BUSINESS INFORMATION SYSTEMS

Foundation Concepts: Information Systems in Business

Information systems have become as integrated into our daily business activities
as accounting, finance, operations management, marketing, human resource
management, or any other major business function. Information systems and
technologies are vital components of successful businesses and organization.
Information technology can help all kinds of businesses improve the efficiency
and effectiveness of their business processes, managerial decision making, and
workgroup collaboration, which strengthens their competitive positions in
rapidly changing marketplaces. This benefit occurs irrespective of whether the
information technology is used to support product development teams, customer
support processes, e-commerce transactions, or any other business activity.
A system is defined as a set of interrelated components, with a clearly defined
boundary, working together to achieve a common set of objectives by accepting
inputs and producing outputs in an organized transformation process.
Systems have three basic functions:
• Input: Involves capturing and assembling elements that enter the system to be
processed. For example, raw materials, energy, data, and human effort must be
secured and organized for processing.
• Processing: Involves transformation processes that convert input into output.
Examples are manufacturing processes, the human breathing process, or
mathematical calculations etc.
• Output : Involves transferring elements that have been produced by a
transformation process to their ultimate destination. For example, finished
products, human services, and management information must be transmitted to
their human users.
An information system (IS) can be any organized combination of people,
hardware, software, communications networks, data resources, and policies and
procedures that stores, retrieves, transforms, and disseminates information in an
organization. People rely on modern information systems to communicate with
one another using a variety of physical devices (hardware), information
processing instructions and procedures (software), communications channels
(networks), and stored data (data resources). . Information systems provide an
organization with support for business processes and operations, decision
making, and competitive advantage.
Our basic IS model shows that an information system consists of five major
resources: people, hardware, software, data, and networks.
People Resources: Specialists—systems analysts, software developers, systems
operators. End Users—anyone else who uses information systems.
Hardware Resources :Machines—computers, video monitors, magnetic disk
drives, printers, optical scanners. Media—floppy disks, magnetic tape, optical
disks, plastic cards, paper forms.
Software Resources Programs—operating system programs, spreadsheet
programs, word processing programs, payroll programs.
Procedures—data entry procedures, error correction procedures, paycheck
distribution procedures. Data Resources Product descriptions, customer records,
employee files, inventory databases.
Network Resources: Communications media, communications processors,
network access, control software. Information Products Management reports
and business documents using text and graphics displays, audio responses, and
paper forms.
MANAGEMENT INFORMATION SYSTEMS
MIS is a collection of systems and processes that facilitate data collection,
compilation, and reporting within the enterprise.Or, MIS is an integrated system
of man and machine for providing the information to support the operations,
management and the decision making function in the organization.MIS is more
focused on the strategic use of technology to support business
objectives.Management information systems (MIS) is a discipline that sits at
the intersection of the business and computing disciplines, to assist
organizations in digitizing work and managing an increasingly remote
workforce. MIS professionals have specialized knowledge in areas such as data
analytics, software development, and project management, allowing them to
assess and adopt new technologies to enhance business processes.
DATA,INFORMATION,KNOWLEDGE
Data is a collection of text, numbers,symbols with no meaning(raw facts and
figures).It can not be used in decision making process.Data are non-random
symbols that represent the values of attributes or events.
The conversion of data into meaningful information is known as data
processing.Or,Information is usually the processed outcome of data.
Data that has been processed into a form that is meaningful to the recipient and
is of real and perceived value in current or procespective actions or
decisions.Data doesnot lose its value due to continuous use.Infact its value will
be increased due to high credibility obtained.Data are obtained automatically as
a result of a routine procedure such as invoicing or measurement processes.

● Information is data transformed in such a way that it helps to reduce

future uncertainity and therefore contributes to decision making.

Featuers of information:

1)it takes a definite form.

2)it has real or perceived value.
3)It is useful for making decisions and meaningful to the recipient.

Difference between data and information

CHARACTERISTICS OF INFORMATION

1.ACCURACY:The quality of management decisions depends on the accuracy

of the information.If the decision is wrong,the decision based on this
information will also go wrong.

2.FORM:The user of the information should get information in a form which is

suitable to his requirement.

3.COMPLETENESS:Information must include all material facts which are

necessary for decision making. Information which is highly necessary to make
decision should not be omitted.

4.TIMELINESS:Information should be available as and when it is needed.

5.RELEVANCE
Information gives its value if it is relevant to the decision making context.

6.RELIABILITY
Information should not be collected from unreliable sources.

TYPES OF INFORMATION

Information can be classified on the basis of information requirements of

different levels of management.
❑ Information can be classified on the basis of information requirements of
different levels of management.
1)Strategic information
❑ Used by the top level management
❑ Used for the broad objectives and policies of an organisation.
2)Tactical information
❑ Used by middle level management(who undertakes activities like
budgeting,analysing varaiances and making cash flow forecasts) for the
effective utilisation of resources of an organisation to achieve the
objectives laid down by the top level management.
❑ Supply information to strategic level decision making.
3)Operational information
❑ Used by the bottom(lower) level management
❑ Used for implementing and executing operational plans.

❑ Strategic Information − Strategic information is concerned with long

term policy decisions that defines the objectives of a business and checks
how well these objectives are met. For example, acquiring a new plant, a
new product, diversification of business etc, comes under strategic
information.
❑ Tactical Information − Tactical information is concerned with the
information needed for exercising control over business resources, like
budgeting, quality control, service level, inventory level, productivity
level etc.
❑ Operational Information − Operational information is concerned with
plant/business level information and is used to ensure proper conduction
of specific operational tasks as planned/intended. Various operator
specific, machine specific and shift specific jobs for quality control
checks comes under this category.
KNOWLEDGE
Business knowledge is an important strategic asset.It is a sum of skills,
experiences, capabilities and insight which you collectively create and rely on in
your business. It affects all the activities in and around your business.

Features of knowledge:
● Infinite
● Dynamic,continuous and ever expanding
● Knowledge is provisional, subject to
criticism,correction,contradiction,change or modification
● Knowledge becomes obsolete.
● Knowledge once parted to others results in no loss to the person.

TYPES OF KNOWLEDGE

1)Explicit Knowledge
❑ This is articulated knowledge recorded in documents, memos,
databases, etc. Explicit knowledge is easy to store, distribute and
communicate.
Tacit knowledge
❑ This is personal know-how or skills rooted in experience or practice
(eg aesthetic sense or intuition). Tacit knowledge is difficult to write
down, visualise or transfer.
Embedded knowledge
These are skills and understanding locked in processes, products, rules or
organisational culture (eg informal routines, codes of conduct, organisational
ethics).
Examples of knowledge that already exists in your business include:
● the skills, competencies and experiences of your workforce
● the designs and processes for your goods and services
● the industry or market data you've gained from research
● your files or documents (electronic or otherwise)

INFORMATION TECHNOLOGY AND COMMUNICATION

TECHNOLOGY
Information and Communication Technology (ICT) refers to the use of digital
technologies to process, store, and exchange information.UNESCO has defined
ICT as forms of technology that are used to
transmit,process,store ,create,display ,or exchange information by electronic
means. ICT covers any product that will store,retrieve,manipulate,transmit or
receive information electronically in a digital form.ICT can assist business
activities including design, manufacturing, R&D, distribution and sales and
feedback.ICT makes a business more efficient, effective and promptly respond
to customers needs. ICT is the infrastructure and components that enable
modern computing.
⮚ ICT components include the following:
▪ Software,Hardware
▪ Middle ware
▪ wired networks
▪ wireless networks
▪ Communication technologies,protocols and interfaces
▪ Cloud
▪ Information security and governance policies

APPLICATIONS OF ICT

❑ ICT in business(e-commerce)
❑ ICT in home(Internet of Things(iot), refers to the collective network of
connected devices and the technology that facilitates communication
between devices and the cloud, as well as between the devices themselves.)
❑ ICT in education(google classsroom)
❑ ICT in financial services(ATM)
❑ ICT in public service(election commission portal,police control room)
❑ ICT in healthcare(online patient consultation)
❑ ICT in agriculture(One of the most significant ICT applications in agriculture
is precision farming. Utilizing GPS and GIS technologies, precision farming
allows farmers to monitor their fields closely, ensuring optimal utilization of
resources and maximizing yield.)
 ● cloud computing is the on-demand delivery of computing services—
including servers, storage, databases, networking, software, analytics,
and intelligence—over the Internet (“the cloud”) to offer faster
innovation, flexible resources, and economies of scale.

TYPES OF COMMUNICATION DEVICES

New Communication technologies have connected not only people but also
business firms changing the way people interact on a daily
basis.Communication devices makes information accessible quickly and easily
in all parts of the world.Communication devices are some kind of hardware
device capable of transmitting an analog or digital signal over the telephone or
other communications wiredly or wirelessly.
History of communication devices
⮚ Direct communication
⮚ Wired communication(telephone,telegraph,fax)
⮚ Wireless communication(radio,television)
⮚ Communication over computer networks(Email,voice systems,voice
mail,audio-conferencing,video-
conferencing,mobilephone,smartphone,laptops,document imaging)
ADVANTAGES AND DISADVANTAGES OF USING
COMMUNICATION DEVICES

Advantages Disadvantages

1.Speed trip 1.Volume of data

2.Wide Coverage 2.Cost of development

3.Low Cost 3.Legal status

4.Exchange of feedback 4.Undelivered data

5.Managing global operation 5.Dependancy

DEMERITS OF ICT
● Information overload
● Staff resistance
● Systems may be inflexible
● Job loss
● If computer fails what is next??
● Training can be costly
● Hackers and viruses

The Role of e-Business in Business

▪ we define e-business as the use of Internet technologies to work and
empower business processes, e-commerce, and enterprise collaboration
within a company and with its customers, suppliers, and other business
stakeholders.
▪ Any online exchange of information, money, resources, services, or any
combination thereof falls under the e-business umbrella(online exchange
of value .).
▪ The Internet and Internet-like networks—those inside the enterprise
(intranet) and between an enterprise and its trading partners (extranet) —
 have become the primary information technology infrastructure that
supports these-business applications of many companies.
▪ Companies rely on e-business applications to
(1) reengineer internal business processes,
(2) implement e-commerce systems with their customers and suppliers
(3) promote enterprise collaboration among business teams and
workgroups.

System Characteristics
▪ a system does not exist in a vacuum; rather, it exists and functions in an
environment containing other systems.
▪ If a system is one of the components of a larger system, it is a subsystem ,
and the larger system is its environment.
▪ an open system , that is, a system that interacts with other systems in its
environment.
▪ a system that has the ability to change itself or its environment to survive
is an adaptive system .
Feedback and Control
The system concept becomes even more useful by including two additional
elements: feedback and control. A system with feedback and control
functions is sometimes called a cybernetic system, that is, a self-monitoring,
self-regulating system.
• Feedback is data about the performance of a system. For example, data
about sales performance are feedback to a sales manager.eg:D
ata about the speed, altitude, attitude, and direction of an aircraft are
feedback to the aircraft’s pilot or autopilot.
• Control involves monitoring and evaluating feedback to determine whether
a system is moving toward the achievement of its goal. The control function
then makes the necessary adjustments to a system’s input and processing
components to ensure that it produces proper output.
A business is an example of an organizational system in which economic
resources (input) are transformed by various business processes
(processing) into goods and services (output).Information systems provide
information (feedback) about the operations of the system to management
for the direction and maintenance of the system (control) as it exchanges
inputs and outputs with its environment.
Components of an information system
Information System Activities
• Input. Optical scanning of bar-coded tags on merchandise.
• Processing. Calculating employee pay, taxes, and other payroll deductions.
• Output. Producing reports and displays about sales performance.
• Storage. Maintaining records on customers, employees, and products.
• Control. Generating audible signals to indicate proper entry of sales data.
MANAGEMENT INFORMATION SYSTEMS
MIS is an integrated user machine system for providing information to
support operations,management,decision making functions in an
organisation .The system utilises
• Computer hardware and software
• Manual procedures
• Models for analysis ,planning,control and decision making(a structured
way for organizations or individuals to make decisions.)
• Database
SUBSYSTEMS OF AN MIS:

Two approaches of defining the subsystems of an MIS are :

ORGANIZATIONAL FUNCTION SUBSYSTEMS:

• According to the organizational functions which they support

Major Functional subsystem Some typical uses

Marketing Sales forecasting, sales planning,
 customer and sales analysis
Manufacturing Production planning and scheduling,
cost control analysis

Logistics Planning and control of purchasing,

inventories, distribution

Personnel Planning personnel requirements,

analyzing performance, salary
administration
Finance and accounting Finance and accounting Financial
analysis, cost analysis,
capital requirements planning, income
measurement
Information system planning,
Information processing cost-effectiveness analysis
Top management Strategic planning, resource allocation

ACTIVITIES SUBSYSTEMS:
• According to managerial activities for which they are used.
Activity subsystem Some typical uses

Transaction processing Processing of orders, shipments, and

receipts

Operational control Scheduling of activities and

 performance
reports

Management control Formulation of budgets and resource

allocation
Management control
Strategic planning Formulation of objectives and
strategies

Conceptual Structure of MIS:

The conceptual structure of a MIS is defined as a federation of functional
subsystems, each of which is divided into four major information processing
components :
• Transaction processing,
• Operational control information system support,
• Managerial control information system support and
• Strategic planning information system support

1. Production Subsystem
Production info system support the production function which includes all
activities concerned with the planning & control of the processes that produce
goods or service. In the production subsystem there are transaction processing,
operation control, managerial control & strategic planning. The typical info
required at the transaction processing level is production orders. The production
order is generally based on the sales orders required by the company.
At the same time operational control level requires detailed reports comparing
actual performance with the production schedule & identifies the weak areas.
However management control requires a summary report which compares the
overall performance to actual performance. Strategic planning is concerned with
simplifying, automating ,integrating many of the activities needed to produce
goods.
2. Marketing Subsystem
Marketing is another important function of an organization. The success of an
organization depends on the efficiency of marketing. The marketing function of
an organization is concerned with the planning, promotion & sale of existing
products in existing markets & the development of new products & new
markets to satisfy existing & potential customers. Thus marketing performs a
vital function in the operation of the business enterprise.
MIS help analyze demand for different products in different regions. It’s mainly
concerned with the marketing right product to target customers. Marketing info
system provides info for planning, control & transaction processing in the
market function. Strategic & operational info system assists marketing
managers in product planning, pricing decisions & advertising & sales
promotion strategies. MIS provides info that helps management to decide the
number of sales executives to assign specific products in specific geographical
areas.
The basic transaction is to be processed at transaction processing level is
customer’s orders & prepares invoice & bills. The operational control activity
includes the day to day scheduling of sales & promotional activities. Managerial
control level is concerned with comparison of overall performance with the
marketing plan. They require info relating to customers, competitors etc.
consideration of new markets & new product marketing strategies are the issues
dealt at the strategic planning level.
3. Human Resource Subsystem
The HRM function is concerned with the recruitment, placement, compensation
& development of employees in an organization. It mainly helps in record
keeping & employee evaluation. Every organization must maintain correct
record of its employees.
Produce pay cheques & pay reports, maintain personal records & analyze the
use of personnel in business operation are the important activities done at the
transaction processing level. Management control level conducts budget
analysis, turnover analysis etc & showing the variances resulting from planned
& actual performance. Strategic planning of personnel involved with the
planning of alternative strategies for recruiting, training & compensating
employees. In this regard they have to collect different type of info from
external sources.
4. Finance & Accounting Subsystem
Financial subsystem undertakes the function of arranging adequate finance to
the business at min cost. This function includes granting credit to customers,
cash management & financial arrangement. Accounting info system record &
report the flow of funds through the organization on a historical basis &
prepares important financial statements like profit & loss account & balance
sheet.
Transaction processing system engaged in the legal & historical record keeping
& produces financial statements. They undertake activities like order
processing, inventory control, payroll & general ledger systems. Management
control level focuses on planning & control of business operations & they
compare the actual cost of financial resources with the targeted cost. The
strategic planning level for accounting & finance involves in the long term
strategies connected with financial & accounting matters.

5. Logistics Subsystem
The logistic subsystem includes activities like purchasing, receiving, inventory
control & distribution. The transactions to be processed are purchase
requisitions, manufacturing orders, receiving reports & shipping orders. The
operational control function make use of info contained in reports like out of
stock items, over stocked items, inventory turn over reports etc managerial
control level compares the planned & actual inventory levels, cost of purchased
items, stock outs etc analysis of new distribution strategies, adoption of new
policy towards the sellers are some of the common tasks dealt at the strategic
planning level.
6. Information Processing Subsystems
It’s the responsibility of the info processing subsystem to provide the necessary
info processing services & resources. Typical transactions for info processing
are requests for processing, changes in data & program. Managerial control over
info processing requires data on planned & actual performance. Acquisition of
hardware & software & automation of info processing etc are some of the
strategic decision to b taken at the top level management.

STRUCTURE OF A MANAGEMENT INFORMATION SYSTEM

Information system can be classified in terms of the following.
1. Operating elements
2. Decision support
3. Management activity
4. Organizational function
1. OPERATING ELEMENTS OF AN INFORMATION SYSTEM:

A. PHYSICAL COMPONENTS:
• Hardware :
Hardware must provide for five major functions:
1. Input or entry
2. Output
3. Secondary storage for data and programs
4. Central processor
5. Communications
• Software :
The software can be classified into two major types:
System software & Application software
• Database
The database contains all data utilized by application software.
• Procedures
Three major types of procedures are required:
1. User instructions
2. Instructions for preparation of input by data preparation personnel
3. Operating instructions for computer operations personnel
• Operations personnel
Computer operators, systems analysts, programmers, data preparation
personnel,
information systems management, data administration, etc.
C. OUTPUTS FOR USERS :
1. Transaction documents or screens
2. Preplanned reports
3. Preplanned inquiry responses
4. Ad hoc reports and inquiries responses
5. User-machine dialog results

Transactional documents are of the following types :

1. Informational
Reports or confirms that action that will be or has been taken.
2. Action
Requests or instructions for action.
3. Investigational
Reports exceptions, errors, or other conditions that may require investigation.
Used forcontrol and future reference.

Reports, inquiry responses, and dialog results provide four types of

information:
1. Monitoring information
Monitoring information provides a basis for problem finding and diagnosis and
may lead to action, but no action is specified by the information itself.
2. Problem finding information
The information is presented in a format that promotes identification of
problems.
3. Action information
The information is presented with action specified or implied.
4. Decision support
The report, inquiry, result, or dialog is oriented to performing analysis and
making a decision.
Preplanned reports have a regular content and format and are usually run on a
regularly scheduled basis.
Prepared at a given time, they reflect one of three conditions with respect
to the time period they cover:
1. They describe status or condition at a point in time.
2. They summarize what has occurred during a period such as a week, month, or
year.
3. They present results to date and project to the end of the period.
Ad hoc reports and inquiry responses occur at irregular intervals and require
data or analysis whose format has not been preplanned.
Ad hoc request are handled in two ways :
1. The user may be provided with a means (inquiry language) for preparing and
processing the request.
2. An information service may be available to process ad hoc requests.

2. MANAGEMENT INFORMATION SYSTEM SUPPORT FOR

DECISION MAKING
Decisions are of different types with respect to the structure that can be
provided for making
them.
• Structured, Programmable Decisions
A structured decision can be said to be programmable, in the sense that
unambiguous decision rules can be specified in advance. When a decision can
be programmed, an organization can prepare a decision rule or decision
procedure. This can be expressed as a set of steps to follow, a flowchart, a
decision table or formula. Since, structured, programmable decisions can be
pre-specified; many of these decisions can be handle by lower-level personnel
with little specialized knowledge. In many cases, it is not possible to define
adecision procedure or decision rule to handle all possible situations.
• Unstructured, Nonprogrammable Decisions
An unstructured decision can be said to be nonprogrammable. The unstructured
decision has no pre-established decision procedure, either because is too
infrequent to justify the organizational cost of preparing a decision procedure or
because the decision procedure is not understood well enough or is too
changeable to allow a stable pre-established decision support.

3. MANAGEMENT INFORMATION SYSTEM STRUCTURE BASED

ON MANAGEMENT ACTIVITY
Hierarchy of Management Activity :
The following categories of management planning and control were defined by
Anthony.
Information Requirements by Level of Management Activity
Strategic planning
● Definition of goals, policies, and general
● guidelines charting course for organization.
● Determination of organizational objectives.
Management control and tactical planning
● Acquisition of resources.
● Acquisition tactics, plant location, new products.
● Establishment and monitoring of budgets.
Operational planning and control
● Effective and efficient use of existing facilities and resources to carry
out activities within
● budget constraints.
Functions of MIS
● The primary function of MIS is to report on business operations to
support decision-making and ensure that the organization is managed
more efficiently. This will help the company reach its full potential
and thus gain a competitive advantage. Listed below are some of the
crucial functions of MIS.
Provide Easy Access to the Information
● MIS allows teams convenient access to marketing, financial or
operational information. MIS reports strategically storing large
amounts of information about the business in a central location that
managers can easily access over a network.
Data Collection
● Data from the company’s day-to-day operations are collected and
combined with data from outside sources. This allows a healthy and
functional relationship between distributors, points of sale, and any
other supply chain member.
 Performance Tracking
● As production and sales numbers are recorded and stored in a central
database, MIS plays a crucial role in keeping track of the performance
of the employees. This information helps detect issues early and make
the right decisions quickly using the latest information.
Foster Collaboration in the Workplace
● In any large company, many situations require the involvement of
multiple people or departments in decision-making.
● MIS is an effective communication channel for the teams to
collaborate and ensure that the decision-making group can access all
the data required for effective decision-making, even if they are
working from different locations.
Company Projections
● These management information systems come with trend analysis
features that will allow you to project how a business will perform in
its current configuration and how it will be affected once you have
implemented the changes you are considering.
Track the Implementation of Decisions
● MIS systems help project expectations for a particular decision. If they
decide to implement the changes, it will be necessary to continue
monitoring performance to see if the teams are on track to achieve the
desired results.
Improve Company Reporting
● One reason large companies prefer management information systems
is the effectiveness of the reporting functions. MIS reports contain
information in an easy-to-understand format, allowing management to
make timely decisions.
● The system's accessibility to people from different parts of the
organization makes it an effective communication and reporting tool.
The results, along with all the necessary supplementary data, can be
shared among colleagues.
● It is also possible to create short executive summaries that explain the
entire situation for company executives to review in situations that
require their approval.
Features of MIS
MIS have several vital features, including:
● Data integration: MIS integrates data from various departments and
functions, giving decision-makers a comprehensive view of the
organization’s data.
● Data storage: MIS stores vast data in databases, making it accessible and
retrievable when needed.
● Data processing: MIS processes data to generate meaningful information. It
can perform calculations, comparisons, and other data transformations to
produce reports and insights.
● User-friendly interface: MIS systems typically have user-friendly interfaces
that allow non-technical users to easily access and interact with data.
● Customization: MIS systems can be customized to meet an organization’s
needs. Users can define the type of information they want to access and how
it is presented.
● Real-time information: Many MIS systems offer real-time or near-real-time
data updates, ensuring decision-makers can access the most current
information to make timely decisions.
● Report generation: MIS generates various reports, including standard
reports, ad-hoc reports, and exception reports. These reports help managers
monitor performance and make informed decisions.
● Security: Access to sensitive information is restricted, and measures are in
place to protect data from unauthorized access or breaches.
● Accessibility: MIS can be accessed remotely, allowing decision-makers to
retrieve information from various locations.
● Integration with other systems: MIS systems can integrate with other
software and systems of the organization, such as ERP (Enterprise Resource
Planning) systems, Customer relationship management (CRM) systems,
Human capital management (HCM) systems, etc.
● Mobile compatibility: Many modern MIS systems are compatible with
mobile devices, allowing users to access critical information on the go.
● Data analytics: Advanced MIS systems may incorporate data analytics and
business intelligence tools to provide deeper insights and support predictive
analytics
Characteristics of MIS

The general characteristics of an MIS are:

● Use a variety of internal data sources.
● Provide reports on the routine operations of an organization.
● Allow users to develop custom reports, such as detailed reports.
● Provide a variety of different reports, both scheduled and on demand.
● Must be accurate and avoid including estimates or probable expenses.
● Provide reports in various formats, including hard copies and electronic
copies.
● The information must be relevant for making a strategic decision.
Typically, an MIS is organized along the functional areas of an organization.
So, the finance department will have a financial MIS, the HR department will
have a human resources MIS, etc.

Benefits of MIS
● Allows company management access to a single database to manage all
transactions and planning processes.
● It saves time and increases work effectiveness considerably.
● Ensures improved data analysis and decision-making.
● Maintains an accurate record of the system’s inputs and outputs and
tracks employee performance.
● Critically analyze a company’s and its employee’s strengths and weaknesses.
● The CEOs or executives can take greater company financial and operational
control.
Limitations of MIS
Even though MIS has many benefits, it also has its limitations, which are
discussed below:
● While MIS may solve some acute problems, it is not a solution to all
problems of an organization.
● Involves maintenance and employee training costs.
● It cannot meet everyone's particular demands.
● If misdesigned, MIS does not serve the management and is irrelevant.
● The MIS is only good if the primary data is updated.
● The MIS provides most information in quantitive form. Hence, it ignores
qualitative information, such as an employee's behaviour.

Purpose of MIS
1. Automation of Processes
One of the most common purposes of a management information system is the
automation of different processes. Since MIS can now be found in different
software, the tasks involved are now made easier.

The software removes the need for manual labor when it comes to tasks such as
producing analysis reports. This is an important feature especially in
competitive fields like the equation sector.

In these kinds of environments, time saved equates to efficiency and improved

productivity. Therefore, time can be redirected to other projects and things that
are beneficial to the institution. So, organizations benefit from tools that help
them save time and other resources.

2. Data Collection
As discussed, the MIS primarily deals with data. Data plays an important role in
every organization regardless of field. It can even be considered the backbone
of operations. Without it, institutions may fail to deliver high-quality services.
So, data collection is an integral part of these organizations. This step may be
tedious as it deals with a lot of figures and information.

This is where the MIS software comes in. Another purpose of a management
information system is to help organizations from all fields collect data in a
faster manner. For example, the software can remove the need for respondents
to be physically present.

There are MIS tools that offer online data collection features. This way, the
management can collect data simultaneously.

3. Storage and Sorting of Data

After data collection, one of the problems that organizations usually face is data
storage and sorting. As institutions expand operations, it may be more
complicated to sort and store collected data.

A management information system solves the problem. As it aids data

collection, it also provides the mechanism in sorting this data however you want
it to be sorted.

For example, school MIS software can help you sort student data by year level,
age, or gender. These kinds of organizations will be useful for the future needs
of the school. It also cuts down the time needed to find information as it is
sorted and readily available.

The MIS software also acts as your storage. You can access all stored data
whenever needed by the organization.

4. Provides Useful Reports

The collected data means nothing if it can’t be put together to provide a
comprehensive report.

Data will only be useful once it can be interpreted. For example, the attendance
of school teachers is just that until it is used for payroll computation.

A good MIS should be able to analyze and provide useful reports like this.
These reports will then be used for an informed decision-making process. This
way, the management can make sure that future plans are effective.
These plans can either address problems determined from the reports. Or
improve an already effective program, which was also evaluated by the said
report.

A tool cannot fully fulfill the purpose of a management information system if

these points are missing. The management information system software must be
able to guide your organization from data collection to analysis.

MIS AND OTHER ACADEMIC DISPLINES

The four main disciplines of Management Information System are:

1. Managerial Accounting

This branch of accounting is concerned with cost analysis and its behaviour
which is useful for managerial decisions.Cost analysis is used in managerial
accounting to determine the most relevant cost for decision making. It employs
techniques such as capital budgeting, break-even analysis, transfer pricing etc.
It is mainly oriented towards internal management and control and is
therefore closely identified with MIS. Managerial accounting knowledge is of
great help in ascertaining the information requirements, carrying analysis, in
designing forms for procuring and providing information. In fact, a managerial
accountant has a clear-cut knowledge about the relevant and specific
information requirement of executives for performing functions in different
departments. For example, to determine the breakeven point the information
required is about fixed cost, variable cost, and selling price of product. He also
knows the sources of information availability. All these facts known to
managerial accountants were utilized in the evolution of MIS.
2. Management Science

It means the application of scientific method and quantitative analysis

techniques (or Operations Research Techniques) to management
problems. The use of management science methods emphasize on the use
of systematic approach to problem solving and application of scientific
method to investigation. It utilizes mathematical and statistical
procedures for analysing problems. Finally, it aims at achieving optimal
decision. Management techniques were incorporated in the MIS design to
make quantitative and analytical information available to the users of
MIS. The information system so designed promoted quantitative
 information and procedures, to facilitate model building for future plans
and activities and to simulate the real situations even before they occur.

3. Management Theory

There were several management theories-behavioural theory, empirical

theory, decision theory, quantitative theory and management process
theory. According to decision theory, the most important task of
managers is to make decisions.

The second theory known as ‘Management process’ is the most wide

spread approach to management. Under this management is defined in
terms of what managers do. According to this, management performs the
functions of planning, organizing, staffing, directing and controlling.

The knowledge of these management theories enabled the MIS designers

to ascertain the type of decisions made and functions performed by
executives in business organisations.

4. Computers.

Computers were not originally planned for processing information but

today this is the major use for which they are applied in business
situations. The reasons for this are their speed of processing, calculating,
and the retrieval of data. In fact, computer technology has been
considered a major factor in MIS development. It has come-out as a
significant tool in information processing and storage.
MIS AS AN EVOLVING CONCEPT

• MIS Vs Data Processing

• MIS Vs Decision Support System
• MIS Vs Information Resource Management
• End User Computing