Sem – 5th Sem

BBA – E-commerce
Management Information System
Batch – Sept 2020 to Jan 2021

Unit –1 The meaning & role of MIS- What is MIS system view of business. System
The meaning & approach. Importance of MIS. Evolution of MIS. Computers in MIS. Concepts of
role of MIS DSS, ESS, KM, OAS, TPS.

The meaning & role of MIS- What is MIS system view of business.

A management information system (MIS) is a computer system consisting of hardware and software that
serves as the backbone of an organization's operations. An MIS gathers data from multiple online systems,
analyzes the information, and reports data to aid in management decision-making.
What Is a Management Information System?
In business, management information systems (or information management systems) are tools used to support
processes, operations, intelligence, and IT. MIS tools move data and manage information. They are the core of
the information management discipline and are often considered the first systems of the information age.
MIS produce data-driven reports that help businesses make the right decisions at the right time. While MIS
overlaps with other business disciplines, there are some differences:
• Enterprise Resource Planning (ERP): This discipline ensures that all departmental systems are
integrated. MIS uses those connected systems to access data to create reports.
• IT Management: This department oversees the installation and maintenance of hardware and software
that are parts of the MIS. The distinction between the two has always been fuzzy.
• E-commerce: E-commerce activity provides data that the MIS uses. In turn, the MIS reports based on
this data affect e-commerce processes.

Components of MIS and their relationship

A management information system is made up of five major components namely people, business processes,
data, hardware, and software. All of these components must work together to achieve business objects.
People – these are the users who use the information system to record the day to day business transactions.
The users are usually qualified professionals such as accountants, human resource managers, etc. The ICT
department usually has the support staff who ensure that the system is running properly.
Business Procedures – these are agreed upon best practices that guide the users and all other components on
how to work efficiently. Business procedures are developed by the people i.e. users, consultants, etc.
Data – the recorded day to day business transactions. For a bank, data is collected from activities such as
deposits, withdrawals, etc.
Hardware – hardware is made up of the computers, printers, networking devices, etc. The hardware provides
the computing power for processing data. It also provides networking and printing capabilities. The hardware
speeds up the processing of data into information.
Software – these are programs that run on the hardware. The software is broken down into two major
categories namely system software and applications software. System software refers to the operating system
i.e. Windows, Mac OS, and Ubuntu, etc. Applications software refers to specialized software for
accomplishing business tasks such as a Payroll program, banking system, point of sale system, etc.
MIS – Concepts -
To the managers, Management Information System is an implementation of the organizational systems and
procedures. To a programmer it is nothing but file structures and file processing. However, it involves much
more complexity.
The three components of MIS provide a more complete and focused definition, where System suggests
integration and holistic view, Information stands for processed data, and Management is the ultimate user,
the decision makers.
Management information system can thus be analyzed as follows −
Management
Management covers the planning, control, and administration of the operations of a concern. The top
management handles planning; the middle management concentrates on controlling; and the lower
management is concerned with actual administration.
Information
Information, in MIS, means the processed data that helps the management in planning, controlling and
operations. Data means all the facts arising out of the operations of the concern. Data is processed i.e.
recorded, summarized, compared and finally presented to the management in the form of MIS report.
System
Data is processed into information with the help of a system. A system is made up of inputs, processing,
output and feedback or control.
Thus MIS means a system for processing data in order to give proper information to the management for
performing its functions.
Definition
Management Information System or 'MIS' is a planned system of collecting, storing, and disseminating data in
the form of information needed to carry out the functions of management.

Objectives of MIS
The goals of an MIS are to implement the organizational structure and dynamics of the enterprise for the
purpose of managing the organization in a better way and capturing the potential of the information system
for competitive advantage.
Following are the basic objectives of an MIS −
• Capturing Data − Capturing contextual data, or operational information that will contribute in
decision making from various internal and external sources of organization.
• Processing Data − The captured data is processed into information needed for planning, organizing,
coordinating, directing and controlling functionalities at strategic, tactical and operational level.
Processing data means −
o making calculations with the data
o sorting data
o classifying data and
o summarizing data
• Information Storage − Information or processed data need to be stored for future use.
• Information Retrieval − The system should be able to retrieve this information from the storage as
and when required by various users.
• Information Propagation − Information or the finished product of the MIS should be circulated to its
users periodically using the organizational network.
Characteristics of MIS
Following are the characteristics of an MIS −
• It should be based on a long-term planning.
• It should provide a holistic view of the dynamics and the structure of the organization.
• It should work as a complete and comprehensive system covering all interconnecting sub-systems
within the organization.
• It should be planned in a top-down way, as the decision makers or the management should actively
take part and provide clear direction at the development stage of the MIS.
• It should be based on need of strategic, operational and tactical information of managers of an
organization.
• It should also take care of exceptional situations by reporting such situations.
• It should be able to make forecasts and estimates, and generate advanced information, thus providing
a competitive advantage. Decision makers can take actions on the basis of such predictions.
• It should create linkage between all sub-systems within the organization, so that the decision makers
can take the right decision based on an integrated view.
• It should allow easy flow of information through various sub-systems, thus avoiding redundancy and
duplicity of data. It should simplify the operations with as much practicability as possible.
• Although the MIS is an integrated, complete system, it should be made in such a flexible way that it
could be easily split into smaller sub-systems as and when required.
• A central database is the backbone of a well-built MIS.

System approach -
Systems approach is an organized way of dealing with a problem.
Management information System – MIS provide information to support management decision making.
The systems approach is an old concept. The approach stands on the assumption that breaking down of a
complex concept into simple easy to understand units helps in better understanding of the complexity.
The approach concentrates on the holistic entity of the system without neglecting the components. It attempts
to understand the role each component plays in the system while simultaneously understanding the activity of
the whole system.
Major concepts of the systems approach are:

1. Holism: A change in any part/component of a system affects the whole system directly or indirectly
2. Specialization: A whole system can be divided into small (granular - smaller easy to understand),
components so that the specialized role of each component is appreciated.
3. Non-summation: Every component (subsystem/partial system) is of importance to the whole. It is
therefore essential to understand the actions of each component to get the holistic perspective.
4. Grouping: The process of specialization can create its own complexity by proliferating components with
increasing specialization. To avoid this it becomes essential to group related disciplines or sub-
disciplines.
5. Coordination: The grouped components and sub components need coordination. Without coordination
the components will not be able to work in a concerted manner and will lead to chaos. Coordination and
control is a very important concept in the study of systems as without this we will not be a unified holistic
concept.
6. Emergent properties: This is an important concept of systems approach. It means that the group of
interrelated entities (components) has properties as a group that is not present in any individual
component. This is the holistic view of a system. For example, multi-cellular organisms exhibit
characteristics as a whole which are not present in individual constituent parts like cells.
Features of Systems Approach:
(i) A system consists of interacting elements. It is set of inter-related and inter-dependent parts arranged in a
manner that produces a unified whole.
(ii) The various sub-systems should be studied in their inter-relationships rather, than in isolation from each
other.
(iii) An organisational system has a boundary that determines which parts are internal and which are external.
(iv) A system does not exist in a vacuum. It receives information, material and energy from other systems as
inputs. These inputs undergo a transformation process within a system and leave the system as output to
other systems.
(v) An organization is a dynamic system as it is responsive to its environment. It is vulnerable to change in its
environment.
Importance of MIS –

There are some key advantages of effective use of management information systems:
• Management can get an overview of their entire operation.
• Managers have the ability to get feedback about their performance.
• Organizations can maximize benefits from their investments by seeing what is working and what isn’t.
• Managers can compare results to planned performance by identifying strengths and weakness in both
the plan and the performance.
• Companies can drive workflow improvements that result in better alignment of business processes to
customer needs.
• Many business decisions are moved out of upper management to levels of the organization that is
closer to where the knowledge and experience lie.
Evolution of MIS –
History of Management Information Systems
The technology and tools used in MIS have evolved over time. Kenneth and Aldrich Estel, who are widely
cited on the topic, have identified six eras in the field.
Computers in MIS -
Characteristics of Computerized MIS
Following are the characteristics of a well-designed computerized MIS −
• It should be able to process data accurately and with high speed, using various techniques like
operations research, simulation, heuristics, etc.
• It should be able to collect, organize, manipulate, and update large amount of raw data of both related
and unrelated nature, coming from various internal and external sources at different periods of time.
• It should provide real time information on ongoing events without any delay.
• It should support various output formats and follow latest rules and regulations in practice.
• It should provide organized and relevant information for all levels of management: strategic,
operational, and tactical.
• It should aim at extreme flexibility in data storage and retrieval.
Nature and Scope of MIS
The following diagram shows the nature and scope of MIS −

Concepts of DSS, ESS, KM, OAS, TPS.

DSS -
Decision support systems (DSS) are interactive software-based systems intended to help managers in
decision-making by accessing large volumes of information generated from various related information
systems involved in organizational business processes, such as office automation system, transaction
processing system, etc.
DSS uses the summary information, exceptions, patterns, and trends using the analytical models. A decision
support system helps in decision-making but does not necessarily give a decision itself. The decision makers
compile useful information from raw data, documents, personal knowledge, and/or business models to
identify and solve problems and make decisions.
Programmed and Non-programmed Decisions
There are two types of decisions - programmed and non-programmed decisions.
Programmed decisions are basically automated processes, general routine work, where −
 • These decisions have been taken several times.
• These decisions follow some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.
Non-programmed decisions occur in unusual and non-addressed situations, so −
• It would be a new decision.
• There will not be any rules to follow.
• These decisions are made based on the available information.
• These decisions are based on the manger's discretion, instinct, perception and judgment.
For example, investing in a new technology is a non-programmed decision.
Decision support systems generally involve non-programmed decisions. Therefore, there will be no exact
report, content, or format for these systems. Reports are generated on the fly.
Attributes of a DSS

• Adaptability and flexibility

• High level of Interactivity
• Ease of use
• Efficiency and effectiveness
• Complete control by decision-makers
• Ease of development
• Extendibility
• Support for modeling and analysis
• Support for data access
• Standalone, integrated, and Web-based
Characteristics of a DSS
• Support for decision-makers in semi-structured and unstructured problems.
• Support for managers at various managerial levels, ranging from top executive to line managers.
• Support for individuals and groups. Less structured problems often requires the involvement of
several individuals from different departments and organization level.
• Support for interdependent or sequential decisions.
• Support for intelligence, design, choice, and implementation.
• Support for variety of decision processes and styles.
• DSSs are adaptive over time.
Benefits of DSS
• Improves efficiency and speed of decision-making activities.
• Increases the control, competitiveness and capability of futuristic decision-making of the organization.
• Facilitates interpersonal communication.
• Encourages learning or training.
• Since it is mostly used in non-programmed decisions, it reveals new approaches and sets up new
evidences for an unusual decision.
• Helps automate managerial processes.
Components of a DSS
Following are the components of the Decision Support System −
• Database Management System (DBMS) − To solve a problem the necessary data may come from
internal or external database. In an organization, internal data are generated by a system such as TPS
and MIS. External data come from a variety of sources such as newspapers, online data services,
databases (financial, marketing, human resources).
• Model Management System − It stores and accesses models that managers use to make decisions.
Such models are used for designing manufacturing facility, analyzing the financial health of an
organization, forecasting demand of a product or service, etc.
Support Tools − Support tools like online help; pulls down menus, user interfaces, graphical
analysis, error correction mechanism, facilitates the user interactions with the system.
Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows −
• Text Oriented DSS − It contains textually represented information that could have a bearing on
decision. It allows documents to be electronically created, revised and viewed as needed.
• Database Oriented DSS − Database plays a major role here; it contains organized and highly
structured data.
• Spreadsheet Oriented DSS − It contains information in spread sheets that allows create, view,
modify procedural knowledge and also instructs the system to execute self-contained instructions.
The most popular tool is Excel and Lotus 1-2-3.
• Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure written for
performing certain calculations and particular program type.
• Rules Oriented DSS − It follows certain procedures adopted as rules.
• Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system is the example.
• Compound DSS − It is built by using two or more of the five structures explained above.
Types of DSS
Following are some typical DSSs −
• Status Inquiry System − It helps in taking operational, management level, or middle level
management decisions, for example daily schedules of jobs to machines or machines to operators.
• Data Analysis System − It needs comparative analysis and makes use of formula or an algorithm, for
example cash flow analysis, inventory analysis etc.
• Information Analysis System − In this system data is analyzed and the information report is
generated. For example, sales analysis, accounts receivable systems, market analysis etc.
• Accounting System − It keeps track of accounting and finance related information, for example, final
account, accounts receivables, accounts payables, etc. that keep track of the major aspects of the
business.
• Model Based System − Simulation models or optimization models used for decision-making are used
infrequently and creates general guidelines for operation or management.
ESS –
Executive support systems are intended to be used by the senior managers directly to provide support to non-
programmed decisions in strategic management.
These information are often external, unstructured and even uncertain. Exact scope and context of such
information is often not known beforehand.
This information is intelligence based −

• Market intelligence
• Investment intelligence
• Technology intelligence
Examples of Intelligent Information
Following are some examples of intelligent information, which is often the source of an ESS −

• External databases
• Technology reports like patent records etc.
• Technical reports from consultants
• Market reports
• Confidential information about competitors
• Speculative information like market conditions
• Government policies
• Financial reports and information
Features of Executive Information System

Advantages of ESS

• Easy for upper level executive to use

• Ability to analyze trends
• Augmentation of managers' leadership capabilities
• Enhance personal thinking and decision-making
• Contribution to strategic control flexibility
• Enhance organizational competitiveness in the market place
• Instruments of change
• Increased executive time horizons.
• Better reporting system
• Improved mental model of business executive
 • Help improve consensus building and communication
• Improve office automation
• Reduce time for finding information
• Early identification of company performance
• Detail examination of critical success factor
• Better understanding
• Time management
• Increased communication capacity and quality
Disadvantage of ESS

• Functions are limited

• Hard to quantify benefits
• Executive may encounter information overload
• System may become slow
• Difficult to keep current data
• May lead to less reliable and insecure data
• Excessive cost for small company

KM -
A knowledge management system is not radically different from all these information systems, but it just
extends the already existing systems by assimilating more information.
As we have seen, data is raw facts, information is processed and/or interpreted data, and knowledge is
personalized information.
What is Knowledge?

• Personalized information
• State of knowing and understanding
• An object to be stored and manipulated
• A process of applying expertise
• A condition of access to information
• Potential to influence action
Sources of Knowledge of an Organization

• Intranet
• Data warehouses and knowledge repositories
• Decision support tools
• Groupware for supporting collaboration
• Networks of knowledge workers
• Internal expertise
Definition of KMS
A knowledge management system comprises a range of practices used in an organization to identify, create,
represent, distribute, and enable adoption to insight and experience. Such insights and experience comprise
knowledge, either embodied in individual or embedded in organizational processes and practices.
Purpose of KMS

• Improved performance
• Competitive advantage
• Innovation
• Sharing of knowledge
• Integration
• Continuous improvement by −
o Driving strategy
o Starting new lines of business
o Solving problems faster
o Developing professional skills
o Recruit and retain talent

Activities in Knowledge Management

• Start with the business problem and the business value to be delivered first.
• Identify what kind of strategy to pursue to deliver this value and address the KM problem.
• Think about the system required from a people and process point of view.
• Finally, think about what kind of technical infrastructure are required to support the people and
processes.
• Implement system and processes with appropriate change management and iterative staged release.
Level of Knowledge Management
OAS –
Office automation is the process of watching data flow around on its own without any human intervention,
inaccuracies, and errors. It is the process of using an automation tool to create, collect, store, analyze, and
share confidential office data that is required to accomplish basis day-to-day routine tasks and processes
effectively.

Technology has made a serious impact on the daily work of office administration. Emails have replaced
memos, shared drives have done away with filing cabinets, and biometrics have taken over employee
timesheet stamping. Many businesses think that they have attained office automation nirvana simply by going
paperless.

What is an office automation system?

An office automation system is the tool that enables data to move from one system to another on its own
without human intervention and inaccuracies. These tools help organizations collect, manage, and analyze
securely to accomplish everyday tasks and processes. It optimizes and automates existing business processes
and procedures.

Why use an office automation system?

In today’s digital age, office automation systems offer an array of benefits for organizations of every size.
Powerful office automation systems reduce manual effort and store a large amount of data in little space. They
not only streamline day-to-day tasks but also speed up information retrieval. Additionally, these tools improve
process visibility and help businesses spot bottlenecks easily.

Some of the biggest advantages of automating office workflows include:

• Reducing the manual effort to complete mundane tasks
• Cutting down on manual errors
• Shrinking the processing time for items
• Getting insights into process performance metrics
• Gaining greater process visibility and identifying potential bottlenecks
• Making sound business decisions based on data
What are the functions of office automation software?
An ideal office automation software:

• Requires less space to store data

• Streamlines data storage and retrieval
• Retrieves information instantly
• Eliminates the need to preserve paperwork
• Removes any chance for data redundancy
• Allows multiple people to access data
• Reduces the possibility of errors
TPS -
A Transaction Processing System is a set of information which processes the data transaction in
database system that monitors transaction programs. The system is useful when something is sold over the
internet. It allows for a time delay between when an item is being sold to when it is actually sold.

Definition
A Transaction Processing System is a set of information which processes the data transaction in database
system that monitors transaction programs. The system is useful when something is sold over the internet. It
allows for a time delay between when an item is being sold to when it is actually sold. An example is that of a
sporting event ticket. While the customer is filling out their information to purchase the seat ticket; the
transaction processing system is holding the ticket so that another customer cannot also buy it. It allows for a
ticket not to be sold to two different customers.
Types
Batch processing : Processes several transactions at the same time, with a time delay.
Real-time processing : Deals with one transaction at a time and does not have a time delay.
Features
Rapid Response : The response time of a transaction processing system (TPS) is important because a
business cannot afford to have their customers waiting for long periods of time before
making a transaction.
Reliability : A good TPS must be very reliable because if it were to break down businesses could
lose a huge portion of revenue because customers would not be able to purchase their
products.
Inflexibility : The TPS must work the same way for every transaction as long as the TPS is being
used. The formality and structure should never change.
Controlled processing : The TPS must be able to allow authorized employees to be able to access it at any
time.