MIS Notes FOR KNEC PDF

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CHAPTER 1 INTRODUCTION TO MIS DEFINITION A management information system is an information system used for decision-making, and for the coordination, control, analysis, and visualization of information in an organization. The study of the management information systems involves people, processes and technology in an organizational context. The major components of a typical MIS long-form (Management Information System) are: • • • • •

People – people who use the information system Data – the data that the information system records Business Procedures – procedures put in place on how to record, store and analyze data Hardware – these include servers, workstations, networking equipment, printers, etc. Software – these are programs used to handle the data. These include programs such as spreadsheet programs, database software, etc.

Role of information in an organization

Types of Information Systems The type of information system that a user uses depends on their level in an organization. The following diagram shows the three major levels of users in an organization and the type of information system that they use.

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Transaction Processing Systems (TPS) This type of information system is used to record the day to day transactions of a business. An example of a Transaction Processing System is a Point of Sale (POS) system. A POS system is used to record the daily sales. Management Information Systems (MIS) Management Information Systems abbreviated as MIS, are used to guide tactic managers to make semi-structured decisions. The output from the transaction processing system is used as input to the MIS system. Decision Support Systems (DSS) Decision support systems are used by top level managers to make semi-structured decisions. The output from the Management Information System is used as input to the decision support system.DSS systems also get data input from external sources such as current market forces, competition, etc. Qualities of a good Information System Good information system should possess the following qualities:

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The co-operative should provide relevant information. Relevance is determined by the user of the information and therefore the management of the co-operative should first define the objectives of the various reports to be produced. Based on the user, the system should generate the following:• • •

Detailed daily operational/transactional reports that are accurate for use by supervisors. Summarized current and projected information, regardless of whether internally or externally sourced, that is likely to affect performance for use by the managers. Highly processed information for strategic planning and management control, obtained from within the co-operative for use by directors and the CEO.

The system should also be designed to generate exceptional reports. The information should be timely for it to be acted upon. The officer in charge of ICT should review the system constantly to assess its speed and recommend upgrading or replacement. Information should be free from errors and the user should be notified of any assumptions or estimates.

CHAPTER TWO

USE OF IS IN MANAGEMENT Definition: Management can be defined as the process of administering and controlling the affairs of the organization, irrespective of its nature, type, structure and size. It is an act of creating and maintaining such a business environment wherein the members of the organization can work together, and achieve business objectives efficiently and effectively. Here are 10 reasons why management is important to any organization. •

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Planning o 1) Helps to achieve goals and objectives o 2) Provides a sense of focus and direction Organizing

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3) For optimum utilization of resources o 4) To maintain responsibility and order Staffing o 5) To get the most qualified personnel for the job o 6) To reduce workload and get things done Directing o 7) Helps facilitate good communication o 8) Helps to initiate action and keep the organization moving Controlling o 9) To monitor progress and chart a way forward o 10) To hold individuals accountable o

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Planning Planning in management is the process of laying down how and when to do the appropriate so that goals can be achieved either in the short term or long term. Remember, failing to plan is planning to fail. 1) Helps to achieve goals and objectives First of all, organizations set their goals. These goals must be planned beforehand, and it is up to a good management structure to come up with proposals and plans for how to achieve them. Proper planning ensures that the organization follows a mapped course towards its vision and mission. 2) Provides a sense of focus and direction When an organization plans its activities, it is able to have a singular focus. Failure to plan can throw an entire business into disarray because no one will understand where they are headed. A management structure that plans finds it even easier to anticipate problems and cope with them. Once an organization has planned its activities well, all other functions of management fall into place.

Organizing Organizing involves defining and grouping roles, establishing authorities, and frameworks that are geared towards the attainment of goals. It breaks down how plans will be implemented and assign the resources needed to do so.

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3). For optimum utilization of resources These resources include both human resources and technology. By assigning individuals roles that best suit them, the organization can reap the maximum from each employee. Organizing paves the way for specialization and the best use of talents. It helps the management to save money and other resources while minimizing losses. 4). To maintain responsibility and order An organized workforce is always effective. They work as a team towards one common goal. When everyone knows what they ought to do, they will be more responsible because they are doing what they know best. It is also easy to hold people accountable when you know what each one of them does. Staffing To staff means to select, develop, maintain, and utilize personnel in such a way that the organization can achieve its goals effectively and economically. Staffing might not be applicable to a sole proprietorship, but it is still very essential. 5) To get the most qualified personnel for the job Staffing as a function of management helps to discover skilled people to fill various positions in the organization. This results in high performance and maximum productivity. It also helps to remunerate employees fairly which in turn translates to increased job satisfaction. This is the reason why many workplaces have thorough vetting procedures before employing people.

6) To reduce workload and get things done Efficient staffing ensures that work is divided among employees according to the roles they have been assigned. The fact that each one of them is good at what he or she is doing means that work will be completed faster and better. Employees stay happy and motivate as there is no pressure in the workplace.

Directing In management, directing is the same as supervising or leading. Directors, supervisors, and leaders are responsible for overseeing their subordinates. It is impossible to run an organization without leadership as you will find out below. 7) Helps facilitate good communication Good directing helps to build a two-way channel of communication between the leadership and subordinates. Employees can express themselves, and as a result, matters arising are address

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appropriately. Communication is a crucial contributor to the performance of an organization so it can never be ignore.

8) Helps to initiate action and keep the organization moving Through supervision and motivation, projects are initiated and sustained. Imagine for a moment, an organization without leaders. There would be no sense of direction, and the whole establishment would just collapse. Directing establishes authority to which employees are answerable.

Controlling In an organization, the controlling function of management focuses on checking whether progress is being made, while measuring the performance of various aspects. Many small organizations ignore controlling as an essential contributor to success to their own peril. 9) To monitor progress and chart a way forward It is very important to conduct audits and reviews of how the organization has been performing. That is the only way to measure progress, correct mistakes and make improvements towards an even more successful future. An organization with strong internal control manages to sustain good results for long periods of time.

10) To hold individuals accountable Controlling helps to identify who is doing what in an organization. It helps you decide who to keep in your team and who is not worth it. It is this function of management that helps organization conduct performance appraisal, which is a very crucial element in business USE OF INFORMATION SYSTEMS IN MANAGEMENT To gain the maximum benefits from your company's information system, you have to exploit all its capacities. Information systems gain their importance by processing the data from company inputs to generate information that is useful for managing your operations. To increase the information system's effectiveness, you can either add more data to make the information more accurate or use the information in new ways. Business Communication Systems

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Part of management is gathering and distributing information, and information systems can make this process more efficient by allowing managers to communicate rapidly. Email is quick and effective, but managers can use information systems even more efficiently by storing documents in folders that they share with the employees who need the information. This type of communication lets employees collaborate in a systematic way. Each employee can communicate additional information by making changes that the system tracks. The manager collects the inputs and sends the newly revised document to his target audience. Business Operations Management How you manage your company's operations depends on the information you have. Information systems can offer more complete and more recent information, allowing you to operate your company more efficiently. You can use information systems to gain a cost advantage over competitors or to differentiate yourself by offering better customer service. Sales data give you insights about what customers are buying and let you stock or produce items that are selling well. With guidance from the information system, you can streamline your operations. Company Decision-Making The company information system can help you make better decisions by delivering all the information you need and by modeling the results of your decisions. A decision involves choosing a course of action from several alternatives and carrying out the corresponding tasks. When you have accurate, up- to-date information, you can make the choice with confidence. If more than one choice looks appealing, you can use the information system to run different scenarios. For each possibility, the system can calculate key indicators such as sales, costs and profits to help you determine which alternative gives the most beneficial result. Company Record-Keeping Your company needs records of its activities for financial and regulatory purposes as well as for finding the causes of problems and taking corrective action. The information system stores documents and revision histories, communication records and operational data. The trick to exploiting this recording capability is organizing the data and using the system to process and present it as useful historical information. You can use such information to prepare cost estimates and forecasts and to analyze how your actions affected the key company indicators.

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Use of IS in decision making Information systems can help you make valid decisions by providing accurate and up-to-date information and performing analytic functions. You have to make sure the information system you choose can work with the information formats available in your company and has the features you need. Suitable information systems can structure the basic data available from your company operations and records into reports to present you with guidance for your decisions. Information from Company Operations When you base your decisions on data available from information systems, they reflect information that comes from the operations of your company. Information systems take data generated by the working level and organize it into useful formats. Information systems typically contain sales figures, expenses, investments and workforce data. If you need to know how much profit your company has made each year for the past five years to make a decision,information systems can provide accurate reports giving you that information. Capability to Run Scenarios The capability to run scenarios is a key decision-making tool. Some information systems have this feature built in, while others can provide the information required for running scenarios on other applications, such as spreadsheets. Your decision is influenced by what happens if you decide a certain way. What-if scenarios show you how different variables change when you make a decision. You can enter reduced staff levels or increased promotion budgets and see what happens to revenue, expenses and profit for different levels of cuts or increases. information systems systems play a critical role in making realistic scenarios possible. Projections to Assist in Decision Making Any decisions you make result in changes in the projected company results and may require modifications to your business strategy and overall goals. Information systems either have trend analysis built in or can provide information that lets you carry out such an analysis. Typical business strategies include projections for all fundamental operating results. A trend analysis allows you to show what these results would be in the current situation and how they will change once you have implemented the decisions you have taken. The new values form the basis of your strategic approach going forward. Implementation and Evaluation

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While you make your decisions with specific goals in mind and have the documentation from information systems and trend analysis to support your expectations, you have to track company results to make sure they develop as planned. Information systems give you the data you need to determine whether your decisions have had the desired effect, or whether you have to take corrective action to reach your goals. If specific results are not on track, you can use information systems to evaluate the situation and decide to take additional measures if necessary. TYPES OF DECISIONS The characteristics of decisions faced by managers at different levels are quite different. Decisions can be classified as structured, semistructured, and unstructured. Unstructured decisions are those in which the decision maker must provide judgment, evaluation, and insights into the problem definition. Each of these decisions is novel, important, and nonroutine, and there is no well-understood or agreed-on procedure for making them. Structured decisions, by contrast, are repetitive and routine, and decision makers can follow a definite procedure for handling them to be efficient. Many decisions have elements of both and are considered semistructured decisions, in which only part of the problem has a clear-cut answer provided by an accepted procedure. In general, structured decisions are made more prevalently at lower organizational levels, whereas unstructured decision making is more common at higher levels of the firm. Senior executives tend to be exposed to many unstructured decision situations that are open ended and evaluative and that require insight based on many sources of information and personal experience. For example, a CEO in today’s music industry might ask, “Whom should we choose as a distribution partner for our online music catalog—Apple, Microsoft, or Sony?” Answering this question would require access to news, government reports, and industry views as well as high-level summaries of firm performance. However, the answer would also require senior managers to use their own best judgment and poll other managers for their opinions. Middle management and operational management tend to face more structured decision scenarios, but their decisions may include unstructured components. A typical middlelevel management decision might be “Why is the order fulfillment report showing a decline over the last six months at a distribution center in Minneapolis?” This middle manager could obtain a report from the firm’s enterprise system or distribution management system on order activity and operational efficiency at the Minneapolis distribution center. This is the structured part of the decision. But before arriving at an answer, this middle manager will have to interview employees and gather more unstructured information from external sources about local economic conditions or sales trends. Rank-and-file employees tend to make more structured decisions. For example, a sales account representative often has to make decisions about extending credit to customers by consulting the firm’s customer database that contains credit information. In this case the

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decision is highly structured, it is a routine decision made thousands of times each day in most firms, and the answer has been preprogrammed into a corporate risk management or credit reporting system. The types of decisions faced by project teams cannot be classified neatly by organizational level. Teams are small groups of middle and operational managers and perhaps employees assigned specific tasks that may last a few months to a few years. Their tasks may involve unstructured or semistructured decisions such as designing new products, devising new ways to enter the marketplace, or reorganizing sales territories and compensation systems. DECISION-MAKING LEVELS Chapter 2 shows that there are different levels in an organization. Each of these levels has different information requirements for decision support and different constituencies or groups that information systems need to serve (see Figure 13-2). The four different decision-making constituencies in a firm are the following:

FIGURE 13-2 Information requirements of key decision-making groups Various levels of management in the firm have differing information requirements for decision support because of their different job responsibilities and the nature of the decisions made at each level.

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Senior management. Senior management is concerned with general yet timely information on changes in the industry and society at large that may affect both the long-term and near-term future of the firm, the firm’s strategic goals, short-term and future performance, specific bottlenecks and trouble affecting operational capabilities, and the overall ability of the firm to achieve its objectives. Middle management and project teams. Middle management is concerned with specific, timely information about firm performance, including revenue and cost reduction targets, and with developing plans and budgets to meet strategic goals established by senior management. This group needs to make important decisions about allocating resources, developing short-range plans, and monitoring the performance...