Paper Coordinator

Co-Principal Investigator
Development Team
Dr. Vijaya Khader
Prof.(Dr.) S.P. Bansal
Former Dean,
Principal Acharya N G Ranga Agricultural University
Investigator Vice Chancellor, Maharaja Agreshen University,
Baddi, Solan, Himachal Pradesh, INDIA
Dr. Vijaya Khader
Former Dean, Acharya N G Ranga Agricultural University

Co-Principal Investigator Prof.(Dr.) YoginderVerma

Prof.Vice Chancellor, Central University of Himachal
Pradesh,Kangra Himachal Pradesh, INDIA

Prof. Manu Sood

Paper Coordinator Professor & Director, University Institute of Information
Technology, Himachal Pradesh University, HP, INDIA

Dr. Sudhanshu Joshi

Content Writer Head, School of Management, Doon University,
Dehradun PIN 248001, Uttarakhand, INDIA
1

Management Information System

Management
Information System Concepts
 Quadrant-I

Description of Module
Subject Name Management
Paper Name Management Information System (MIS)
Module Title Information System Concepts
Module Id Module- 1
Pre-requisites Basic Knowledge of Computer Fundamental and Management
Systems
Objectives 1. To understand the concept, definitions and Scope of
Information Systems
2. Understanding various types of Information System
3. To understand interrelationship between various Information
Systems and their applications
Keywords Information Systems, Management Information System
(MIS),efficiency, Levels of Management

Learning Objectives:

The module provides an introduction to IS; historical perspective; types of

information systems and their mission; information management; typical
business applications; structure and components of modern computer systems;
basics of data communication.

Learning Outcomes:

On successful completion of this module, students should be able to:

 Discuss the roles and functions of information and information systems
(IS) in the decision and communication processes of modern
organizations;
 Recognize the basic theories, concepts, methods and terminologies used
in IS;
 Describe the main categories of IS including both functional and cross
functional IS;
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  Demonstrate an understanding of how are applications are developed,
implemented and managed;
 Demonstrate an ability to employ a number of IS tools commonly utilized
in organizations.

1. Introduction

Functionally, Information Systems are becoming the backbone of most business

and non business organizations. Banks (to process payments, deposits etc.);
Tax authority (for tax deposits, tax rebate or exemption and for final record
keeping etc); Hospitals (For Patient entry, diagnosis and treatment and storage
of his/her history in a database etc) or a superstore (for stock keeping, billing
and payment at the Point of Sale (POS)).
Therefore, in every domain of life Information plays very critical role including
education, finance, government/ non government. Service Industry including
(Healthcare, Insurance, Traveling business etc.) or a manufacturing firm from
small to large business.

Management Information System

Management
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 Checkbox 1: Summary of Characteristics of High-Quality Information
Quality Characteristic Description
Relevant Information is either relevant or irrelevant to a decision. Irrelevant information
interferes with the process—no matter how interesting it is—because it wastes
time or causes confusion or delay. Irrelevant information is a persistent problem
because ISs are good at generating lots of it
Timely This characteristic means that the decision maker receives the information when
he or she needs it—that is, when it would be meaningful to the decision.
For example, the manager of a retail chain needs daily information on stores’
performance and products that are selling unusually high or low, so that
immediate corrective action can be taken. Receiving performance information at
the end of the month leaves thirty-day gaps in corrective actions
Reliable, accurate This characteristic means that the information can be trusted and that the decision
maker has confidence that information is free from errors, to the extent possible.
For example, calculations are correct and data are in correct categories. When
information is trusted, it eliminates wasting time having to verify it. Typically, it
is more important for the information to be timely than to be perfect.
Easy to understand This characteristic means that information is presented clearly, and concisely, and
is well-documented.
(Source: Turban, 2010)

One example to understand the significance of Information could be a

Supermarket store where IT is being used to track the stock based on incoming
shipments and sales that are recorded at cash registers.
Youtube animation I : What is Information Systems
Following YouTube link explains the Nature and Scope of Information Systems
https://www.youtube.com/watch?v=RdgFoFPTckw
The video highlights need and scope of information systems for the business
organizations. (Source: study.com)

Management Information System

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Information System Concepts
 Organizations such as banks, online travel agencies, tax authorities, and
electronic bookshops can be seen as IT companies given the central role of
their information systems.

Checkbox 2: The significance of Information Systems in the Hospital

setup

Checkbox 2 A patient when consults a doctor initially tells him all possible symptoms.
With this information, the doctor examines the patient and makes a diagnosis.
Afterward, the doctor determines the treatment to heal the patient. For example, based
on the diagnosis, the doctor may write the patient a prescription for some medication.
Finally, the doctor must document the symptoms, the diagnosis, and the treatments. In
modern days, most doctors use a software system to record this information.

2. Definition
2.0 Data: Data, or raw data, refers to a basic description of products,
customers, events, activities, and transactions that are recorded, classified, and
stored. Data are the raw material from which information is produced; and the
quality, reliability, and integrity of the data must be maintained for the
information to be useful. Examples are the number of hours an employee
worked in a certain week or the number of new Toyota vehicles sold in the first
quarter of 2013.

Management Information System

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 2.0.1 Database: A database is a repository that consists of stored data
organized for access, search, retrieval, and update.

2.1 Information:
Before we provide our definition of an information system, we first explain the
term “information,” which can mean any of the following:
1. The communication act of one agent—the term “agent” may refer to any
entity ranging from a person or a software component to an organization—
informing another agent (e.g., by exchanging messages);
2. The knowledge or beliefs of agents as a part of their mental state;
3. (Data) objects that represent knowledge or beliefs.
2.2 System:
The next term that we should understand is “system”, which could be defined as
A Method, or process of grouping things together.

Figure 1: Example of Data, Information and Knowledge (Turban, 2008)

Information Technology
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Information System Concepts
 The collection of computing systems used by an organization is termed
information technology (IT). In its broadest sense, IT describes an organization’s
collection of information systems, their users, and the management that
oversees them. Often the term information technology is used interchangeably
with information system (IS). ISs collect (input) and process data, distribute
reports (outputs), and support decision making and business processes.

Figure 3 shows how major types of ISs relate to each other and how data flows
among them. In this example, 1. Data from online purchases are captured and
processed by the TPS, or transaction processing system and then stored in the
transactional database. 2. Data needed for reporting purposes are extracted
from the database and used by the MIS, management information system, to

Management Information System

Management
Information System Concepts
 create periodic, ad hoc, or other types of reports. 3. Data are output to a
decision-support system (DSS) where they are analyzed using formulas,
financial ratios, or models.

Figure 3: Information Systems linkage with data flows (Turban, 2008)

2.3 Information Systems:

Whereas, the term “Information Systems” Combining of users, technology and
process to complete a given goal.

Management Information System

Management
Information System Concepts
 Customers

Products and Services

Business Processes

Participants Information Technology

Figure 1: Commercial business process and requirement of Information

across participants and need of technology (Source: MIT, 2006)

2.3 Business process:

Business Process consists of a set of activities that is performed in an
organizational and technical environment. These activities are coordinated to
jointly realize a business goal. Each business process is enacted by a single
organization, but it may interact with business processes performed by other
organizations.
2.5. Users: A user is a person who uses a computer or network
service. Users generally use a system or a software product without the

Management Information System

Management
Information System Concepts
 technical expertise required to fully understand it. Power users use advanced
features of programs, though they are not necessarily capable of computer
programming and system administration.
2.6. IT Infrastructure
The term infrastructure in an information technology (IT) context refers to an
enterprise's entire collection of hardware, software, networks, data centers,
facilities and related equipment used to develop, test, operate, monitor, manage
and/or support information technology services. Figure 1 illustrate interlinkage
between various hardware and software components across the organization.

Figure 1: Block diagram on IT Infrastructure support across organization

2.7. Information Systems

The term “Information System” combining of users, IT Infrastructure (hardware
and software), technology and process to complete a given goal. An information
system is a software system to capture, transmit, store, retrieve, manipulate, or

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 display information, thereby supporting people, organizations, or other software
system.
2.7.1. Components of Information Systems
Information Systems use software, hardware, data and procedures to process
large amounts of information and to perform complex calculations.
2.7.1. Types of Information Systems
a. Transaction processing systems, such as online air ticket booking
systems, collect data from users and generate an airline ticket and a bill.
b. Customer relationship systems, track customer activities, purchasing
trends, product defects and customer inquiries. They allow customers to interact
with companies for service, product feedback and problem resolutions.
c. Business intelligence systems, predict future sales patterns, summarize
current costs and forecast revenues.
d. Knowledge management systems, analyze, organize and share knowledge
with organization members for innovation and improved performance.
e. Personal Information Systems, Such an information system can manage
and store information for a private person. Examples are an address book or
address database and an audio CD collection.

f. Enterprise (or organizational) information systems, An enterprise

information system is tailored toward the support of an organization. We
distinguish between generic types and technologies of information systems and
information systems for certain types of organizations. The former class of

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 enterprise information systems supports functionality that can be used by a wide
range of organizations.
Various types of enterprise information systems

(a). Enterprises Resource Planning Systems - An enterprise resource planning

(ERP) system is an information system that supports the main business
processes of an organization— for example, human resource management,
sales, marketing, management, financial accounting, controlling, and logistics.
(b). Enterprises Resource Planning Systems- A procurement system is an
information system that helps an organization automate the purchasing process.
The aim of a procurement system is to acquire what is needed to keep the
business processes running at minimal cost. With the available inventory, the
expected arrival of ordered goods, and forecasts based on sales and production
plans, the procurement system determines the requirements and generates new
orders.
(c). Manufacturing Systems- Manufacturing systems support the production
processes in organizations. Driven by information, such as the bill of materials
(BOM), inventory levels, and available capacity, they plan the production
process. With increasing automation of production processes, manufacturing
systems have become more and more important.
(d). Sales and Marketing Systems- Sales and marketing systems need to
process customer orders by taking into account issues such as availability.
These systems are driven by software addressing the four p’s: product, price,
place, and promotion.

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 (e). Delivery System- A delivery system is an information system that supports
the delivery of goods to customers. The task of these systems is to plan and
schedule when and in what order customers receive their products.
(f). Finance System- Among the oldest information systems are finance
systems. These systems support the flow of money within and between
organizations. Finance systems typically provide accounting functionality to
maintain a consistent and auditable set of books for reporting and management
support.
(g). Product Design Systems - Enterprise information systems not only support
the production of products, they also support the design of products. Examples
are computer-aided design (CAD) systems and product data management
(PDM) systems.
(h). Workflow Management Systems. Many organizations aim to automate their
business processes. To this end, they have to specify in which order the
activities of a business process must be executed and which person has to
execute an activity at which time.
(i). Data Warehouses. A data warehouse is a large database that stores
historical and up to-date information from a variety of sources.
(j). Business Intelligence Systems. A business intelligence system provides
tools to analyze the performance—that is, the efficiency and the effectiveness—
of running business processes. These tools extract information on the business
processes from the data available in an organization.

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Information System Concepts
 Information systems and decision structure

Information Characteristic
Decision Structure
AdHoc
Strategic Decisions Unstructured
Strategic Decision Support Summarized
Un- structured Management Infrequent
Executive/ System Forward Looking
Directors
External
Wide Scope
Semi Tactical Management Management
Tactical Decisions Business Unit Managers/ Self
structured directed teams Information System
Pre-specified
Scheduled
Detailed
Structured Transaction
Operational Management Frequent
Operational Decisions Operational Managers/ Self-Directed Processing System Historical
Teams Internal
Narrow Focus

Figure 1(a): Information Systems and Decision Structure across levels of

organization (Source: O’Brien and Markus, 2011)

A more functional classification of information can be done on the basis of types

of decisions.
Information required at different levels of Management (see figure 1(a)) can be
classified into (i) Operational; (ii) Tactical; (iii) Strategic

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Information System Concepts
 Figure 1(b), illustrate a simplified form of information requirement at various
levels of management

Strategic
Top

Middle

Lower Operational

(i) Operational Information:

Definition and Scope: Operational information relates to the day-to-day
operations of the organization and thus, is useful in exercising control over
the operations that are repetitive in nature. Since such activities are
controlled at lower levels of management, operational information is needed
by the lower management.
Nature of Information current and historical data
Source of data: internal source of data.

Example
Function Area Use of Information
Treasuring The information regarding the cash position on day-to-day basis is
Function monitored and controlled at the lower levels of management
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 Marketing Daily and weekly sales information is used by lower level manager to
function monitor the performance of the sales force.

(ii) Tactical Information:

Definition and Scope: Tactical information helps middle level managers
allocating resources and establishing controls to implement the top level
plans of the organization.
Nature of information: Predictive, focusing on short-term trends. It may be
partly current and partly historical.
Source: internal as well external sources

Function Area Use of Information

Finance Function Information regarding the alternative sources of funds and their uses
in the short run, opportunities for deployment of surplus funds in
short- term securities

(iii) Strategic Information:

Definition and Scope: Strategic information is used by managers to define
goals and priorities, initiate new programmes and develop policies for
acquisition and use of corporate resources.Needed for making choices
among the business options.
Nature of information: Predictive in nature, relies heavily on external
sources of data, has a long-term perspective, and is mostly in summary form.
Source: internal as well external sources
Example
Function Area Use of Information
Project Future project planning (including Project Financing Decision)
Management

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 3. Applications of Information Systems

Information
Systems

Support of Business Operations Support Management Support of

Operations Systems Support System Managerial Decision
Making

Specialized Transaction Process Enterprise Executive Specialized

Management Decision
Processing Processing Control Collaboration Information Processing
Information Support
System System System System System System
System Systems
Processing Control of Team and
Prespecified
Business industrial Workgroup
Reporting for Information
Transactions Processes Collaboration Information
Managers
Decision Tailored for
Support executives
Expert Knowledge Strategic Functional
Systems Management Information Business
System System Systems

Expert Advice Manage Support Support Basic

to Decision Organizational Competitive Business
Makers Knowledge Advantage Functions

(Source: O’ Brien and Markus, 2011) 17

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Information System Concepts
 3.1 Operations Support Systems (OSS) produce a variety of information
products for internal and external use, such as processing business
transactions, controlling industrial processes, supporting enterprise
communications and collaborations, and updating corporate databases
effectively. They do not emphasize the specific information products that can
best be used by managers. Further processing by management information
systems is usually required.

3.1.1. Classification within Operations Support Systems (OSS)-

a. Specialized Processing System

b. Transaction Processing System
c. Process Control System
d. Enterprise collaboration System

3.2 Management Support System (MSS) is more specifically focus on the

process of providing information and support for decision-making by
different levels of responsibilities of the managers and business
professionals
Under Management Support System (MSS) various Information systems are
covered as mentioned following:
3.2.1 Management Information Systems (MIS): provide information in the
form of reports and displays to managers and many business professionals that
support their day-to-day decision-making needs. Usually the information has
been specified in advance to adequately meet the expectations on operational

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 and tactical levels of the organization, where the decision making situations are
more structured and better defined.
3.2.2 Decision Support Systems (DSS) are computer-based information
systems that provide interactive information support to managers and business
professionals during the decision-making process. DSS use analytical models,
specialized databases, a decision maker's own insights and judgments, and an
interactive, computer-based modeling process to support semi-structured
business

3.2.3 Executive Information Systems (EIS)or Executive Support

Systems (ESS) are information systems that combine many of the futures of
MIS and DSS. Here the information is presented in forms tailored to the
preferences of the executives using the system, such as graphical user
interface, customized to the executives graphics displays, exception reporting,
trend analysis, and abilities to 'drill-down' and retrieve displays of related
information quickly at lower levels of detail.
3.2.4 Specialized Processing Systems (PS) are information systems
characterized as functional business systems, strategic information systems,
knowledge management systems, and expert systems.
It is important to realize that business applications of information systems in the
real world are typically integrated combinations of all these types of information
systems. In practice, all these different types and roles of information systems
are combined into integrated or Cross-Functional Business Information
Systems that provide a variety of functions. Thus, most information systems are
designed to produce information and support decision making for various levels
of management and business functions, as well as perform record-keeping and

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 transaction-processing chores. Whenever you analyze or work with an
information system, you probably see that it provides information for a variety of
managerial levels and business functions.

The Business
Enterprise
Information
Strategic/ Technology Customer Value
Processes/ Structure/ Business Value
Culture

Business / IT Challenges Business / IT Development Business/ IT Goals

 Speed and flexibility  Use of the internet,  Give Customers what
requirements of product intranets, extranets, and the they want, when and
(Source: O’ Brien and
development, manufacturing,Markus, 2011)
Web as the primary IT how they want it, at the
and delivery cycles. Infrastructure lowest cost.
 Reengineering and cross  Diffusion of Web Technology  Coordination of
functional integration of to internetwork employees, manufacturing and
business processes using customers, and suppliers. business processes with
internet technologies  Global networked suppliers and customers.
 Integration of e-business and computing, collaboration,  Marketing channel
e-commerce into the and decision support partnerships with
organization’s strategies, systems. suppliers and
processes, structure and distributors.
culture

4. Management Information Systems and Decision Making

The functional areas or departments—accounting, finance,

production/operations, marketing and sales, human resources, and engineering
and design—are supported by ISs designed for their particular reporting needs.
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 General-purpose reporting systems are referred to as management information
systems (MIS). Their objective is to provide reports to managers for tracking
operations, monitoring, and control. Typically, a functional system provides
reports about such topics as operational efficiency, effectiveness, and
productivity by extracting information from databases and processing it
according to the needs of the user. Types of reports are the following:
Periodic: These reports are created or run according to a pre-set schedule.
Examples are daily, weekly, and quarterly. Reports are easily distributed via e-
mail, blogs, internal web sites (called intranets), or other electronic media.
Periodic reports are also easily ignored if workers don’t find them worth the time
to review.
Exception: Exception reports are generated only when something is outside the
norm, either higher or lower than expected. Sales in hardware stores prior to a
hurricane may be much higher than the norm. Or sales of fresh produce may
drop during a food contamination crisis. Exception reports are more likely to be
read because workers know that some unusual event or deviation has occurred.
Ad hoc: Ad hoc reports are unplanned reports. They are generated to a screen
or in print on an as needed basis. They are generated on request to learn more
about a situation, problem, or opportunity
5. Information System Life Cycle (ISLC)

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 Requirements

Runtime Analysis (Re) design Design Analysis

Monitoring Adjustment
Implementation

Migration Execution Production

Distribution
Configuration

Deployment

Figure 4: The Life Cycle Model (Software Development Life Cycle) of an

enterprises system

Definition of SDLC: The systems development life cycle (SDLC) is a

conceptual model used in project management that describes the stages
involved in an information system development project, from an initial feasibility
study through maintenance of the completed application.

Various SDLC methodologies have been developed to guide the processes

involved, including the waterfall model (which was the original SDLC method);
rapid application development (RAD); joint application development (JAD); the
fountain model; the spiral model; build and fix; and synchronize-and-stabilize.

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 Frequently, several models are combined into some sort of hybrid methodology.
Documentation is crucial regardless of the type of model chosen or devised for
any application, and is usually done in parallel with the development process.
Some methods work better for specific types of projects, but in the final analysis,
the most important factor for the success of a project may be how closely the
particular plan was followed.

In general, an SDLC methodology follows the following steps:

1. The existing system is evaluated. Deficiencies are identified. This can be

done by interviewing users of the system and consulting with support
personnel.

2. The new system requirements are defined. In particular, the deficiencies in

the existing system must be addressed with specific proposals for
improvement.

3. The proposed system is designed. Plans are laid out concerning the
physical construction, hardware, operating systems, programming,
communications, and security issues.

4. The new system is developed. The new components and programs must be
obtained and installed. Users of the system must be trained in its use, and
all aspects of performance must be tested. If necessary, adjustments must
be made at this stage.

5. The system is put into use. This can be done in various ways. The new
system can phased in, according to application or location, and the old
system gradually replaced. In some cases, it may be more cost-effective to
shut down the old system and implement the new system all at once.
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 6. Once the new system is up and running for a while, it should be exhaustively
evaluated. Maintenance must be kept up rigorously at all times. Users of the
system should be kept up-to-date concerning the latest modifications and
procedures.

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