What is MIS?

Intoduction &
Definition
Management Information Systems (MIS), referred to (acronym) as
Information Management and Systems, is the discipline covering the
application of people, technologies, and procedures collectively called
information systems, to solving business problems.
“'MIS' is a planned system of collecting, storing and
disseminating data in the form of information needed to carry out the
functions of management.”
In abroad terms, MIS is a collection of systems, hardware, procedures and
people that all work together to process, store, and produce information
that is useful to the organization. Academically, the term is commonly
used to refer to the group of information management methods tied to
the automation or support of human decision making, e.g. Decision
Support Systems, Expert Systems, and Executive Information Systems
It can also be said that:
 MIS is the use of information technology, people, and business
processes to record, store and process data to produce information
that decision makers can use to make day to day decisions.
 MIS professionals help firms realize maximum benefit from
investment in personnel, equipment, and business processes. MIS is a
people-oriented field with an emphasis on service through
technology.
The term MIS

Consist of 3 major terms namely : management, information and

system
Management : Management is art of getting things done through and
with the people in formally organized groups. The basic functions
performed by a manager in an organization are: Planning, controlling,
staffing, organizing, and directing.
Information : Information is considered as valuable component of an
organization. Information is data that is processed and is presented in a
form which assists decision maker.
System : A system is defined as a set of elements which are joined
together to achieve a common objective. The elements are interrelated
and interdependent. Thus every system is said to be composed of
subsystems. A system has one or multiple inputs, these inputs are
processed through a transformation process to convert these input( s)
to output.
Objectives of MIS

1. Data Capturing : MIS capture data from various internal and external
sources of organization. Data capturing may be manual or through computer
terminals.
2. Processing of Data : The captured data is processed to convert into
required information. Processing of data is done by such activities as
calculating, sorting, classifying, and summarizing.
3. Storage of Information : MIS stores the processed or unprocessed data for
future use. If any information is not immediately required, it is saved as an
organization record, for later use.
4. Retrieval of Information : MIS retrieves information from its stores as and
when required by various users.
5. Dissemination of Information : Information, which is a finished product of
MIS, is disseminated to the users in the organization. It is periodic or online
through computer terminal. `
In short businesses use information systems at all levels of operation to:-
 collect,
 process, and
 store data.

Management aggregates and disseminates this data in the form of

information needed to carry out the daily operations of business.
Everyone who works in business, from someone who pays the bills to the
person who makes employment decisions, uses information systems.
Characteristics of MIS

1. Systems Approach : The information system follows a systems

approach. Systems approach means taking a comprehensive view or a
complete look at the interlocking sub-systems that operate within an
organization.
2. Management Oriented : Management oriented characteristic of
MIS implies that the management actively directs the system
development efforts. For planning of MIS, top-down approach should be
followed. Top down approach suggests that the system development
starts from the determination of management’s needs and overall
business objective. To ensure that the implementation of system’s
polices meet the specification of the system, continued review and
participation of the manager is necessary.
3. Need Based : MIS design should be as per the information needs of
managers at different levels
 4. Exception Based : MIS should be developed on the exception
based also, which means that in an abnormal situation, there should
be immediate reporting about the exceptional situation to the
decision –makers at the required level.
 5. Future Oriented : MIS should not merely provide past of historical
information; rather it should provide information, on the basis of
future projections on the actions to be initiated.
 6. Integrated : Integration is significant because of its ability to
produce more meaningful information. Integration means taking a
comprehensive view or looking at the complete picture of the
interlocking subsystems that operate within the company
 7. Common Data Flow : Common data flow includes avoiding
duplication, combining similar functions and simplifying operations
wherever possible. The development of common data flow is an
economically sound and logical concept, but it must be viewed from
a practical angle.
 8. Long Term Planning : MIS is developed over relatively long
periods. A heavy element of planning should be involved.
 9. Sub System Concept : The MIS should be viewed as a single
entity, but it must be broken down into digestible sub-systems which
are more meaningful.
 10. Central database : In the MIS there should be common data
base for whole system
The need for MIS

The justifications for having an MIS system are as follows to mention but a
few
 Decision makers need information to make effective decisions.
Management Information Systems (MIS) make this possible.
 MIS systems facilitate communication within and outside the
organization – employees within the organization are able to easily
access the required information for the day to day operations. Facilitates
such as Short Message Service (SMS) & Email make it possible to
communicate with customers and suppliers from within the MIS system
that an organization is using.
 Record keeping – management information systems record all business
transactions of an organization and provide a reference point for the
transactions.
Components of MIS

 The major components of a typical 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.
Data and Information

 Data refers to raw basic facts i.e. price of a product, the number of
products purchased, etc. that haven't yet been processed.
For example, a price of $6 and a quantity of 10 do not convey
any meaning to a customer at a point of sale till. Information should
be processed data that conveys meaning to the recipient.
Multiplying $6 by 10 gives us $60, which is the total bill that the
customer should pay.
 information is data that has been processed, transformed or
manipulated and gives meaning to the decision maker.
Characteristics of good information

 The parameters of a good quality are difficult to determine, however,

the information can be termed as of a good quality if it meets the
norms of impartiality, validity, reliability, consistency and age. The
quality of information has another dimension of utility from the user’s
point of view.
 The users being many, this is difficult to control. Therefore, if one can
develop information with due regards to these parameters, one can
easily control the outgoing quality of the information with the
probable exception of the satisfaction at the users end.
 Following are the essential characteristic features:
Good information has the following characteristics:
 Accurate – information must be free from errors and mistakes. This
is achieved by following strict set standards for processing data into
information. For example, adding $6 + 10 would give us inaccurate
information. Accurate information for our example is multiplying $6
by 10.
 Complete – all the information needed to make a good decision must
be available. Nothing should be missing. If TAX is an application to
the computation of the total amount that the customer should pay
then, it should be included as well. Leaving it out can mislead the
customer to think they should pay $60 only when in actual fact, they
must pay tax as well.
 Cost Effective – the cost of obtaining information must not exceed
the benefit of the information in monetary terms.
 User-focused – the information must be presented in such a way
that it should address the information requirements of the target user.
For example, operational managers required very detailed
information, and this should be considered when presenting
information to operational managers. The same information would
not be appropriate for senior managers because they would have to
process it again. To them, it would be data and not information.
 Relevant – the information must be relevant to the recipient. The
information must be directly related to the problem that the intended
recipient is facing. If the ICT department wants to buy a new server,
information that talks about a 35% discount on laptops would not be
relevant in such a scenario.
 Authoritative – the information must come from a reliable source.
Let's say you have a bank account and you would like to transfer
money to another bank account that uses a different currency from
yours. Using the exchange rate from a bureau de change would not
be considered authoritative compared to getting the exchange rate
directly from your bank.
 Timely – information should be available when it is needed. Let's say
your company wants to merge with another company. Information
that evaluates the other company that you want to merge with must
be provided before the merger, and you must have sufficient time to
verify the information. Delays destroys the value of information. The
characteristic of timeliness, to be effective, should also include up-to-
date, i.e. current information.
 Adequacy : Adequacy means information must be sufficient in
quantity, i.e. MIS must provide reports containing information which
is required in the deciding processes of decision-making. The report
should not give inadequate or for that matter, more than adequate
information, which may create a difficult situation for the decision-
maker. Whereas inadequacy of information leads to crises,
information overload results in chaos.
 Explicitness : A report is said to be of good quality if it does not
require further analysis by the recipients for decision making.
 Impartiality: Impartial information contains no bias and has been
collected without any distorted view of the situation. The partiality
creeps in, if the data is collected with a preconceived view, a
prejudice, and a pre-determined objective or a certain motive.
 Validity: The validity of the information relates to the purpose of the
information. In other words, it is the answer to the question-dose the
information meet the purpose of decision making for which it is being
collected? The validity also depends on how the information is used.
Since the information and the purpose need not have one to one
correspondence, the tendency to use it in a particular situation may
make the information invalid.
 Consistency: The information is termed as inconsistent if it is
derived form a data which dose not have a consistent pattern of
period. Somewhere, the information must relate to a consistent base
or a pattern. For example, you have collected the information on the
quantity of production for the last twelve months to fix the production
norms. If in this twelve months period, the factory has worked with
variable shift production, the production statistics of the twelve
months for comparison is inconsistent due to per shift production. The
consistency can be brought in by rationalizing the data to per shift
production per month. The regularity in providing the information also
helps in assessing the consistency in the information.
 Age: If the information is old, it is not useful today. The currency of
the information makes all the difference to the users. If the
information is old then it does not meet any characteristics of the
information viz., the update of knowledge, the element of surprise
and the reduction of uncertainty, and the representation. Maintaining
these parameters at a high degree always poses a number of
problems. These problems are in the management of the operations,
the sources, the data processing and the systems in the organization.
A failure to maintain the parameters to a high degree affects the value
of the information to the decision maker.

time, i.e. recipients must get information when they need it. Delays destroys the value of
(i) Timeliness : Timeliness means that information must reach the recipients within the prescribed timeframes. For effective decision-making, information must reach the decision-maker at the right

 information. The characteristic of timeliness, to be effective, should also include up-to-date, i.e. current information. (ii) Accuracy : Information should be
accurate. It means that information should be free from mistakes, errors &, clear Accuracy also means that the information is free from bias. Wrong information
given to management would result in wrong decisions. As managers decisions are based on the information supplied in MIS reports, all managers need accurate
information. (iii) Relevance : Information is said to be relevant if it answers especially for the recipient what, why, where, when, who and why? In other words,
the MIS should serve reports to managers which is useful and the information helps them to make decisions.. (iv) Adequacy : Adequacy means information must
be sufficient in quantity, i.e. MIS must provide reports containing information which is required in the deciding processes of decision-making. The report should
not give inadequate or for that matter, more than adequate information, which may create a difficult situation for the decision-maker. Whereas inadequacy of
information leads to crises, information overload results in chaos. (v) Completeness : The information which is given to a manager must be complete and should
meet all his needs. Incomplete information may result in wrong decisions and thus may prove costly to the organization. (vi) Explicitness : A report is said to be
of good quality if it does not require further analysis by the recipients for decision making. (Vii) Impartiality: Impartial information contains no bias and has been
collected without any distorted view of the situation. The partiality creeps in, if the data is collected with a preconceived view, a prejudice, and a pre-determined
objective or a certain motive. (viii)Validity: The validity of the information relates to the purpose of the information. In other words, it is the answer to the question-
dose the information meet the purpose of decision making for which it is being collected? The validity also depends on how the information is used. Since the
information and the purpose need not have one to one correspondence, the tendency to use it in a particular situation may make the information invalid. For
example, if the quality of the manufactured product is deteriorating and it is decided to select the causes of poor quality, then one must collect all the possible
causes which may affect the quality. Quality is a function of the raw material, the process of manufacture, the tools applied, the measures of the quality
assessment, the attitude of the people towards the control of quality. However, if the information collected talks only about raw materials and the process of
manufacture, then this information is not sufficient and hence it is not valid for all the decisions which are required to control the quality. (ix) Reliability: It is
connected to the representation and the accuracy of what is being described. For example, if the organization collects the information on the product acceptance
in the selected market segment, the size of the sample and the method of selection of the sample will decide the reliability. If the sample is small, the information
may not give the correct and a complete picture and hence it is not reliable. The reliability is also affected from the right source. (x)Consistency:The information is
termed as inconsistent if it is derived form a data which dose not have a consistent pattern of period. Somewhere, the information must relate to a consistent
base or a pattern. For example, you have collected the information on the quantity of production for the last twelve months to fix the production norms. If in this
twelve months period, the factory has worked with variable shift production, the production statistics of the twelve months for comparison is inconsistent due to
per shift production. The consistency can be brought in by rationalizing the data to per shift production per month. The regularity in providing the information also
helps in assessing the consistency in the information. (xi)Age: If the information is old, it is not useful today. The currency of the information makes all the
difference to the users. If the information is old then it does not meet any characteristics of the information viz., the update of knowledge, the element of surprise
and the reduction of uncertainty, and the representation. Maintaining these parameters at a high degree always poses a number of problems. These problems are
in the management of the operations, the sources, the data processing and the systems in the organization. A failure to maintain the parameters to a high degree
affects the
 value of the information to the decision maker.
Types of information

 The information can be classified in a number of ways to provide

better understanding. Jhon Dearden of Harvard University classifies
information in the following manner :
 (1) Action Verses No-Action Information : The information which
induces action is called action information. ‘No stock‘report calling a
purchase action is an action information. The information which
communicates only the status is No-Action Information. The stock
balance is no-action information.
 (2) Recurring Verses No-Recurring Information : The
information generated at regular intervals is recurring information.
The monthly sales reports, the stock statement, the trial balance, etc
are recurring information. The financial analysis or the report on the
market research study is norecurring information
 (3) Internal and external information : The information generated
through the internal sources of the organization is termed as Internal
Information, while the information generated through the govt. reports,
the industry survey etc., termed as External Information, as the sources
of the data are outside the organization.
The information can also be classified, in terms of its application :
 (i) Planning Information : Certain standard norms and specifications
are used in planning of any activity. Hence such information is called the
Planning Information. e. g. Time standard, design standard.
 (ii) Control Information : Reporting the status of an activity through a
feedback mechanism is called the Controlling Information. When such
information shows a deviation from the goal or the objective, it will
induce a decision or an action leading to control
(iii) Knowledge Information : A collection of information through the
library records and the research studies to build up a knowledge base as
an information is known as Knowledge Information.
(iv)Organization Information : When the information is used by
everybody in the organization, it is called Organization Information.
Employee and payroll Information is used by a number of people in an
organization.
(v) Functional/ Operational Information : When the information is
used in the operation of a business it is called Functional/Operational
Information.
(vi) Database Information : When the information has multiple use
and application, it is called as database information. Material
specification or supplier information is stored for multiple users.
Competitive advantage of information
and MIS

Competitive advantage is a position that makes a business more

profitable than its competitors. For example, producing products at a
lower cost than your competitors makes you more profitable.
Information systems have the capacity to help an organization into such
a position. They do so in the following ways :-

 Operational excellence – operational excellence seeks to improve

the operations of the business. Let's take an example of a retail store.
A retail store can use information systems to automatically place an
order with a supplier once the inventory level reaches the re-order
limit. This ensures that the retail store never runs out of inventory
and customers can always count on it to find what they need.
 New business models, products, and services – let's continue
with the example of a retail store. The retail store can develop a web
based order system or smartphone application that clients can use to
buy items from the comfort of their homes or wherever they are. The
order system can be linked to a delivery business and have support
for online payments. This is a new business model compared to
customers walking in to make purchases vs doing it from web based
or smartphone apps.
 Improved supplier and customer relations – historical data is
used to understand the needs of the customers and suppliers. This
data is then used to create services and products that address the
needs. This leads to long-term relationships with customers and
business which puts an organization in a more profitable position.
 Improved decision making – information is critical when making
decisions. Information systems if designed and operated efficiently,
output information that has all the characteristic of good information
described in the above section. This enables an organization to make
decisions that will profit the organizations.
 Competitive advantage
 Survival
Porter's Value chain

Value chain refers to activities that a company performs to create value

for its customers.(Series of activities designed to meet business needs
by adding value or cost in each phase of business processes).
Think of a company such as Apple Inc. Why are they successful? Why do
customers love and buy the iPhone? It is because the iPhone adds value
to their lives. This is why Apple Inc. is a successful business.
The overall goal of the value chain is to help a business gain
competitive advantage. Competitive advantage is a business's position
in a market that makes it to be more profitable than its direct
competitors.
The concept of a value chain was developed by Michael Porter. Porter's
value chain has two activities namely;
 Primary activities – these are activities that are related to the
creating products/services, marketing and sales, and support. Primary
activities consist of inbound logistics, operations, outbound logistics,
marketing and sales, and service.
 Support activities – these are activities that support the primary
activities. Support activities consist of procurement (purchasing),
human resource management, technological development and
infrastructure.
lowing diagram depicts the value chain
Influences of IT on
organizational goals
 Organizational goals refer to objectives and the mission of
the organization, especially in the long term. Regardless of the type
of business that an organization engages in, the overall goal is to
create value for the customers or clients.
 Business Information Technology alignment is concerned with using
information technology to effectively achieve business goals.
Cont/

 Two of the most common ways that an organization can provide value
is by:
1. offering a quality product at a lower price than the competitor or
offering products at a high price but with more features that add
value to the customers.
2. Information technology enables businesses to process and analyze
large amounts of data at a cheaper cost and within the shortest
possible time. This enables organizations to provide quality products
at a cheaper price.
Conti/

Take a bank example. A bank can use ATM to allow the clients to
withdraw money and other automated means to deposit money.
Customers with queries can be directed to a website that has frequently
asked questions. Both individuals and businesses can view the
statements online if they subscribe to internet banking.
The above IT business practices lead to reduced costs of doing business
and creating new products and services. Reduced cost of doing business
enables a bank to reduce the bank charges, therefore, offering a quality
product or service at a cheaper rate.
Summary:

1. Business entities exist to make profits. Not for profit organizations

exist to deliver quality services or products cost effectively.
2. Regardless of the type of organization, MIS has a major role to play in
achieving the objectives.
3. MIS enables organizations to make sound decisions by providing
decision makers with information.
MIS Professionals

 MIS professionals create information systems for data management

(i.e., storing, searching, and analyzing data).
 In addition, they manage various information systems to meet the
needs of managers, staff and customers. By working collaboratively
with various members of their work group, as well as with their
customers and clients, MIS professionals are able to play a key role in
areas such as information security, integration, and exchange.
 MIS professionals, learn to design, implement, and use business
information systems in innovative ways to increase the effectiveness
and efficiency of your company.
Profiles of people doing MIS

The profiles of MIS professionals are varied, but in general, such

individuals possess many of the following traits:
 good problem solving skills
 ability to effectively manage time and resources
 a clear vision of “the big picture” as well as the “small details”
 a desire to work closely with other people
 excellent communication skills
 ability to think strategically about technology
 a desire to take responsibility for developing and implementing their
own ideas
career options for MIS professionals

 IT Consultant
 Web Developer
 Information Systems Manager
 Business Intelligence Analyst
 Network Administrator
 Business Application Developer
 Systems Analyst
 Technical Support Specialist
 Business Analyst
 Systems Developer
Why major in MIS?

 Job satisfaction
 High placement rate
 High salaries
 Exciting field
 Challenging field
 Hands-on problem solving
 Innovation and creativity
 Global opportunities
 Great chance for advancement
 You can have an impact!
Pyramid Diagram of Organizational levels and
information requirements (Anthony’s Triangle)

 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.
 Understanding the various levels of an organization is essential to
understand the information required by the users who operate at
their respective levels.
information system that they use.

Pyramid diagram of an organization

information system that they use.
Operational management level
`
 The operational level is concerned with performing day to day
business transactions of the organization. Examples of users at this
level of management include cashiers at a point of sale, bank tellers,
nurses in a hospital, customer care staff, etc.
 Users at this level use make structured decisions. This means that
they have defined rules that guides them while making decisions.
This information has the following characteristics
 Derived from internal sources; Relevant to the immediate term
 Task-specific
 Prepared daily/ frequently
 Detailed, being the processing of raw data; Largely quantitave
Tactical Management Level

 This organization level is dominated by middle-level managers, heads of

departments, supervisors, etc. The users at this level usually oversee the
activities of the users at the operational management level.
 Tactical users make semi-structured decisions. The decisions are partly
based on set guidelines and judgmental calls. As an example, a tactical
manager can check the credit limit and payments history of a customer
and decide to make an exception to raise the credit limit for a particular
customer. The decision is partly structured in the sense that the tactical
manager has to use existing information to identify a payments history
that benefits the organization and an allowed increase percentage.
 What are the characteristics of this information?
 Characteristics of tactal information
 Primarily generated internally but may have a limited external
component
 Summarised at relatively low level
 Relevant to the short and medium terms
 Concerned with the activities of the department
 Prepared routinely and regularly
 Based on quantitative measures
Strategic Management Level

 This is the most senior level in an organization. The users at this level
make unstructured decisions. Senior level managers are concerned
with the long-term planning of the organization. They use information
from tactical managers and external data to guide them when making
unstructured decisions.
Strategic level

The characteristics are:

 Derived from both internal and external sources
 Summarised at a high level
 Relevant to the long term
 Concerned with the whole organization
 Often prepared on an ‘ad hoc’ basis
 Both quantitative and qualitative
 Uncertain, requires assumptions to be made regarding the future
Types of MIS.

There are 4 types of MIS

 Transaction Processing System. ( Example: Payroll System, Order

Processing System, Stock Control System)
 Management Information System.
 Decision Support System.
 Expert Systems and Artificial Intelligence.
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.
Other Examples of transaction processing systems include;
 Payroll systems – processing employees salary, loans management,
etc.
 Stock Control systems – keeping track of inventory levels
 Airline booking systems – flights booking management
Management Information Systems (MIS)
 Management Information Systems are used to guide tactic managers to
make semi-structured decisions (monitor the organization's current
performance status). The output from the transaction processing system
is used as input to the MIS system.
 The MIS system analyzes the input with routine algorithms i.e. aggregate,
compare and summarizes the results to produced reports that tactical
managers use to monitor, control and predict future performance.
 Tactical managers are responsible for the semi-structured decision. MIS
systems provide the information needed to make the structured decision
and based on the experience of the tactical managers, they make
judgement calls i.e. predict how much of goods or inventory should be
ordered for the second quarter based on the sales of the first quarter.
Examples of management information systems include;
 Sales management systems – they get input from the point of sale
system
 Budgeting systems – gives an overview of how much money is
spent within the organization for the short and long terms.
 Human resource management system – overall welfare of the
employees, staff turnover, etc.
Artificial intelligence techniques in
business

 Artificial intelligence systems mimic human expertise to identify

patterns in large data sets. Companies such as Amazon, Facebook,
and Google, etc. use artificial intelligence techniques to identify data
that is most relevant to you.
 Let's use Facebook as an example, Facebook usually makes very
accurate predictions of people that you might know or went with to
school. They use the data that you provide to them, the data that
your friends provide and based on this information make predictions
of people that you might know.
 Amazon uses artificial intelligence techniques too to suggest products
that you should buy also based on what you are currently getting.
 Google also uses artificial intelligence to give you the most relevant
search results based on your interactions with Google and your
location.
 These techniques have greatly contributed in making these
companies very successful because they are able to provide value to
their customers.
Online Analytical Processing
(OLAP)
 Online analytical processing (OLAP) is used to query and analyze
multi-dimensional data and produce information that can be viewed
in different ways using multiple dimensions.
 Let's say a company sells laptops, desktops, and Mobile device. They have
four (4) branches A, B, C and D. OLAP can be used to view the total sales of
each product in all regions and compare the actual sales with the projected
sales.
 Each piece of information such as product, number of sales, sales value
represents a different dimension
 The main objective of OLAP systems is to provide answers to ad hoc
queries within the shortest possible time regardless of the size of the
datasets being used.
Decision support system (DSS) with examples

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.

For example,
 One of the DSS applications is the management and development of complex
anti-terrorism systems.
 Other examples include a bank loan officer verifying the credit of a loan
applicant or an engineering firm that has bids on several projects and wants to
know if they can be competitive with their costs.
 A decision support system (DSS) is an interactive computer-based
information system that, like MIS also serves at the management
level of an organization.
 However, in contrast to MIS (that processes data), it processes
information to support the decision making process of managers. It
provides middle managers with the information that enables them to
make intelligent decisions.
 A DSS in bank, for example, can enable a manger to analyze the
changing trends in deposits and loans in order to ascertain the yearly
targets.
 DSS’s are designed for every manager to execute a specific
managerial task or problem.
 Generally, they help managers to make semi-structured decisions,
the solution to which can be arrived at logically. However, sometimes,
they can also help in taking complex decisions.
Types of decision support system

Types of Decision Support Systems (DSS)

 Decision Support Systems (DSS) are a class of computerized information system that
support decision-making activities. ... A decision support system may present information
graphically and may include an expert system or artificial intelligence (AI).

 The decisions range from routine decisions taken regularly to strategic decisions, which are
sometimes taken once in the lifetime of an organization. The decisions differ in the following
degrees,
 Complexity
 Information requirement for taking the decision
 Relevance
 Effect on the organization
 Degree of structured behavior of the decision-making process.
 The different types of decisions require different type of information as without information
one cannot decide.
What are the components of DSS?

 A decision support systems consists of three main components,

namely database, software system and user interface.
components

 1. DSS Database: It contains data from various sources, including

internal data from the organization, the data generated by different
applications, and the external data mined form the Internet, etc. The
decision support systems database can be a small database or a
standalone system or a huge data warehouse supporting the
information needs of an organization. To avoid the interference
of decision support system with the working of operational systems,
the DSS database usually contains a copy of the production database.
 2. DSS Software System: It consists of various mathematical and
analytical models that are used to analyze the complex data, thereby
producing the required information. A model predicts the output in
the basis of different inputs or different conditions, or finds out the
combination of conditions and input that is required to produce the
desired output.

 A decision support system may compromise different models where

each model performs a specific function. The selection of models that
must be included in a decision support system family depends on
user requirements and the purposes of DSS. Note that the DSS
software contains the predefined models (or routines) using which
new models can be built to support specific type of decisions.
3. DSS User Interface: It is an interactive graphical interface which
makes the interaction easier between the DSS and its users. It displays
the results (output) of the analysis in various forms, such as text, table,
charts or graphics. The user can select the appropriate option to view
the output according to his requirement.
 A manager, for example, would like to view comparative sales data in
tabular form whereas an architect creating a design plan would be
more interested in viewing the result of analysis in a graphical format.
The present-day decision support system built using the Web-based
interface provides its users some special capabilities like better
interactivity, facility for customization and personalization, and more
ease of use.
 Draw datadase

 DSS
 User database

 DDS SOFTWARE SYSTEM

 USER INTERFACE

 USER
Some of the commonly used mathematical and
statistical models are as follows:-

 Statistical Models: They contain a wide range of statistical

functions, such as mean, median, mode, deviations etc. These
models are used to establish, relationships between the occurrences
of an event and various factors related to that event. It can, for
example, relate sale of product to differences in area, income,
season, or other factors. In addition to statistical functions, they
contain software that can analyze series of data to project future
outcomes.
 Sensitivity Analysis Models: These are used to provide answers to
what-if situations occurring frequently in an organization. During the
analysis, the value of one variable is changed repeatedly and
resulting changes on other variables are observed. The sale of
product, for example, is affected by different factors such as price,
expenses on advertisements, number of sales staff, productions etc.
Using a sensitivity model, price of the product can be changed
(increased or decreased) repeatedly to ascertain the sensitivity of
different factors and their effect on sales volume. Excel spreadsheets
and Lotus 1-2-3 are often used for making such analysis.
 Optimization Analysis Models: They are used to find optimum
value for a target variable under given circumstances. They are
widely used for making decisions related to optimum utilization of
resources in an organization. During optimization analysis, the values
for one or more variables are changed repeatedly keeping in mind the
specific constraints, until the best values for target variable are
found. They can, for example, determine the highest level of
production that can be achieved by varying job assignments to
workers, keeping in mind that some workers are skilled and their job
assignment cannot be changed. Linear programming techniques and
Solver tool in Microsoft excel are mostly used for making such
analysis.
 Forecasting Models: They use various forecasting tools and techniques,
including the regression models, time series analysis, and market research
methods etc., to make statements about the future or to predict something in
advance. They provide information that helps in analyzing the business
conditions and making future plans. These systems are widely used for
forecasting sales.
 Backward Analysis Sensitivity Models: Also known as goal seeking analysis,
the technique followed in these models is just opposite to the technique applied
in sensitivity analysis models. In place of changing the value of variable
repeatedly to see how it affects other variables, goal seeking analysis sets a
target value for a variable and then repeatedly changes other variables until the
target value is achieved. To increase the production level by 40 percent using
the backward sensitivity analysis, for example, first, the target value for the
production level can be set and then the required changes to made in other
factors, such as the amount of raw material, machinery and tools, number of
production staff, etc., to achieve the target production level.
Manual Information Systems VS Computerized
Information Systems (MIS)

Data is the bloodstream of any business entity. Everyone in an

organization needs information to make decisions. An information
system is an organized way of recording, storing data, and retrieving
information.
Manual Information System
 A manual information system does not use any computerized
devices. The recording, storing and retrieving of data is done
manually by the people, who are responsible for the information
system.
The major components of a manual information system are:-
 People –people are the recipients of information system
 Business Procedures –these are measures put in place that define
the rules for processing data, storing it, analyzing it and producing
information
 Data –these are the recorded day to day transactions
 Filing system – this is an organized way of storing information
 Reports –the reports are generated after manually analyzing the
data from the filing system and compiling it.
The following diagram illustrates how a typical manual information
system works
Advantages and Dis-advantages of a
manual information system

Advantages:
 The following are the advantages of manual information systems
 Cost effective – it is cheaper compared to a computerized system because there is no need
to purchase expensive equipment such as servers, workstations, printers, etc.
 Flexible –evolving business requirements can easily be implemented into the business
procedures and implemented immediately
Disadvantages:
 The following are some of the disadvantages of a manual information system.
 Time consuming –all data entries need to be verified before filing, this is a time consuming
task when done by humans. Retrieving data from the filing system also takes a considerable
amount of time
 Prone to error – the accuracy of the data when verified and validated by human beings is
more prone to errors compared to verification and validation done by computerized systems.
 Lack of security – the security of manual systems is implemented by restricting access to
the file room. Experience shows unauthorized people can easily gain access to the filing room
Disadvantages/conti

 Duplication of data –most departments in an organization need to

have access to the same data. In a manual system, it is common to
duplicate this data to make it easy to accessible to all authorized
users. The challenge comes in when the same data needs to be
updated
 Data inconsistency – due to the duplication of data, it is very
common to update data in one file and not update the other files.
This leads to data inconsistency
 Lack of backups – if the file get lost or mishandled, the chances of
recovering the data are almost zero.
Computerized information system

Computerized systems were developed to address the challenges of manual

information systems. The major difference between a manual and computerized
information system is a computerized system uses a combination of software and
hardware to record, store, analyze and retrieve information.

Advantages:
 Fast data processing and information retrieval – this is one of the biggest
advantages of a computerized information system. It processes data and retrieves
information at a faster rate. This leads to improved client/customer service
 Improved data accuracy – easy to implement data validation and verification
checks in a computerized system compared to a manual system.
 Improved security – in addition to restricting access to the database server, the
computerized information system can implement other security controls such as
user’s authentication, biometric authentication systems, access rights control, etc.
 Reduced data duplication – database systems are designed in
such a way that minimized duplication of data. This means updating
data in one department automatically makes it available to the other
departments
 Improved backup systems – with modern day technology, backups
can be stored in the cloud which makes it easy to recover the data if
something happened to the hardware and software used to store the
data
 Easy access to information – most business executives need to
travel and still be able to make a decision based on the information.
The web and Mobile technologies make accessing data from
anywhere possible
Disadvantages:
 It is expensive to set up and configure – the organization has to
buy hardware and the required software to run the information
system. In addition to that, business procedures will need to be
revised, and the staff will need to be trained on how to use the
computerized information system.
 Heavy reliance on technology – if something happens to the
hardware or software that makes it stop functioning, then the
information cannot be accessed until the required hardware or
software has been replaced.
 Risk of fraud – if proper controls and checks are not in place, an
intruder can post unauthorized transactions such as an invoice for
goods that were never delivered, etc.
Summary

1. MIS is the acronym for Management Information System. It is a

collection of people, procedures, data, and information technology that
aids managers to make informed decisions.
2. Computerized information systems are more efficient compared to
manual information systems. Manual information systems are cheaper
compared to computerized information systems.
3. Transaction processing systems (TPS) are by operational staff to record
day to day business transactions, and they are used to make structured
decisions
4. Management Information Systems (MIS) are used by middle-level
managers to make semi-structured decisions
5. Decision Support Systems are used by top level managers, and they
help top level managers to make unstructured decisions.