BIM seventh Semester, TU

ITC 226: Management Information System

Exam Question pattern
Group A
Brief answer questions
10*1=10
Group B
Short answer questions
5*4=20
Group C:
Comprehensive questions
2*5=10
FM:40, Time: 2 Hrs
 Practical Exam
Group Project
5 or 6 students in each group
Practical Exam: 20 marks (project
+viva+presentation)
 Internal marks
40 marks
Assignment
Case study
Assessment exam
Attendance
Involvement in class activities
Others criterias of college/campus
 Chapter 1

Foundation of Information system

(IS) in business
 Basic concept of MIS
• Management
 Can be defined as achieving goals in a way
that makes the best use of all the available
resources
 Can be defined as a function or process and is
the art of planning, staffing, coordinating and
controlling
 .
• Information
 Information is the processed data or
Information may be considered as data that
has been organized and processed
 Information increases understanding and
helps people in taking intelligent decision
 To make a useful decision, information must
be delivered to the right person, at the right
time, in the right place
 Characteristics of Information
• Good information is that which is used and
creates value
• The characteristics of good information are:
1. Accuracy
2. Complete
3. Timeliness
4. Relevant
5. Consistent
6. Reliability
 Contd.
1. Accuracy
 Accuracy of an information depends upon
the truthfulness with which data is collected
from either primary or secondary sources
 Decisions are incorrect and may have
disaster if inaccurate information is obtained.
 Contd.
2. Complete
 Information is considered as complete if it
tells its user all what he/she wishes to know
about a particular situation/problem
 The decision maker needs complete
information for solving problems without any
manipulation
 contd
3. Timeliness
 Information should be available when needed
i.e. right information to right person at the
right time
 Delayed information loose its importance
 Contd.
4. Relevance
 Available information needs to be updated all
the time so that it could match its current
utility
5. Reliability
 Information should be reliable and external
force relied upon indication.
 Contd.
6. Consistent
 All the information should be consistent and
should be based on same assumption, time
period and other factors.
 Process of converting data into
information
Data collection-cleaning-classification-sorting-
processing-storing-retrieval -dissemination
1. Collection:- Survey, interview, newspaper
etc.
2. Cleaning:- reduce noise and redundancy
3. Classification
4. Sorting, adding, merging
5. Summarization and Report generation
 System
 Can be defined as a group of interrelated
components working together toward a
common goal by accepting input and
producing output
 Each individual components of a system has
its own goal but together these parts works in
harmony so that the goal and the common
goal of the system are harmonize.
 Contd.
 A system has three basic interacting
components or functions:
 Input
 Processing
 Output
 Management Information System
 Can be defined as a system that provides
information to support managerial functions
like planning, organizing, controlling and
coordinating
 MIS includes files, hardware, software, models
of processing, storing, retrieving and
transmitting information to the users.
 Information Technology
 It is the technology which supports activities
involving the creation, storage, manipulation
and communication of information together
with their related methods and application
 It includes tools and techniques that supports
the design and development of information
system i.e. hardware, software,
communication network etc.
Basic strategy of IT in the business use
1. Lower cost
 Use IT to reduce the cost of business process
2. Innovate
 Create new products and services that
include IT components
 Make radical changes to business process
with IT that dramatically reduce cost,
improve quality
 Contd.
3. Promote Growth
 Use IT to manage regional and global business
expansion
 Use IT to diversify and integrate into other
products and services
 Conts.
4. Develop Alliance
 Develop enterprises information systems
linked by the internet and extranet that
support strategic business relationship with
customers, suppliers and others.
 Information System
Information system can be defined technically
as a set of interrelated components that
collect , processes, stores and distribute
information to support decision making and
control in an organization.
IS contains information about significant
people , place and things within the
organization or in the environment
surrounding
 Components of IS
Basically IS has five resources:
a)People: people are the users who uses the
system. Normally there are two types of
people resources:
 end-user: who uses IS
 IS specialist: system analyst, system
developers, system operators
 IS components contd….
b) Hardware resources: includes all physical
devices that helps to process and store the
required information. E.g. harddisk,
computer
c) Software resources: It is simply a collection of
programs, files and all set of information
processing instruction which control the
hardware [Link]. Application
software, system software
 IS components contd…
d) Data resources: Data are the raw fact and
figures which can have different forms like
alphanumeric, image data etc. Data in the
system might be product, descriptions,
customer records, employee files etc.
e) Network: It is a path through which signal
travels from one machine to another.
Normally it consists of communication media,
communication processor and control S/W.
 IS contd….
Information system can be of formal or informal.
Formal systems are designed and developed
using a set of well-established organizational
policies, procedure and principles to co-ordinate
and facilitate communication between different
functional unit
Informal system, on the other hand do not follow
any formal or pre-established rules for collecting,
processing, storing and distributing data.
 Information Technology (IT)
IT consists of all the H/W and S/W that a firm
needs to use in order to achieve its business
objectives.
Information technologies are tools and
techniques that support the design and
development of IS.
IT is one of many tools that managers use to cope
with change. Eg. H/W,S/W,data management
technology, networking and telecom technology,
WWW.
 IT and IS
Information systems and information
technologies are interrelated
If any of them is not handled properly,
organizations will not be taking any business
advantages.
 Computer literacy
Computer literacy is the knowledge of how a
computer and its component work.
To use the IS users need to be computer
literate
Users should know about the operations of
computers such as inputting, processing,
storing, outputting and controlling.
 Information literacy
It is the ability to create and use IS to achieve
the competitive advantage
It includes computer literacy, business insights
and understanding of the organization,
management, IT and problem solving
technique.
 Data and Information
Data are the raw fact and figures from which
we start to get information
Information is the processed data
 Management Information System
MIS is defined as system that provides
information to support managerial functions
like planning, organizing, directing,
controlling, coordinating and staffing
information in a systematic and a routine
manner.
The primary goal of MIS is to support
organizational decision making.
 Objectives of MIS
Facilitate decision making process by
furnishing information in proper timeframe.
Helps in highlighting critical factors
Core competencies
Helps to create the paperless industry
Increase productivity and efficiency
Enhance supply chain management
 1.1 The fundamental role of
Information System in business
 IS and IT have revolutionized firm and
industries.
 Information systems are transforming
business and the visible result of this include
the massive use of cell phone and wireless
communication devices
 Internet has drastically reduced the cost of
business operating on a global scale
The role of Information System in
business today Contd….
 Business responses to changes in their
environment are enhanced through digital
communications, allows for time shifting
( business being conducted 24 hrs * 7 days) and
space shifting (business being conducted globally
or beyond traditional geographic boundries).
 Cloud computing, Mobile digital platform allow
more distributed work, decision making and
collaboration
The role of Information System in
business today Contd….
 Now a days web 2.0 applications are widely
adopted by organization
 There is a growing interdependence between
a firm’s IS and its business capabilities
 Business firms invest heavily in IS to achieve
six strategic business objectives:
The role of Information System in
business today Contd….
 Operational excellence
 New products and services
 Customer and supplier intimacy
 Improved decision making
 Competitive advantage
 Survival
The role of Information System in
business today Contd….

 Operational excellence :  
. Businesses can constantly improve their
efficiency of their operations in order to
achieve higher profitability
. They can do this by constantly having the
correct amount of stock in store so consumers
can always get want they want.
The role of Information System in
business today Contd….
 New product and services
. IS play a major role for businesses in creating
new products and services.
. New business models can be created and these
can describe how a company produce, create
and sell their products. 
The role of Information System in
business today Contd….
 Customer and supplier intimacy
.  The better services a company provides its
consumers with more likely they are too come
back to them and as result the more they will
buy and the supplier therefore can supply
raw materials in time at lower cost. 
The role of Information System in
business today Contd….
 Improved decision making
. I.S systems make managers to use real time
data when making a decision , therefore make
better decisions and not have to waste time
looking for  information.
The role of Information System in
business today Contd….
 Competitive advantage
. If companies use I.S. effectively they will
generally create a competitive advantage over
their rivals.
 Survival
. Business invest in IS to make their jobs as easy
as possibly and nowadays businesses should
invest in IS to survive in competitive business
market. E.g. Introduction of ATM
 1.2 Information System
 Definition…
 Dimension of Information System
• To understand IS, we must understand the
organization, management and technology
dimension of a system and their power to
provide solution to challenges and problem in
the business environment.
 1.2 Information System contd..
• The dimensions of IS are:
 Organization( structure, culture)
 Management(challenges, strategy,
innovation)
 Technology
 1.2 Information System contd…
1. Organization
 Information systems are integral part of
organization
 The key elements of an organization are its
people, business process, politics and culture
 Organization have a structure that is
composed of different levels and specialist
 1.2 Information System contd…
 The structure define a clear vision of labor
 Authority and responsibility in a business firms are
organized as a hierarchy
 Senior mgmt makes long terms strategy about
product or services
 Middle mgmt carries out the program and plan of
senior mgmt
 Operational mgmt is responsible for monitoring
the dially activities of the business
 1.2 Information System contd…
2. Management
 Managers set organizational strategy for
responding to business challenges
 In addition, managers must act creativity:
creation of new products and services and
occasionally re-creating the organization
 Managers make decision and formulate action
plans to solve organizational problem
 1.2 Information System contd…
• They set the organizational strategies for
responding to those challenges and they
allocate the human and financial resources to
coordinate the work and achieve success.
 1.2 Information System contd…
3. Technology dimension of IS
 IT is one of many tools manager use to cope with
change
 The components used in IT are:
 Computer hardware
 Computer software
 Data management technology
 Network and telecom technology
 IT infrastructure
 1.3 Business perspective of IS
• Managers and business firm invest heavily in IT
and IS because they provide real economic
value to the business
• From a business point perspective, an IS is an
important instrument for creating values for the
firm
• Investments in IT will result in superior returns
like productivity increases, revenue increases,
superior long-term strategic positioning
 1.3 Business perspective of IS
• From a business perspective, information
systems are part of a series of value-adding
activities for acquiring, transforming and
distributing information that managers can
use to improve decision making, enhance
organizational performance and ultimately
increases firm profitability, which is known as
business information value chain.
 1.3 Business perspective of IS
contd…
• An IS represents an organizational and
management solution based on IT to a
challenge or problem faced by environment.
• Some firms achieve better results than others
• Studies of returns from IT investments show
that there is considerable variation in the
returns firm receive
 1.3 Business perspective of IS
• Reasons for lower return on investment
include failure to adopt the right business
model that fit the new technology or seeking to
preserve on old business model
• IT investment can not make organizations and
managers more effective unless they are
accompained by complementary assets: assets
required to derive value from a primary
invesment.
 1.3 Business perspective of IS
• Complementary assets include:
I. Organizational assets: these include a
supportive business culture that values
efficiency and effectiveness, an appropriate
business model, efficient business process,
decentralization of authority and a strong IS
development team.
[Link] assets: these include strong senior
management support for change,
 1.3 Business perspective of IS
, incentive systems that monitor and reward
individual innovation, focus on teamwork and
collaboration, training program and a
management culture that values flexibility and
knowledge.
III. Social assets: these are not made by the firm
but the society, other firms, governments and
other key market actors such as internet,
network etc.
 1.4 The role of e-business in
business
• e-business (e’biz’nis) – the transformation of key
business processes through the use of Internet
technologies. (IBM)
• when a business has fully integrated information and
communications technologies (ICTs) into its
operations, potentially redesigning its business
processes around ICT or completely reinventing its
business model . . . e-business, is understood to be
the integration of all these activities with the internal
processes of a business through ICT. (DTI, 2000)
 The Benefits of E-business

The benefits of e-business can be summarized as:

 The opportunity to access new markets across the globe
 The chance to target market segments more effectively
 The greater speed in getting the product and services to
market
 Provide more accurate information and improve
customer service experience
 Provides convenience and comfort for customers

57
 1.4 Managerial challenges of
Information Technology
 Success in today’s business depends on
maximizing the use of internet based
technology and IS that meet the requirement
of customers, suppliers and other
stakeholders
 IT and IS should manage the organizational
business process, structure and culture of a
business enterprise
 1.4.1 success and failure with IT
 The success of an IS should also be measured
in terms of the effectiveness of the IT in
supporting an organization’s business process,
structure, culture and customer and supplier
intimacy
 If IT and IS are not managed properly, the
system will be mismanaged and can creates
technological and business failure
 1.4.2 Developing IS solutions
• Developing IS is an enormously challenging
task.
• When IS project is not properly managed, it
can run into serious trouble and as a result
loss in the cost
• Developing successful system is the joint
responsibility of IS department and end user.
 Some reasons why organizations
develop IS
• Capability: greater processing control,
increased volume
• Control: accuracy, improve consistency and
better security
• Communication: enhance communication
• Cost: cost monitoring and cost reduction
• Competitive advantage
• A manager should decide which system will be
developed, what they will do and how they
will be implemented
• A manager need to understand how IS can
change social work and work life of the firm.
 1.4.3 Challenges and ethics of IT
• Manager should know what uses of IT might
be considered improper or harmful to other
people or society? What is the proper
business use of IT? how can you protect from
computer crime and other risks of IT?
 1.4.4 Challenges of IT careers
Some challenges in IT careers are:
• New technology
• Cloud computing
• Virtualization
• Creating value
• Social networks
 1.4.5 The IS function
• Input
• Storage
• Processing
• Feedback loop
• Output
1.5 Types of Information
Systems
 Transaction processing Systems (TPS)
 TPS is the basic business system that solves
the problem of operational level of the
organization.
 TPS is a computerized system that performs
and records the daily routine transactions
necessary to conduct business e.g. sales
ordering system, hotel reservation system etc.
 At the operational level task, resources and
goals are predefined and highly structured.
 Transaction processing Systems (TPS)
 Managers need TPS to monitor the status of
external operations and they form the relation
with external environment.
 TPS are also major producers of information for
the other type of system for e.g. the payroll
system along with other accounting TPS, supplies
data to the companies, general ledger system
which is responsible for producing reports such
as income statement and balance sheet.
 Objectives of TPS
 Provide all the information required for running
the business properly and efficiently
 It provides documents and report timely
 Ensure accuracy and integrity of data
 Provides necessary data for tactical and strategic
system such as DSS applications
 Provides a framework for analyzing
organization’s activities
 To identify the true picture of business
 Fig:- TPS

Notice of Event Transaction Entry TPS Program Data

I/p
Event Processing
O/P

O/P
 Decision structure
1. Structured Decision
2. Semi structured Decision
3. Unstructured Decision
 Structured Decision
 Decision that are structured by the decision
procedures or decision rules developed for
them
 They involve situations where the procedures
to follow when a decision is needed can be
specified in advance
 Decision made by the operational level of
management tends to be structured decision
 Semistructured Decision
 Decision involving procedures that can be
partially pre-defined, but not enough to lead
to a definite recommended decision
 Unstructured Decision
 Unstructured decision involves the decisions
situation where it is not possible to specify in
advance most of the decision procedures to
follow
 Online Analytical processing
(OLAP)
 The use of online data analysis tools to
explore large databases of transaction data is
called OLAP
 When the analytical processes accessed large
slices of the transaction database, they slowed
down transaction processing critical to
customer relationships
 Online Transaction Processing
System (OLTPS)
 OLTPS is a class of programs that facilitate and
manage transaction-oriented applications
 It is an interactive data processing
 It involves a direct connection between TPS
programs and operator
 The term online means that the data input
device is directly linked to the TPS and
therefore the data are processed as soon as it
is entered into the system
 OLTPS
 The input device may be at a remote location
and be linked to the system by networks or by
telecommunication systems.
Objectives
 To have direct connection with users
 To make the information available whenever
required
 To make the business things simpler
 To reduce the time sag between the decision
making and its manipulation
Office Automation
System
(OAS)
 OAS
 OAS refers to valid computer machinery and
software used to digitally create, collect, store
and manipulate office information needed for
accomplishing basic task and goals.
 Raw data storage, electronic transfer and
management of e-business information
comprises the basic activities of an office
automation system
 OAS contd..
 OAS facilitates everyday information
processing tasks in offices and business
organization
 These systems include a wide range of tools
such as spreadsheet, word processor, and
presentation pachages
 OAS contd…
 Generate presentation from external data
 Automatically sent email to customers or
group in Microsoft outlook
 Create custom data entry mechanism for
Microsoft office documents
 Maintain and organize data store in Microsoft
excel or Microsoft access
 Extract data from PDF file for further
processing
 OAS includes
1. Word processing: Creating written
documents, such as letters, memos and term
papers on the computer
2. Desktop Publishing: Using software with
sophisticated publishing capabilities to create
documents
3. E-mail: sending mail electronically
4. Voice mail: Storing, retrieving and
distributing messages using telephone
 OAS includes
6. Video conferencing: Using group-oriented
systems that allow users located n different
parts of the world to engage in face-to-face
communication
 Advantages of OAS
 Provide more time to managers to
concentrate on their basic job
 Improve the quality of works in terms of
content, timeliness and accuracy
 Reduce the time spent on input capture
 Helps in co-ordinate and integrate office work
 Helps in reducing administrative detail
overhead
 Increases the productivity of office worker at
all levels
 Enables more cost & time effective communication
 Disadvantages of OAS
 Cost of automated office hardware is high
 Office automation can disrupt traditional
office work, roles and working environment
 Office automation may lead to security
problems e.g. unauthorized use of e-mail and
fax
 Decision Support System (DSS)
 DSS is computer based information system that
provides interactive information support to
managers and business professionals during the
decision making process.
 DSS uses analytical model and specialized
database
 DSS may be defined as a what-if approach that
uses an information system to assist
management in formulating policies and
projecting the likely consequences of decisions.
Decision Support System (DSS) contd…
 DSS supports the decision making process
rather than automating the decision making
process.
 DSS allows the decision maker to retrieve data
and test alternative solutions during the
process of decision making.
 Objective of DSS
 To save time and effort in decision making
process
 To help in processing the collected data and in
producing a suggested solution to a problem
 To provide sophisticated and fast analysis of
huge amount of data and information
 To provide efficient and effective solution of
complex problem.
 Objective of DSS contd…
 To provide support for decision makers at all
management levels mainly in semi-structured
or unstructured situation by bringing together
human judgment and computerized
information
 Advantages of DSS
 Improves managerial effectiveness
 Employs interactive processing that permits
rapid response time
 As DSS reduces the time and effort in
collecting and analysis of data for different
sources, a large number of alternatives can be
evaluated.
 DSS features include
1. Data query and collection from the
knowledge database
2. Analysis data of decision model
3. Presentation of resulting data for “best”
solutions
 Basic analytical modeling activities
used in DSS
1. What-if analysis
2. Sensitivity analysis
3. Goal seeking analysis
4. Optimization analysis
 What-if analysis

 In what-if analysis, an end users make changes

to variable or relationship among variables
and observes the resulting changes in the
values of other variables
 For e.g. if we are using a spread sheet, we
might change a revenue amount(variable or
tax rate in a simple financial spread sheet
model.
 Sensitivity analysis
 It is a special case of what-if analysis
 Typically, the value of analysis one variable is
changed repeatedly and the resulting changes
on other variable are observed
 So, it is used when decision makers are
uncertain about the assumptions made in
eliminating the value of certain key variables.
 Goal seeking analysis

 It is the direction of analysis done in what-if

and sensitivity analysis
 Instead of observing how changes in variable
effects other variables, goal seeking analysis
sets target value for a variable and then
repeatedly changes other variable until the
target value is achieved
 Optimization analysis

 It is more complex extension of goal seeking

analysis
 Instead of setting a specific target value for a
variable the goal is to find the optimum value
for one or more target variables, which gives
certain constraints.
 Components of DSS
1. The user interface
2. The database
3. The models and analytical tools
4. The DSS architecture and networking
 Features of DSS
1. Flexibility:- The system is flexible so that any
semi-structured or unstructured decision
making situation can be tackled with ease
and speed
2. Simple model:- The system use simple model
of decision making. The only change is that a
different set of information is sought for the
use of different models. The choice of a
model depends upon the complexity of
decision making
3. Database
 Various definitions of DSS
1. Information system featuring an integrated
system composed of decision models,
database and decision maker to support
decision-making
2. A set of computer based tools used by
managers in connection with his/her
problem solving and decision making duties.
3. Decision support system are analytical models
used to increase managerial or professional
decision making by bringing important data to
view
4. An integrated set of computer tools that allow
a decision maker to interact directly with
computers to create information useful in making
semi-structured or unstructured decisions
5. Decision support implies the use of
computers to:
Assist managers in their decision processes in
semi-structured tasks;
Support rather than replace, managerial
judgment
Improve the effectiveness of decision making
rather than its efficiency
 Executive Support System (ESS)
 ESS is a reporting tool/software that allows to
convert organization’s data into useful
summarized reports
 These reports are generally used by executive
level managers for quick access to reports
coming from all company levels departments
such as billing, cost accounting, staffing etc.
 ESS contd…
 ESS is a computer based system intended to
facilitate and support the information and
decision making needs of senior executives by
providing easy access to both internal and
external information relevant to meeting the
strategic goals of the organization
 It is commonly considered as a specialized form
of decision support system
 Most ESS uses GUI and graphic displays that
can be customized to the information
preference of executives
 Objectives of ESS
1. To help senior managers to analyze, compare
and highlight tends
2. To provide data from internal and external
sources
3. To help senior managers with unstructured
problems that occurs at the strategic level of
the organization
4. To filter data to provide senior managers
with detailed transaction of data
 Advantages of ESS
 Provides timely delivery of company summary
information
 Information provided is better understood
 Reduces paper overload by allowing filtering
of relevant information
 Offers efficiency to decision makers
Difference between DSS, MIS and
EIS
Dimension DSS MIS EIS
Focus Analysis, decision support Information Processing Status Access
Users Analysts, professions, Middle, lower level Senior Executives
managers
Application Diversified Areas where Production control, sales Environmental scanning,
managerial decisions are forecast, financial analysis, performance evaluation
made HRM
Database Special Corporate special
Decision support Supports semi-structured Direct or indirect support, Indirect support, mainly high
capabilities and unstructured decision research and other models level and unstructured
making decisions and policies
Principle use Planning, organizing, Control Tracking and control
staffing and control
Construction By users, either alone or By vendors or IS specialist By vendors or Is specialist
with specialists from IS
department
 Relationship between different
system
• assignment