preliminary cost-effectiveness data for the
Examine the quality of databases and information to be made available. Study the number of
operations, dispersions and duplication of files, and potential breakdown points;
Expand the conceptual design in greater details if none of these provide a preferred design.

f) Preparing the conceptual design report: The conceptual design report is a proposal prepared for the
expenditure of funds and possible changes in the organizational set-up. Since this report is submitted to
management, it must contain the summary of problems that necessitate the system, the objectives, the
general nature of the system, reason why this concept was selected over others, and time and resources
required to design and implement the system.

Implementation of MIS

Before installing a new MIS in any organization, it is desirable to know whether there is already an old
MIS in control. If so, then the old system is allowed to operate in parallel, till the new system is fully
operational. The implementation plan involves the following steps:

Preparing organizational plans.

Planning of work flow
Training of personnel
Development of software
Acquiring computer hardware
Designing the format for data collection
Constructing of data files
Operation of old and new inducting the new system.
Evaluation, maintenance and control of the new system.

The outline of implementation phase of an MIS is shown in the fig. below

Training Program

MIS Design Space Layout plan Completion of training System check

Parallel operation
Hardware Software

Design of format Develop files Test No



Approaches of MIS development

There are several approaches, which are used for developing MIS:

1. Top down approach: This approach develops a corporate plan as a guide for designing the
information system. Here top management takes the lead in formulating objectives, policies and plans
and communicates them down the line to middle and supervisory management for translating them into

2. Bottom up approach: It consists of following five steps:

Individual functional applications are planned separately consisting of transaction processing,

updating of files and simple reports
Files of various functional applications are integrated by means of indexing and chaining into a
Various functions are added to operate on the database at management control level
Integration of models into a model base having a wide variety of analysis, decision and planning
Strategic planning data and planning models are added to the information system

3. Integrative approach: This approach permits managers at all levels to influence the design of the
information system. Here evaluation, modification and approval of top management continues, till a
final design is acceptable to all levels

4. Traditional approach: Here activities are performed in sequence. Each activity is taken only when
the previous activity is completed. Managers and users consider and review the work performed by MIS
professionals during each stage of processing, in order to ensure accuracy and completeness.

5. Prototyping approach: In order to avoid any possible delay, prototyping approach is used. The goal
is to develop a small or pilot version, called a prototype, which is built quickly and lesser cost with the
intention of modifying it when need arises:

6. End user development approach: with the increasing availability of low cost technology, end user
development is popular in many organizations. Here the end user is responsible for system development.

7. Systematic approach for development in small organizations: Since fewer MIS professionals shall
be working having with a variety of responsibilities that they have little time to develop new systems for
users in a very small organization, no MIS professional will exist. This does not mean that they cannot
develop management information systems. They develop systems using the following steps:

a) Identify requirements
b) Locate, evaluate and secure software development
c) Locate, evaluate and secure hardware
d) Implement the systems.

1) MIS cannot replace managerial judgements in decision making. it is merely an effective tool
for the managers
2) In decision making and problem solving.
3) The quality of output of MIS Is directly proportional to the quality of input and processes
4) MIS cannot provide tailor made information packages. it is required to analyse the available
information before decision making
5) In a fast changing and complex environment, MIS may not have enough flexibility to update
itself quickly.
6) MIS takes only quantitative factors into account
7) MIS is less useful for making non programmed decisions.
8) MIS less effective in organizations where information is not being shared with others
9) MIS is less effective due to frequent changes in top management organizational structure and
operational staff.

Strategic MIS

Strategic MIS is set of systems which are considered critical to the current or future business
competitiveness ,and hence the survival of an organization. Strategic MIS also supplies an organization
with business intelligence. In other words, if an information system is used in creative ways to achieve
goals and fulfill set organizational missions, it can considered to be a strategic MIS.

Strategic MIS can be internal or external systems. External strategic MIS are used mainly by external
quantities in the business environment, such as customers, suppliers, distributors etc and have a value
added component that gives developers some time to reap the benefits of the system innovation.

Internal strategic MIS are used by employees within the organization and do not have value added
component. The employees focus on issues such as improving the quality of products, services and also
enhancing the decision making capabilities of managers. Such systems are used at all levels in the
organization and they have long term implications for the firm and also for the business processes within
the firm

In general, strategic MIS can be divided into three categories:

a) Systems that focus on innovation for competitive edge

b) Systems the use of information as a weapon
c) System that increase productivity and lower the costs of goods and services


There are common characteristics in all strategic MIS. They are:

a) Telecommunications as central part of SMIS

b) Reliance on a number of vendors for providing information technologies
c) Cooperation among a number of organizations

Telecommunications is a vital part of SMIS. successful organizations transcended traditional

organizational boundaries and eliminated barriers of time and space through the use of
telecommunications. However, developing and implementing information systems that rely heavily on
telecommunications is challenging task and often becomes one often becomes one of the bottlenecks for
the development of SMIS

Inter organizational systems are those systems which are shared by more than two organizations, in terms
of cooperation and collaboration rather than competition. Such ventures often result in powerful systems
enhancing productivity, reduction in operating costs, increased market share, creating new partnerships,
especially for organizations that conduct business transaction in the global market.


Researchers , Chris Kemerer and Glen Sosa, both from sloan school of management, identified 12
barriers to successful development of SMIS. These barriers fall into three categories:

a) Problem definition
b) implementation
c) maintenance

Problem definition barriers

 Generating workable idea require leadership and team work

 Many innovative ideas are technically infeasible
 Many innovative ideas are prohibitively expansive
 Many ideas die because they lack a sufficient market

Implementation barriers

 Telecommunications increases the complexity of implementing SMIS

 Multiple systems are difficult to integrate
 SMIS systems often require inter organizational cooperation
 State of the art technologies are difficult to implement

Maintenance barriers

 Competitors can copy SMIS

 Unanticipated demand can overwhelm the usefulness of an SMIS
 Applications can be expensive to maintain or enhance
 High exit barriers can cause devastating losses

Organizations with limited financial resources technological sophistication and organizational

flexibility are likely to face one or more of the above mentioned barriers.

Success and failure of MIS

Most organizations use MIS more successfully than other organizations. Through hardware, software
and technology available are the latest and the best, its use is more for the collection and storage of
data and its elementary processing. There are some factors, which make MIS a success while there are
some factors, which make it a failure.

Factors contributing to success of MIS: if MIS is to be a success, then it should have all the
features listed below:
 MIS is integrated into the management function .it sets clear objectives to ensure that MIS
focuses on the major issues of the business. Also adequate development resources are
provided and human & organizational barriers to progress are removed
 An appropriate information processing technology required to meet the data processing and
analysis needs of the users of MIS is selected
 MIS is oriented, defined and designed in terms of the users requirements and its operational
viability ensured
 MIS is kept under continuous surveillance, that its open system is modified according to the
changing information needs.
 MIS focuses on results and goals, and highlights the factors and reasons for non
 MIS is not allowed to end up into an information generation mill avoiding the noise in the
information and the communication system
 MIS recognizes that a manager is a human being and therefore the systems must consider all
the human behavioral aspects in the process of management
 MIS recognizes that the different information needs for different objectives must be met
with. The globalization of information in isolation from the different objectives leads to too
much information and its non-use
 MIS is easy to operate and therefore the design of MIS has such good features which make a
user friendly design
 MIS recognizes that the information needs become obsolete and new needs emerge. The MIS
design, therefore, has a potential capability to quickly meet newer needs of information.
 MIS concentrates on developing the information support to manage critical success factors. it
concentrates on the mission critical applications serving the needs of top management

Factors contributing to failures: Many times, MIS is a failure. The common factors which are
responsible for this are as follows:

 MIS is conceived as a data processing and not as an information system

 MIS does not provide that information which is needed by managers but it tends to provide
the information generally the function calls for MIS then becomes an impersonal function
 Underestimating the complexity in the business systems and not recognizing it in the MIS
design leads to problems in the successful implementation
 Adequate attention is not given to the quality control aspects of the inputs, the process and
the outputs leading to insufficient checks and controls in MIS
 MIS is developed without streamlining the transaction processing systems in the
 Lack of training and appreciation that the users of the information and the generators of the
data are different, and they have to play an important role in the MIS
 MIS does not meet certain critical and key factors of its users, such as a response to the query
on the database, an inability to get the processing done in a particular, lack of user friendly
system and the dependence on the system personnel
 A belief that the computerized MIS can solve all the management problems of planning and
control of the business.
 Lack of administrative discipline in following the standardized systems and procedures,
wrong coding and deviating from the system specifications result in incomplete incorrect
 MIS does not give perfect information to all the users in the organization. any attempt
towards such a goal will be unsuccessful because every user has a human ingenuity, bias and
certain assumptions not known to the designer MIS cannot make up these by providing
perfect information

Information Systems

The nature and scope of information required at different levels in an organization varies considerably.
Organizations need different information systems to meet this need. Accordingly, different information
systems are designed to meet the different information needs of managers. Four types of information
systems exist;

1. Transaction Processing System (TPS)

2. Intelligent Support System (ISS)
3. Office Automation System (OAS)
4. Decision Support System (DSS)

Transaction Processing System (TPS)

The primary purpose of TPS is to record, process, validate and store transactions that take place in various
functional areas of business. Transactions cane be either internal or external. There are six steps in
processing a transaction;

1. Data entry
2. Data validation
3. Processing and revalidation
4. Storage
5. Output generation
6. Query support

Intelligent Support System (ISS)

Systems which facilitate decisions requiring the use of knowledge, intuition, experience, expertise are
called ISS. Decision Support Systems (DSS), Executive Support System (ESS), Artificial Intelligence
(AI) and Expert Systems (ES) come under this category.

Office Automation System (OAS)

OAS refers to the use of mechanical, electrical and electronic devices to enhance communication in the
workplace and increase the efficiency and productivity of knowledge workers and clerical workers. OAS

Word processing, email, voice mail, video conferencing, audio conferencing, tele conferencing, Desk Top
Publishing, imaging, multimedia systems.

Data is raw information.


A database is a collection of logically related data that are organized in such a way so as to facilitate easy
accessing and processing of data. Databases contain data not information.

Database Management Systems (DBMS) are support programs that work in conjunction with the operating
system to create, store, process, retrieve, control and manage the data.

Components of DBMS

A DBMS has three components;

1. Data Dictionary System – an encyclopedia of information concerning each data element

2. Data Definition Language – is used to describe the data and define the schema in the DBMS. It
serves as an interface for application programs that use the data
3. Data Manipulation Language – a language that processes and manipulated data in the database

Database Models

Hierarchical model

Network model

Relational model