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Management Information System Topics:
» Definition of Management Information System
» Purpose of Management Information System
» Advantages of Management Information System
» Objectives of Management Information System
» Characteristics Management Information System
» Models/ types of Management Information Systems
» Management Information System Planning, Controlling and Limitations
Definition of Management Information System
Management Information System can be defined as a formal method of collecting timely information in a presentable
form. in order to facilitate effective decision making and implementation, in order to carry out organizational operations for the
purpose of achieving the organizational goal. A management information system is a system design to provide selected
decision –orientation information needed by management plan, control and evaluate the activities of the corporation. It is designed within the frame work that emphasizes profit, planning, performance planning and control at all levels. It complements the ultimate integration of required business information sub system both financial with in the company.
According to Philip kolter- A marketing information system consist of people, equipment and procedures
together,sort,analyse,evaluate and distribute the needed timely and accurate information and marketing decision makers.
Professor Allen S. Lee states that research in the information system field examines more than the technological system,or
just the social system or even the two side by side in addition it investigates the phenomena that emerge when the two interact.
An information system can be any organized combination of people, hardware, software, communication network and data resources that collects, transforms and disseminates information in an organization.
Purpose of Management Information System
Information processing is a major social activity. A significant part of an individual’s working and personal time is spent in recording, searching for, and absorbing information, as much as 80% of a typical executive’s time is spent on processing and communication information. Their duties involve the production and use of information outputs documents, reports, analysis, plans, etc.
The system provides information on past, present, and project future and on relevant events inside and outside the organization in the society. it may be define as planned and integrated system for gathering relevant data,coverting it in to right time. The
main purpose of management information system is to provide the right and correct information to the right people at
right time.
Another important purpose of management information system is that it is needed by all business organization because
of increased complexity and rate of change of today’s business environment foe example marketing manager needs information about sales performance and trends financial manager needs information on returns, production manager needs information analyzing resources requirement and workers productivity and personnel manager needs information analyzing resources requirements and workers productivity and personnel manager needs information concerning employee compensation and professional development. thus effective managers with the specific marketing,financial,production and personnel information, and products they require to support their decision making responsibilities.
Management information system concept is a vital to effective computer use in business of two or major reason:
1- It serves as a system framework for organizing business computer applications. business application of computer should be viewed as interrelated and integrated computer based information system and not as independent data processing job.
2- It emphasized the management orientation of electronics information processing in business the primary goal of computer
based information should be the processing of data generated by business operations.
Advantages of Management Information System
1. Management information system helps the managers to make planning and control decision.
2. Facilitated planning- management information system improves the quality of plants by providing relevant
information for sound decision making due to increase in size and complexity of organization managers have lost personal contact with the scenes of operations.
3. Minimize information overload- management information system changes the larger amount of data into summarized
form and thereby avoids the confusion which may arise when manager are flooded with detailed facts.
4. Bring coordination-management information system facilities integration of specialized activities by keeping each
department aware of the problem and requirement of their department. it connect all decision centers in the organization.
- Make control easier-it serves as a link between managerial planning and control. It improves the ability of management to evaluate and improve performance. The use of computers has increased the data processing and storage capability and reduces the cost.
6. Management information system assembles, processes.stores, retrie, evaluate, and disseminate the information.
- It insure that appropriate data is collected from the various sources, processed, and sent further to all the needy destinations.
8. Management information system helps in strategic planning, management control, operational control and transaction
processing.
- It helps the clerical personnel in the transaction processing and answer their queries on the data pertaining to the transaction the status of a particular record and reference on a variety of documents.
Objectives of Management Information System
1. Management information system main objective is to attain the transaction processing of data of an organization
effectively. Transaction processing is applied in conversion and analysis of raw data.
2. Management information system is the management of marketing, fiancé, production, and the personnel becomes
better trained which result in his efficiency.
3. Management information system is in making the forecasting and long term prospective planning more effective.
- It tries to create a structured database in knowledge base for all the people in the organization.
Characteristics of Management Information System
Management information system and top management - management information system is a comprehensive
and coordinated set of information subsystems which are rationally integrated and which transform data information in a variety of a ways to enhance productivity in conformity with the manager’s style and characteristics on the basis of established quality.
1. Management oriented - the system is designed from top to bottom. This does not mean that the system will be geared to
providing information directly to top management rather it means that the system development starts from an appraisal of management needs and overall business objectives it is possible that top management is the focus of the system such as their needs cornerstone on which the system is built for example- a marketing information system basic sales order processing the shipment of goods to the customers and the billing of the goods are fundamental operation control activities. however if the system is designed properly this transaction information can be traced by salesman, sales territory, size of order, geography and
integrated management information system more often than not, the remote site to have the connection with each other
and with a host of operation in order to create a effective management information system with geographical boundaries
some from of distributed data processing is necessary. Distributed data processing can be thought of as the delivery system, placing information in the hands of those who need it when they need it.
10. Information as a resource - Providing the entire organization must be a concept that information is a valuable resource
particularly in the management control and strategic planning areas must be properly managed. This is a subtle but important change in thinking. It was a common in the past to view the data processing.
Models/ Types of Management Information Systems
1. Accounting management information systems - All levels of accounting managers share all accounting reports.
2. Financial management information systems - It provide financial information to all financial managers within an
organization include the chief financial officer. The chief financial officer. The chief financial officer analyzes historical and current financial activity.
3. Manufacturing management information systems - More than any functional area great advance in technology
have impacted operations, as a result manufacturing operations have changed. For instance, inventories are provided just in time so that great amounts of money are not spent for warehousing huge inventories in some instance raw material are even proceeds on rail load cars waiting to be sent directly to the factory thus there is no need for warehousing.
4. Marketing management information system - A marketing management information system support
managerial activity in the area of product development, distribution, pricing decision, promotional effectiveness and sales forecasting more than any other functional area.
5. Human resource management information system - It concern with activity related workers, managers and other
individual employed by an organization because the personnel function relates to all other areas in business the human
resource management information system playa a valuable role in ensuring organization system include work-force
analysis and planning, hiring, training, and job assignment.
6. Structure of management information system - The management information system has been described in
terms of support for decision making management activity and organization functions.
7. Conceptual structure - The conceptual structure of a management information system is defined as a federation
of functional subsystem each of which is divided into four major information processing components transaction processing, operational control information system support, managerial control information system, managerial control information system and strategic planning information system which has some unique data files which are used by only that sub system.
8. Physical structure - The physical structure of an management information system would be identical to the
conceptual structure of all applications consisting of completely separate programs used by only one function but this is frequently not the case substantial information can be achieved from
1 - Integrated processing
2 - Use of common modules
Integrated processing is achieved by designing several related applications as a single system in order to simplify the interconnection and reduce the duplication of input. A good example is an order entry system. The recording of an order initiates a sequence of processing. Each step using new data but also most of the data from prior processing. In other words, an integrated order entry system crosses functional boundaries.
Management Information System Planning, Controlling
and Limitations
Planning - The top level management is mainly concerned with strategic planning for example the strategic planning
activities of top management involve future interaction between the organization and its external environment.
Computational support for planning:
- An analysis of historical data to obtain relationship useful for projection.
- Various projection and forecasting techniques to estimate future value.
- Computations internal to the plan and computation required for outputs.
- Output of the results in a meaningful planning format.
Historical data analysis techniques
Historical data analyzed to discover pattern or relation that will be useful in projecting the future value of significance variables. Even when the quantitative relations are not sufficiently stable to use in forecasting data analysis is useful for input into the judgmental forecast.
Historical extrapolation techniques
Historical data describes the past planning that involve the future estimating is generally based on analysis of past history combined with various technique to generate data for planning purposes.
Financial planning computation
Models that involve financial plan need to provide for various computation and analyses commonly required for measuring or evaluating profitability example are depreciation computation rate of return analysis and break even analysis. Depreciation is a significant computation in most financial planning it affect profit computation because it is an expense and it effect cash flow because of its impact on taxes. There are several methods for computing deprecation all of which should be available to the planner. These methods are straight line double declining balance sum of the year digits and production or use basis.
Controlling - At the middle level management, information is management control. Middle level managers such as
departmental heads are concerned with the current and future performance of their units. Therefore they need aggregate information on the sales, profit etc.of their units such information is available from both within the organization as well as outside the organization, for example, financial data for budgets and ratio analysis are available from the company’s records. However market data can be collected through special surveys and reports from outside the organization. Top level managers also require management control information. But these information must be more detailed narrower in scope and more accurate than information required for strategic planning. It should also generate at more frequent because the time horizon of decision is shorter.
At the supervisory level of management operational control is exercised production scheduling, cost and credit control, etc. are examples of operational control. Therefore a detailed report on a daily and weekly basis is required, inventory report, operating cost, production rate, etc are examples of such information. Such information available from with in the organization.
The control feedback loop is basic to system design. The computer can improve the control process in several ways:
- The standard can be complex. Computational simplifications are not necessary.
- The computation of deviation and identification of cause can be more sophisticated.
- Reporting with computers can use irregular time interval which is very difficult with manual processing and can be done more frequently.
Limitation
1. Aggression - The people may hit back at the system and may even sabotage it by using equipment incorrectly by putting
incomplete information into the system or buy actual destruction of hardware or software.
2. Projection - It is a psychological mechanism of blaming difficulties on someone or something else. When employees
blame the management information system for problems caused by human error or other factors unrelated to the system,
projection is taking place.
3. Avoidance - It occurs when individuals defend themselves by withdrawing from or avoiding a frustrating situation.
Managers may avoid the system by ignoring its output, in favour of their own information sources.
Management Information System Planning - Management information system general business planning
initiates from the following concepts :
- Mission of the corporate.
- Objectives and goals for the corporate in all key performance areas. These are in line with the mission of the corporate.
