Management Information Systems –

(BIT 451)

Dr. Kate Takyi

UNIT 1: Management Information Systems
– Basic Concepts
Learning Objectives
• Know the fundamental management concepts

• Understand the basic concepts of Information Systems

• Understand and apply core knowledge in Information Systems

• Identify and analyze requirements for information systems

• Understand and apply design principles in Information Systems

• Identify the basic components of Management Information Systems

• Conceptualize information systems as combinations of hardware and software technologies

• Know the applications of information systems in various levels of Management

Introduction
• Management Information System (MIS) is a study of people, technology,
organizations, and the relationships among them in a broader sense.
• However in precise terms MIS is a software system that focuses on the management
of information technology to provide efficiency and effectiveness or strategy decision
making.
• The term is often used in the academic study of businesses and has connections with
other areas, such as information systems, information technology, informatics, e-
commerce and computer science.
Basic Concepts
• MIS is an accumulation of 3 different terms : Management, Information and Systems

Management:
• Management is an art of getting things done by others. However, for the purpose of
Management Information System, management comprises the process and activity
that a manager does in the operation of their organization
– i.e., to plan, organize, direct and control operations.

Information:
• Information simply means processed data or in the layman language, data which can
be converted into meaningful and useful form for a specific user.
Basic Concepts
System:
• A system can be explained in the following ways:
• System can be defined as a set of elements joined together for a common objective.
• A group of interrelated or interacting elements forming a unified whole. e.g.,
business organization as systems.
• A group of interrelated components working together towards a common goal by
accepting input and producing output in an organized transformation process.
 Overview of Management Concepts
• Every business unit has some objectives of its own. These objectives can be achieved with the
coordinated efforts of several personnel.

• Management is the integrating force in all organized activity. Whenever two or more people
work together, to attain a common objective, they have to coordinate their activities.

• They also have to organize and utilize their resources in such a way as to optimize the results.

• Management therefore can be defined as planning, directing and controlling the business
operations for the purpose of producing goods or services desired by customers so that
organizational objectives are accomplished.
 Functions of Management
Planning:

• Selecting information and making assumptions concerning the future to put together the
activities necessary to achieve organizational objectives.”

• Planning includes both the broadest view of the organization, e.g., its mission, and the
narrowest, e.g., a tactic for accomplishing a specific goal.

Organizing: Includes:
– The classification and categorization of requisite objectives the grouping of activities needed to accomplish
objectives
– the assignment of each grouping to a manager with the authority necessary to supervise it
– the provisions for coordination horizontally and vertically in the organization structure.

• The focus is on separation, coordination, and control of tasks and the flow of information
inside the organization. It is in this function that managers allocate authority to job holders.
Functions of Management
Directing:

• Direction is telling people what to accomplish and seeing that they do it to the finest of their
capability.

• It includes making assignments, corresponding procedures, seeing that mistakes are corrected,
providing on the job instruction and, of course, issuing orders.”

• The purpose of directing is to control the behaviour of all personnel to accomplish the organization's
mission and objectives while simultaneously helping them accomplish their own career objectives.

Staffing:

• Staffing function requires recognition of human resource needs, filling the organizational structure
and keeping it filled with competent people.

• This function includes recruiting, training; evaluating and compensating are the specific activities.
Functions of Management
Controlling:

• Control is the course of action that measures present performance and guides it towards some
predetermined goal.
– i.e checking existing actions against some desired results determined in the planning process.
 Levels of Management
• can be grouped into three levels
 Top Level Management
 Middle Level Management
 Low Level or Operative Management

• Top Level Management:

• Top level management consists of board of directors, managing directors or executive
committee members. Objectives include:
– Setting key objectives, policies and identifying factors essential for the development of the
organization.
– Making appointments to the top position of the organization such as managers department heads etc.
– Reviewing the work of different personnel in various levels
 Levels of Management
Middle Level Management:
• Middle level management consists of managers of various departments such as productions,
sales, marketing, resource, finance etc. Objectives include:
– Follow the rules and policies formulated by the top level management.
– Motivating personnel for higher productivity.
– Collecting detail analysis reports from the various departments.
– Mutual understanding with other departments in the organization.
– Recommendations to the top level management.

Low Level Management:

• Low level management consist of supervisors, daily workers etc. Follow the rules and
guidelines made out by the top level authentic of the organization. Some of the functions are:
 Levels of Management
• To issue orders and instructions to the workers and to supervise and control their work

• To classify and assign jobs to the workers

• To direct and guide the workers about work procedure

• To arrange for the necessary tools, equipment, materials etc., for the worker

• To solve the problems of workers

• To inform the management about the problems of workers which are not solved at this level

• To maintain discipline among the workers and to develop in them the right approach to work.

• To maintain good human relations

• To build a high group morale among the workers.

 Concept of a System
• A System is a group of interrelated components working together toward a common
goal by accepting inputs and producing outputs in an organized transformation
process.
• The concepts of a system are Technology, Application, Development and
Management.
– Technology: Computer networks are systems of information processing components that are a
variety of hardware, software and telecommunication technology.
– Application: Electronic business and commerce application involves interconnected business
information system
– Development: developing ways to use IT in business which includes designing the basic
component of information system.
– Management: Managing IT emphasizes the quality, strategic business value and security of an
organization in information system.
Components of a System
• There are three basic components of a system
– Input
– Processing and
– Output

• Input: Input involves capturing and assembling elements that enter to the system to
be processed. Some of the inputs are raw materials, energy, data etc.
• Processing: It involves transformation process that converts input to output.
• Output: It involves the element that has been produced by a transformation process
to their ultimate destination.
Types of System
• Dynamic System: When the interrelated component of the system interacts with
each other and it is controlled by management then it is known as Dynamic System.
• Cybernative System: Dynamic System implementing the concept of feedback and
control is known as Cybernative System.
• Open System: A system that interacts with other systems in its environment by
exchanging input and output with its environment.
• Adoptive System: A System having the ability to change itself and its environment
in order to survive is called an Adoptive System.
General Systems Concept
• Many of the concepts of General Systems Theory ( GST) have direct
applicability to organizations and MIS.
• GST emphasizes that not only is it necessary to examine and analyze the
individual parts of the system or organization – known as the reductionist
approach – but also it is vital that the system is viewed as a totality where the
whole is greater than the sum of the parts – known as the holistic approach.
• Systems are made up sub-systems just like organizations are made of
departments in commercial terms.
• It is vital to consider the inter-relationships between else the system as whole
will not function efficiently and slow to adapt to new conditions.
• The reductionist approach ignores the vital inter-relationships by treating the
individual parts as self contained entities – which they are not.
Data and Information
• Raw facts or figures representing an object, place or the events occurring in the
organization.
• Data on its own can be fairly useless, but when data is interpreted and processed to
determine its true meaning, it becomes useful.
• Characteristics of Data
– They are facts obtained by reading, observation, counting, measuring and weighing etc. which are
then recorded
– Data is derived from external and internal sources (activities with firm).
– Data may be produced as an automatic by-product of some routine but essential operation. E.g. in a
production of an invoice, a special counting or measuring procedure must be introduced and the
result recorded.
– The source of data needs to be given considerable attention because if the sources of the is data
flawed, any resulting information will be worthless.
Information
• By information, we mean that data is shaped into a meaningful form, which may be
useful
• So, when data is processed, interpreted, organized, structured or presented, so as to
make them meaningful or useful, they are called information.
• Conceptually, information is the message (utterance or expression) being conveyed.
• Therefore, in a general sense, information is ‘knowledge communicated or received
concerning a particular fact or circumstance”.
Characteristics of Good Information

• Relevance: Information must be relevant to the problem being considered. Too often reports,
messages, tabulations etc. contain irrelevant parts which mostly prevent the user of the
information to get the actual meaning of what the sender wants.

• Accuracy: Information should be sufficiently accurate for it to be relied upon by the manager
and for the purpose for which it is intended.

• Completeness: Ideally, must include all the information required for a decision should be
available. However, in practice, this is not often obtainable. What is required is that the
information is complete in respect of the key elements of the problem. This suggests that
there should be interaction between information providers and users to ensure that the key
factors are identified.
Characteristics of Good Information
• Confidence in the source: For information to have value it must be used. For it to be used,
managers must have confidence in the source
– The source has been reliable in the past
– There is good communication between the information producer and the manager

• Communication to the right person: All persons have a defined sphere of activity and
responsibility and should receive information to help them carry out their designated tasks. It
is quite common for information to be supplied to the wrong level in the organization.
– E.g A superior may not pass it on the person who needs it whilst subordinates may hold onto
information in an attempt to make themselves seem indispensable.
Functions of Information
• Reduction of Uncertainty: Uncertainty exist where there is less than perfect
knowledge. Relevant information help to reduce the unknown
• An aid to monitoring and control: By providing information about performance
and the extent of deviations from planned level of performance, management are
better able to control operations.
• As a means of communication: Managers need to know about developments, plans,
forecasts, impending changes and so on.
• As a memory supplement: By having historical information about performance,
transactions, results of past actions and decisions available for reference, personal
memories are supplemented.
• As aid to simplification: By reducing uncertainty and enhancing understanding,
problems and situations are simplified and become more manageable.
Information Systems
• Meaning: An information system can be any organized combination of people, hardware, software,
communication software and data resource that collects, transforms or screens the information in an
organization.

• Definition: An information system can be defined as a set of interrelated components that collect (or
retrieve), process, store and distribute information to support decision making, coordination and control
in an organization.

General model of an Information System

Information Systems
• Examples of Information Systems:

 Airline reservations (seat, booking, payment, schedules, boarding list, special needs, etc.).

 Bank operations (deposit, transfer, withdrawal) electronically with distinguished payment

gateways.

 Integration of department with the help of contemporary software’s like ERP (Enterprise
Resource Planning)

 Logistics management application to streamline the transportation system.

Components of Information Systems
1. People Resources
• People are required for the operation of all information system. People Resources are
divided into two types
– End-Users: These are the people who use an information system or the information it produce. Eg:
Accounts, Sales Persons, Customers and Managers.
– Information system specialist: These are the people who develop and also operate Information system.
Eg: System Managers, Programmers, Computer Operation.

2. Data Resources
• Data resources of an Information system are typically organized in two parts:
– Database: Database holds processed and organized data.
– Knowledge Base: It holds knowledge in a variety of forms such as facts, rules, and case
examples.
Components of Information Systems
3. Software Resources
• It includes all sets of information processing instruction. There are 2 types:
– Program: Set of operating instructions that controls the computer hardware.
– Procedure: Set of Information processing instructions needed by people. Eg: Operating
System, Spreadsheet Programs, and Word processor Programs.

4. Hardware Resources
• Include all physical devices and materials used in information processing.
– Machines: Eg - Computer, Video Monitor, Scanner.
– Media: Hardware in computer based Information system. Eg - Floppy Disk, Magnetic Tape
and Optical Disk.
– Computer System: Eg - Microcomputers, Midrange Computers System, Large Mainframe
– Computer Peripheral: Eg - Mouse, Key Board.
Components of Information Systems
5. Network Resources:
• These are the fundamental resource components of all information Systems. It has
two types:
– Communication Media: Eg - Co-axial Cable, Twisted Paired Wire, Fibre Optics Cable,
Microwave System and Communication Satellite System.
– Network Support: Generally used for the operation and use of a communication network. Eg -
Modems, Internet Browser and Communication Control Software.
Components of Information Systems
Role of Information Systems
An Information system supports the business Organizations in the following ways.

• Support the Business Process: Treats inputs as a request from the customer and outputs as
services to customer.
– Supports current operations and use the system to influence further way of working.

• Support Operation of a Business Organization: An IS supports operations of a business

organization by giving timely information, maintenance and enhancement which provides
flexibility in the operation of organizations.

• Support Decision Making: An IS supports the decision making by employee in their daily
operations.
– It also supports managers in decision making to meet the goals and objectives of the
organization.
Role of Information Systems
• Strategies for an Organization: Today each business is running in a competitive
market. An IS supports the organization to evolve appropriate strategies for the
business to assent in a competitive environment
Types of Information
• Strategic: Needed for long range planning and directions. This is less structured.
• Tactical: Needed to take short range decisions to improve profitability and
performance.
• Operational: Needed for day to day operations of the organization. Eg: Daily Sales,
Billing.
• Statutory: Needed by law to be given to government authorities. Eg: Sales tax return.
Management Hierarchy of Information
needs
Functional areas of Management
• Production
• Marketing
• Materials – purchase, stores
• Finance –accounts
• Human Resource Development (HRD)
• Research and Development (R&D)
Information for Management
Different types of information required for various departments of an enterprise can be
categorized as follows.

Production Management

• The following type of information is needed in production management:

• Strategic Information:
– Yearly and monthly production quotas and alternate schedules
– Policies on machine replacement, augmentation and modernization.
– Identifying best product mix
Information for Management
– Exploring alternate marketing channels.
– Timing of special sales campaigns.

Operational Information:
– Sales analysis by regions, customer class, sales person.
– Sales target versus achievement.
– Market share and trends.
– Seasonal variations.
– Effect of model changes.
– Performance of sales outlets
– Costs of campaigns and benefit.
Information for Management
• Tactical Information
– Identifying and controlling areas of high cost.
– Identifying critical bottlenecks in production.
– Identifying alternate production schedules based on tools, machines etc.
– Performance measures of machines to decide replacement.

• Operational Information
– Monitoring up to date production information by examining assemblies, detecting likely shortages
and giving early warning.
– Scheduling better production dynamically.
– Preventive maintenance schedules.
– Monitoring tool, machine and personnel availability
Information for Management
Marketing Management
• Strategic Information:
– Search for new markets and marketing strategies.
– Analysis of competitor’s strategy
– Technology and demographic forecasts and product changes

• Tactical Information:
– Advertising techniques and analysis of their impact.
– Customer preference surveys.
– Correlation of prices and sales.
– Sales force deployment and targets.
Information for Management
Material Management – Determining optimal reorder levels.
– Determining issues of items to shops versus
• Strategic Information: controlling high value of inventory.
– Developing vendors for critical items – Determining impact on material cost and
– Determining optimal levels of inventory Procurement with design changes and new
Product introduction.
– Determining proportion of material needed
– Reducing varieties of inventory

• Tactical Information:
– Developing vendor performance measures.
Information for Management
• Operational Information:
– List of excess & deficient items received
– List of items rejected
– Critical items received
– Stores in transit and in inspection
– Value of inventory in hand
– Goods received, rejected and issued
Information for Management
Finance Management – Impact of taxation on pricing

• Strategic Information: • Operational Information:

– Methods of financing – Periodic financial report.
– Pricing policies – Budget status to all functional managers.
– Tax planning – Tax returns.
– Share transfers.
• Tactical Information:
– Profit and loss account.
– Variations between budget and expenses.
– Payments and receipts.
– Large outstanding payments/Receipts.
– Payroll, provident fund accounts
– Credit and payment status.
– Cost increases and pricing.
Information for Management
Human Resource Management – Production incentives.
– Morale of personnel.
• Strategic Information:
– reduction.
– Long range human resource requirements at
different levels. – Leave and overtime policies.
– Policies on human resource development and – Personnel deployment policies.
training
• Operational Information:
– Policies on personnel welfare and facilities
– Routine assessment.
Tactical Information: – Skills inventory.
– Performance appraisal. – Loan/advances and recoveries.
– Demographic make-up of personnel and its – Leave record.
impact on retirement.