management information system

MANAGEMENT INFORMATION

SYSTEM

Information System

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Information System

• Hardware• Software• Data• Network• Procedures• People

HardwareSoftware

PeopleDataApplication

An information system (IS) collects, processes, stores, analyzes, and disseminates information for a specific purpose “Application”.

(Management) Information Systems 4

Information System Resources

DATA WORKERS

KIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR MANAGERS

MANAGEMENT LEVEL MIDDLE MANAGERS

OPERATIONAL OPERATIONAL LEVEL MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &

SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCESMARKETING

Different information for different users

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Information System - Classification By Support Function

Operational Managers

Data Workers

Middle Managers

Senior MgrExecutive Support System

Management Information SystemDecision Support SystemIntelligent Support Systems

Knowledge Management SystemOffice Automation System

Transaction Processing System

•5-year sales trend•Profit Planning•5-year budget forecasting•Product development

•Sales Management•Inventory Control•Annual budget•Production Scheduling•Cost Analysis•Pricing Analysis

•System support•Word Processing•Desktop Publishing

•Order Processing•Fulfillment•Material Movement•A/R, A/P, GL•Payroll•POS

Types of Information Systems

Management Information System (M.I.S.) is basically concerned with processing data into information. Which is then communicated to the various Departments in an organization for appropriate

decision-making.Data Information Communication DecisionsData collection involves the use of InformationTechnology (IT) comprising: computers and telecommunicationsnetworks (E-Mail, Voice Mail, Internet,telephone, etc.)Computers are important for more quantitative,than qualitative, data collection, storage andretrieval; Special features are speed and accuracy,and storage of large amount of data.

MANAGEMENT LEVEL• INPUTS: HIGH VOLUME DATA• PROCESSING: SIMPLE MODELS• OUTPUTS: SUMMARY REPORTS• USERS: MIDDLE MANAGERS

Management Information Systems (MIS)Function: Produce reports summarized from transaction data, usually in one functional area.Example: Report on total sales of each customer.Supports: Primarily for middle managers, sometimes for lower level managers as well.

• STRUCTURED & SEMI-STRUCTURED DECISIONS• REPORT CONTROL ORIENTED• PAST & PRESENT DATA• INTERNAL ORIENTATION• LENGTHY DESIGN PROCESS

Management Information Systems (MIS)

Features:

Characteristics of a Management Information System

• Provides reports with fixed and standard formats– Hard-copy and soft-copy reports

• Uses internal data stored in the computer system

• End users can develop custom reports• Requires formal requests from users

INTERRELATIONSHIPS AMONG SYSTEMS

FAS

SMSMPS

HRSMIS

Finance and accouting

Human Resource

Management information

Manufacturing and production

Sales and marketing

An Organization’sMIS

FinancialMIS

MarketingMIS

HumanResources

MIS

Etc.

AccountingMIS

Drill down reports

Exception reports

Demand reports

Key-indicator reports

Scheduled reports

Databasesof

externaldata

Databasesof

validtransactions

Transactionprocessing

systems

Businesstransactions


ExtranetExtranet

InternetInternet

Etc.

Corporatedatabasesofinternaldata

Databasesofexternaldata

Databasesofvalidtransactions

Operationaldatabases

Transactionprocessingsystems

Managementinformationsystems

Decisionsupportsystems

Executivesupportsystems

Expertsystems


Input anderror list

Drill-down reports

Exception reports

Demand reports

Key-indicator reports

Scheduledreports

Employees

Corporateintranet

Applicationdatabases

Schematic of MIS

Commondatabases

Marketingmanagementinformation

system

FinancialmanagementInformation

system

ManufacturingmanagementInformation

system

Ordermanagementinformation

system

TPS

Risks Associated With MISRisk reflects the potential, the likelihood, or the expectation of events thatcould adversely affect earnings or capital. Management uses MIS to help inthe assessment of risk within an institution. Management decisions basedupon ineffective, inaccurate, or incomplete MIS may increase risk in a numberof areas such as credit quality, liquidity, market/pricing, interest rate, or foreigncurrency. A flawed MIS causes operational risks and can adversely affect anorganization's monitoring of its fiduciary, consumer, fair lending, Bank SecrecyAct, or other compliance-related activities.Since management requires information to assess and monitor performance atall levels of the organization, MIS risk can extend to all levels of theoperations. Additionally, poorly programmed or non-secure systems in whichdata can be manipulated and/or systems requiring ongoing repairs can easilydisrupt routine work flow and can lead to incorrect decisions or impairedplanning.

Assessing Vulnerability To MIS Risk

To function effectively as an interacting, interrelated, and interdependent feedback tool for management and staff, MIS must be "useable." The five elements of a useable MIS system are:

Timeliness:To simplify prompt decision making, an institution's

MIS should be capable of providing and distributing current information to appropriate users. Information systems should be designed to expedite reporting of information. The system should be able to quickly collect and edit data, summarize results,

and be able to adjust and correct errors promptly.

Relevance:Information provided to management must be

relevant. Information that is inappropriate, unnecessary, or too detailed for effective decision making has no value. MIS must be appropriate to support the management level using it. The relevance and level of detail provided through MIS systems directly correlate to what is needed by the board of directors, executive management,

departmental or area mid-level managers, etc. in the performance of their jobs.

Accuracy:A sound system of automated and manual internal controls must exist throughout all information systems processing activities. Information should receive appropriate editing, balancing, and internal control checks. A comprehensive internal and external audit program should be employed to ensure the adequacy of internal controls.

ConsistencyTo be reliable, data should be processed and compiled

consistently and uniformly. Variations in how data is collected and reported can distort information and trend analysis. In addition, because data collection and reporting processes will change over time, management must establish sound procedures to allow for systems changes. These procedures should be well defined and documented, clearly communicated to appropriate employees, and should include an effective monitoring system.

CompletenessDecision makers need complete and pertinent information in a summarizedform. Reports should be designed to eliminate clutter and voluminous detail, thereby avoiding "information overload."

Fundamentals of Information Systems, Third Edition

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An Overview of Management Information Systems: Management Information Systems in Perspective

• A management information system (MIS) provides managers with information that supports effective decision making and provides feedback on daily operations

• The use of MISs spans all levels of management


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Inputs to a Management Information System

• Internal data sources– TPSs and ERP systems and related databases; data

warehouses and data marts; specific functional areas throughout the firm

• External data sources– Customers, suppliers, competitors, and

stockholders, whose data is not already captured by the TPS; the Internet; extranets


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Outputs of a Management Information System

• Scheduled report: produced periodically, or on a schedule

• Key-indicator report: summary of the previous day’s critical activities

• Demand report: developed to give certain information at someone’s request

• Exception report: automatically produced when a situation is unusual or requires management action

• Drill-down report: provides increasingly detailed data about a situation


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Functional Aspects of the MIS

• Most organizations are structured along functional lines or areas

• The MIS can be divided along functional lines to produce reports tailored to individual functions

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Functional Aspects of the MIS (continued)


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Financial Management Information Systems

• Financial MIS: provides financial information to all financial managers within an organization

• Profit/loss and cost systems• Auditing• Uses and management of funds


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Manufacturing Management Information Systems

• The manufacturing MIS subsystems and outputs monitor and control the flow of materials, products, and services through the organization

• Design and engineering• Production scheduling• Inventory control

Fundamentals of Information Systems, Third Edition 32

Marketing Management Information Systems

• Marketing MIS: supports managerial activities in product development, distribution, pricing decisions, promotional effectiveness, and sales forecasting

• Marketing research• Product development• Promotion and advertising• Product pricing


Human Resource Management Information Systems

• Human resource MIS: concerned with activities related to employees and potential employees of an organization

• Needs and planning assessments• Recruiting• Training and skills development• Scheduling and assignment• Employee benefits• Outplacement

Order Management Information System

• This software facilitates the entering of an order, whether via a web-site shopping cart or a data entry system (for orders received via phone and mail). It typically captures customer proprietary information and account level information. Credit verification or payment processing is done to check for validity and/or availability of funds. Once entered, valid orders are processed for warehouse fulfillment, such picking/packing/shipping.

• Orders can be received from businesses, consumers, or a mix of both, depending on the products. Offers and pricing may be done via catalogs or web sites or broadcast network advertisements.

http://en.wikipedia.org/wiki/Broadcast_network

An integrated order management system may encompass these modules:

• Product Information (descriptions, attributes, locations, quantities)• Inventory Availability (ATP) and Sourcing• Vendors, Purchasing, and Receiving• Marketing (Catalogs, promotions, pricing)• Customers and Prospects• Order Entry and Customer Service (including Returns and Refunds)• Financial Processing (credit cards, billing, payment on account)• Order Processing (selection, printing, picking, packing, shipping)• Data Analysis and Reporting• Financials (Accounts Payable, Accounts Receivable, General Ledger)

Order Management requires multiple steps in a sequential process like Capture, Validation, Fraud Check, Payment Authorization, Sourcing, Backorder management, Pick, pack, ship and associated customer communications; it is common therefore for an order management system to have workflow capabilities as well.


Other Management Information Systems

• Accounting MIS: provides aggregate information on accounts payable, accounts receivable, payroll, and many other applications

• Geographic information system (GIS): capable of assembling, storing, manipulating, and displaying geographic information

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A Comparison of DSS and MIS

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Managing Information Systems

• Information Systems (IS) have enormous strategic value so when they are not working even for a short time, an organization cannot function. Furthermore, the Life Cycle Costs (acquisition, operation, security, and maintenance) of these systems is considerable. Therefore, it is essential to manage them properly. The planning, organizing, implementing, operating, and controlling of the infrastructures and the organization’s portfolio of applications must be done with great skill.

• The responsibility for the management of information resources is divided between two organizational entities: – The information systems department (ISD), which is a corporate entity– the end users, who are scattered throughout the organization.

CLASSIFICATION OF MIS REPORTS

MIS reports can be classified into two types:

1) CONTENT 2) TIME

CONTENT

listing each sales transaction over a specified period in a given sales region

CONTENT

SUMMARYREPORTS

showing the total sales of each item sold in a given region

CONTENT

EXCEPTION REPORTSlisting items that have shown a drop in

sales by over 20% in a given region since the last period.

TIME

HISTORICALREPORTS

comparing past sales information with the present

TIME

STATUS REPORTS Only shows the current sales

TIME

PREDICTIVEREPORTS forecasts of next months sales.

management information system

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