Introduction to mis notes PDF

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MANAGEMENT INFORMATION SYSTEM NOTES...

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Introduction to MIS INTRO DUCTION TO MANAGEMENT INFORMATION SYSTEMS Introduction MIS: is a system that provides the information necessary to manage an organization effectively. MIS and the information it generates are considered essential components of prudent and reasonable business decisions. Components of a management information system a) Database: It is used to store data or information that an organization uses. b) Database management system. It is a collection of programs that enable the storage, modification and manipulation of information from a database. c) User-interface: Allows the user to interact with the system d) Model base: It has the required statistical models in order to analyze the large amount of data. Information system: It’s the interaction of related components working together to store, retrieve and disseminate or distribute data to achieve an objective.

Characteristics of MIS Ø MIS support structured decisions at operational and management control levels. However, they are useful for planning purpose of senior management staff. Ø MIS are generally reporting and control oriented. They are designed to report on existing operations and therefore to help provide day-to-day control of operations. Ø MIS rely on existing corporate data and data flows. Ø MIS have little analytical capability. Ø MIS generally aid in decision making using past and present data. Ø MIS are relatively inflexible. Ø MIS have an internal rather than an external orientation.

ROLES OF INFORMATION IN AN ORGANISATION ü Reduction of uncertainty: Uncertainty exists where there is less than perfect knowledge. Relevant information helps to reduce the unknown. This is particularly relevant in planning and decision making. ü An aid to monitoring and control: By providing information about performance in the extent of deviations from planned levels of performance, managers are better able to control operations. ü As a means of communication: Information helps managers to know about development plans, forecasts etc. ü An aid to simplification: By reducing uncertainty and enhancing understanding, problems and situations are simplified and become more manageable.

SYSTEM CONCEPTS System A system is a set of inter-dependent/interrelated components (some of which may be systems in their own right), with an identifiable boundary and which collectively accomplish certain objectives/purpose. Characteristics of a system

1. A system has an environment-a system cannot exist in isolation. It exists in an environment. The environment reacts with it. 2. A system has a purpose-a system performs a function. It has a reason for its existence. 3. Systems have inputs and outputs 4. Systems have performance that can be measured in terms of its output-a system will have measures of performance A system has 9 characteristics. · Components A system is made up of components. A component is an irreducible part or aggregation It is what makes up a system, also called subsystems. We can repair or upgrade the system by changing individual components without having to make changes throughout the entire system. The components are interrelated. This means the dependence of one subsystem on one or more subsystems. The function of one subsystem is tied to the function of others. · A Boundary A system has a boundary within which all of its components are contained and which Establishes the limits of a system, separating the system from other systems. The boundary is the line that makes the inside and outside of a system and that sends off the system from its environments. · A purpose This is the overall goal or function of a system. A system must give priority to the objectives of the organization as a whole as compared to the objectives of a subsystem. · An Environment This is everything external to a system that interacts with the system i.e. everything outside the system’s boundary, usually the system interacts with its environment, exchanging, in the case of an information system, data and information. · Interfaces This is the point of contact where a system meets its environments or where subsystems Meet each other. E.g. The interface between an automated system and its users (manual system) and interfaces between different information systems. It is the design of good interfaces that permits different systems to work together

without being too dependent on each other. Because an interface exists at the point where a system meets its environment, the interface has several special, important functions outlined below:i. Security - protecting the system from undesirable elements that may want to infiltrate it. Filtering unwanted data both for elements leaving and entering the system. Coding and decoding incoming and outgoing messages. Detecting and correcting errors in its interaction with the environment ii. Buffering - providing a layer of slack between the system and its environment, so that the system and its environment can work on different cycles and at different speeds. iii. Summarizing raw data and transforming them into the level details and format needed throughout the system. · Constraint/ Controls This is a limit to what a system can accomplish. A system must face constraints in its Functioning because there are limits – in terms of capacity, speed, or capabilities to what it can do and how it can achieve its purpose within its environment · Input This is whatever a system gets from its environment, e.g. raw data. · Output This is whatever a system returns to its environment in order to fulfill its purpose Subsystem: A system within a larger system. This means that systems exist on more than one level and can be composed of subsystems.

Classifications of systems. Classification of Systems 1) Open Systems These are the system which are connected to and interact with the environment. Examples are, the biological and social system. All business organizations are also open systems since they must have the capacity to adopt in the future of changing competition, changing markets etc. 2) Closed Systems A closed system is that which does not interact with its environment. The system is neither influenced by nor influences its environment. It does not take in from or give to it. The system behavior occurs because of internal interaction and is more relevant to scientific than social systems. They do not obtain modification from their environments. A computer program is a relatively closed system because it accepts only previously defined outputs. In fact, no system can be a completely closed system for a long time. Difference between Open Systems and Closed Systems Open System Closed System -Interacts with the environment constantly - Does not interact with the Environment -Has infinite scope - Limited Scope -Relevant variables keep on interacting - Self Contained -Flexible and abstract - Rigid and mathematical

3) Abstract systems These are conceptual. They are not physical entities. They maybe formulas, representation or model of a real system. 4) Deterministic Systems (Mechanistic Systems) These are the systems that function according to some predetermined procedure and have results and future behavior predicted with certainty provided they are working correctly and under control. 5) Probabilistic Systems (Stochastic Systems) These are those systems which operate on probability. State and behavior can be predicted only within certain limits, even when they’re under control. Cybernetic system (Self Organizing/ Adaptive) These are systems that have to adapt to their environments/ react to stimuli, they learn from their mistakes, so that they do not always react in the same way to a particular input. Examples are the social systems, organizations, plants. 6) Open – Loop System. This is a system which does not act in a controlled manner, i.e. no feedback, and so no measure of performance against standards. 7) Closed – Loop System A system that functions in a controlled manner e.g. A system accepts inputs, work upon them according to some pre-defined processing rules, and produces outputs, so that it can function in a controlled manner, must give feedback 8) Artificial Systems These systems are created rather than occur by nature e.g. computer programs, organization, etc. They are usually made to support the objective of the designer and user.

USE OF INFORMATION SYSTEM IN MANAGEMENT Management is the process of planning, organizing, leading and controlling the effort of organization members and of using all other organization resources to achieve organizational goals. Functions of management Planning It is the function of management of systematically making decisions about the goals to be achieved and activities needed to achieve those that an individual or a group will pursue in future. Organizing It is the management function of assembling and coordinating financial resources, information and other resources needed to achieve organizational goals. Leading

It is the management function that involves the manager’s efforts to ensure high performance by employees and includes directing, motivating, and communicating with employees individually and in groups. Controlling The function of management of monitoring progress and making changes to make sure that the organizational goals are achieved. Staffing Involves recruiting the right people with right skills.

How information systems support management as a function o Information access Management information systems simplify and speed up information retrieval by storing data in a central location that is accessed via network. This enables quick and accurate decision making. o Data collection Information systems bring together data from inside and outside the organization.by setting up a network that links a central database to retail outlets, distributors and members of the supply chain companies can collect and send production data daily and decisions based on the latest information. o Collaboration Information systems make it easy managers to make collaborative decisions. o Interpretation Information systems help decision makers to understand the implication of their decisions. E.g. a sales manager can make predictions about the effect of a price change on sales by running simulations within the system. o Presentation The reporting tools within information system enable decision makers to tailor reports to the information needs of other parties. Types of decisions. Unstructured/un programmed/non-programmed These are non-routine decisions in which the decision maker must provide judgment, evaluation and insights into the problem definition. There is no agreed procedure for making such decisions. These decisions are normally made by strategic level managers Structured decisions/programmed These are repetitive, routine and have defined procedures They are made by the operational level employees. Semi-structured decisions These are decisions which are partially unstructured and partially have defined procedure on how they are supposed to be made or executed.

Types of decisions and where they are made in an organization Decision making cycle/stages of decision-making Problem definition stage At this stage, the decision maker identifies the problem clearly. Develop alternatives/identify alternatives The decision maker should state out the alternatives available for a particular problem. The decision maker should do adequate research to find the best option that will aid in solving the problem. Evaluate alternatives The decision maker should analyze each alternative and come up with advantages and disadvantages of each option. The decision maker should rank the alternatives logically Make decision This is where the decision maker implements the decision. Monitor the solution Monitoring of solutions at early stage may help to alter the decision if deviations from expectations are noticed.

Management and Types of Decisions It is the process of getting things done through and with people to achieve organization objectives in the changing environment. It is a way of ensuring that there is effective, efficient use of limited resources. The major roles of a manager include: ü Planning ü Organization

ü Leading ü Controlling ü Coordinating

1.

Planning

It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals. According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.

2.

Organizing

It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves:     

3.

Identification of activities. Classification of grouping of activities. Assignment of duties. Delegation of authority and creation of responsibility. Coordinating authority and responsibility relationships.

Staffing

It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure”. Staffing involves:     

Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place). Recruitment, Selection & Placement. Training & Development. Remuneration. Performance Appraisal.

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4.

Promotions & Transfer.

Directing

It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:    

Supervision Motivation Leadership Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers. Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose. Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction. Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

5.

Controlling

It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps: a. Establishment of standard performance. b. Measurement of actual performance. c. Comparison of actual performance with the standards and finding out deviation if any. d. Corrective action.

Importance of Management 1. It helps in Achieving Group Goals - It arranges the factors of production, assembles and organizes the resources, integrates the resources in effective manner to achieve goals. It directs group efforts towards achievement of pre-determined goals. By defining objective of organization clearly there would be no wastage of time, money and effort. Management converts disorganized resources of men, machines, money etc. into useful enterprise. These resources are coordinated, directed and controlled in such a manner that enterprise work towards attainment of goals. 2. Optimum Utilization of Resources - Management utilizes all the physical & human resources productively. This leads to efficacy in management. Management provides maximum utilization of scarce resources by selecting its best possible alternate use in industry from out of various uses. It makes use of experts, professional and these services leads to use of their skills, knowledge, and proper utilization and avoids wastage. If employees and machines are producing its maximum there is no under employment of any resources. 3. Reduces Costs - It gets maximum results through minimum input by proper planning and by using minimum input & getting maximum output. Management uses physical, human and financial resources in such a manner which results in best combination. This helps in cost reduction. 4. Establishes Sound Organization - No overlapping of efforts (smooth and coordinated functions). To establish sound organizational structure is one of the objective of management which is in tune with objective of organization and for fulfillment of this, it establishes effective authority & responsibility relationship i.e. who is accountable to whom, who can give instructions to whom, who are superiors & who are subordinates. Management fills up various positions with right persons, having right skills, training and qualification. All jobs should be cleared to everyone. 5. Establishes Equilibrium - It enables the organization to survive in changing environment. It keeps in touch with the changing environment. With the change is external environment, the initial co-ordination of organization must be changed. So it adapts organization to changing demand of market / changing needs of societies. It is responsible for growth and survival of organization. 6. Essentials for Prosperity of Society - Efficient management leads to better economical production which helps in turn to increase the welfare of people. Good management makes a difficult task easier by avoiding wastage of scarce resource. It improves standard of living. It increases the profit which is beneficial to business and society will get maximum output at minimum cost by creating employment opportunities which generate income in hands. Organization comes with new products and researches beneficial for society.

Three types of decisions: There are three types of decisions made by different sections of the organization. Information systems are used to help with these decisions.

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Unstructured decisions...