Importance Of Management Information System

Management information system is an integrated set of component or entities that interact to achieve a particulars function, objective or goal. Therefore it is a computer based system that provides information for decisions making on planning, organizing and controlling the operation of the sub-system of the firm and provides a synergistic organization in the process.

The component of an information system includes. a hardware which is used for input/output process and storage of data, software used to process data and also to instruct the hand-ware component, data bases which is the location in the system where all the organization data will be automated and procedures which is a set of documents that explain the structure of that management information system.

There are various driving factors of management information system for example:-
Technological revolutions in all sectors make modern managers to need to have access to large amount of selective information for the complex tasks and decisions.

The lifespan of most product has continued getting shorter and shorter and therefore the challenge to the manager is to design product that will take a longer shelf life and in order to do this, the manager must be able to keep abreast of the factors that influences the organization product and services thus, management information system come in hardy in supporting the process.

There are huge amount of information available to today’s manager and this had therefore meant that managers are increasingly relying on management information system to access the exploding information. Management information services helps manager to access relevant, accurate, up-to-date information which is the more sure way of making accurate decisions. It also helps in automation and incorporation of research and management science techniques into the overall management information system for example probability theory.

The management information services are capable of taking advantage of the computational ability of the company like processing, storage capacity among others.

Based on this relevancy, management information system should be installed and upgraded in various organizations since today’s managers need them to access information for managerial decision making and also management functions.

Difference between DSS & MIS

1. MIS functions to produce routine reports,DSS employ sophisticated data modelling & analysis tools for the purpose of resolving structured problems.
2. MIS is used by a limited group (staff managers & professionals), DSS are used by groups,individuals & managers at various levels.
3. DSS is charachterized by an adaptability which contrasted with the semi-inflexible nature of MIS.
4. DSS data sources are much more varied comprising inventory, accounting & production sources & not just internal business ones & its analytical tools are more sophisticated(simulation,atatistical analysis).

Thus, MIS & DSS are differentiated in terms of components, dynamics , analytical tools & general properties.

Need For System Analysis

NEED FOR SYSTEMS ANALYSIS AND DESIGN
Systems analysis and design, as performed by systems analysts, seeks to understand what humans need to analyze data input or data flow systematically, process or
transform data, store data, and output information in the context of a particular
business. Furthermore, systems analysis and design is used to analyze, design,
and implement improvements in the support of users and the functioning of
businesses that can be accomplished through the use of computerized information
systems.
Installing a system without proper planning leads to great user dissatisfaction
and frequently causes the system to fall into disuse. Systems analysis and design
lends structure to the analysis and design of information systems, a costly endeavor
that might otherwise have been done in a haphazard way. It can be thought of as a
series of processes systematically undertaken to improve a business through the
use of computerized information systems. Systems analysis and design involves
working with current and eventual users of information systems to support them
in working with technologies in an organizational setting.
User involvement throughout the systems project is critical to the successful
development of computerized information systems. Systems analysts, whose roles
in the organization are discussed next, are the other essential component in developing
useful information systems.
Users are moving to the forefront as software development teams become
more international in their composition. This means that there is more emphasis
on working with software users; on performing analysis of their business, problems,
and objectives; and on communicating the analysis and design of the planned
system to all involved.
New technologies also are driving the need for systems analysis. Ajax
(Asynchronous JavaScript and XML) is not a new programming language, but a
technique that uses existing languages to make Web pages function more like a traditional
desktop application program. Building and redesigning Web pages that
utilize Ajax technologies will be a task facing analysts. New programming languages,
such as Ruby on Rails, which is a combination programming language and
code generator for creating Web applications, will require more analysis.

Use of Information Management Systems

The management of Information is facilitated by the use of Information Technology and Information Sciences. The popular Information Management Systems can be listed as follows:

Document management system (DMS)

The DMS is focused primarily on the storage and retrieval of self-contained electronic data resources in the document form. Generally, The DMS is designed to help the organizations to manage the creation and flow of documents through the provision of a centralized repository. The workflow of the DMS encapsulates business rules and metadata.

Content management system (CMS)

The CMS assist in the creation, distribution, publishing, and management of the enterprise information. These systems are generally applicable on the online content which is dynamically managed as a website on the internet or intranet. The CMS system can also be called as ‘web content management’ (WCM).

Library management system (LMS)

Library management systems facilitate the library technical functions and services that include tracking of the library assets, managing CDs and books inventory and lending, supporting the daily administrative activities of the library and the record keeping.

Records management system (RMS)

The RMS are the recordkeeping systems which capture, maintain and provide access to the records including paper as well as electronic documents, efficiently and timely.

Digital imaging system (DIS)

The DIS assist in automation of the creation of electronic versions of the paper documents such as PDFs or Tiffs. So created Electronic documents are used as an input to the records management systems.

Learning management system (LMS)

Learning management systems are generally used to automate the e-learning process which includes the administrative process like registering students, managing training resources, creating courseware, recording results etc.

Geographic information system (GIS)

The GIS are special purpose, computer-based systems that facilitate the capture, storage, retrieval, display and analysis of the spatial data.

System Analysis Lecture notes

Systems Analysis

Systems analysis includes a review of the present information system to assess its capabilities and shortcomings; specification of system goals, objectives, and constraints; a survey of potential system users to assess their information needs; identification and analysis of alternative system concepts; specification a system concept; and system requirements analysis and specification.This phase includes an analysis of major system functions and the development of a system

architecture (identification of the major system components and their interrelationships). Heavy emphasis is placed on end-user requirements. It is essential to involve the end-user in the system requirements activity, to insure the development of a system that is fully responsive the user's needs. The review of the current system and survey of potential users can be done by a

variety of means, including review of documentation, site visits, questionnaire surveys, interviews, and focus-group discussions.

Systems Design

The systems design phase is generally broken into two subphases, top-level design and detailed

design. Top-level design consists of the identification of the major system components and their

functions. In order to specify the top-level design, a number of alternative system design concepts

are synthesized and evaluated in terms of a variety of selection criteria, which include cost

(implementation, operation and maintenance), performance, satisfaction of requirements,

development risk, flexibility for expansion/upgrading, and political acceptability. The important

aspect of top-level design is to present several feasible solutions to the system managers and

users, to describe their advantages and disadvantages, and to obtain a consensus on a preferred

design concept. An example of a design decision is the decision concerning which functions

should be implemented using computers and which should be manual (e.g., should data collected

at a regional level and needed at a central level be transmitted via the Internet (e.g., virtual private

network or e-mail) or hand-carried on a memory stick).

Systems Implementation

Systems implementation consists of developing all of the system components -- data collection

forms; data collection, transfer and processing procedures; data entry procedures and screens

(including on-line edit checking); software; report forms; report distribution; quality control

procedures. As mentioned, we recommend the use of an iterative, rapid-prototyping approach to

the software implementation. It is highly recommended to field-test major systems in a single

geographic area before going full scale. This field testing involves not only software, but all

aspects of the system (e.g., data collection procedures, training, quality control).

Detailed design consists of specifying all of the system components and functions in detail. In the

detailed design phase, decisions are made concerning what data elements are to be collected,

how they are to be coded, how frequently they are to be collected, and at what levels of detail they

are to be aggregated. A critical design decision concerns the "units of analysis" -- the item on

which the data are to be measured, such as an individual, a household, a school, a clinic, a farm, a

village, or a region. The decision on the unit of analysis has a significant impact on both the cost

of the system operation (especially the data collection burden) and on the flexibility of ad-hoc

reporting. This design decision is particularly important. While it is an easy matter to revise a data

entry screen or report format, it is not possible to produce a desired report about a particular type

of unit if data on that unit are not included in the data base. For example, if it is desired to produce

3

a report about the frequency distribution of villages by some characteristic, village-level data must

be included in the data base (or capable of being constructed by aggregation of lower-level units).

If it is desired to produce a frequency distribution of facilities by size, facility data must be included.

If it is desired to produce distributions of families with particular characteristics, data on families

must be included in the data base.

Concept of DBMS

CONCEPT OF DBMS

A Database Management System (DBMS) is a set of computer programs that controls the creation, maintenance, and the use of the database with computer as a platform or of an organization and its end users. It allows organizations to place control of organization-wide database development in the hands of database administrators (DBAs) and other specialists. A DBMS is a system software package that helps the use of integrated collection of data records and files known as databases. It allows different user application programs to easily access the same database. DBMSs may use any of a variety of database models, such as the network model or relational model. In large systems, a DBMS allows users and other software to store and retrieve data in a structured way. Instead of having to write computer programs to extract information, user can ask simple questions in a query language. Thus, many DBMS packages provide Fourth-generation programming language (4GLs) and other application development features. It helps to specify the logical organization for a database and access and use the information within a database. It provides facilities for controlling data access, enforcing data integrity, managing concurrency controlled, restoring database.

Features commonly offered by database management systems include:

Query ability

Querying is the process of requesting attribute information from various perspectives and combinations of factors. Example: "How many 2-door cars in Texas are green?" A database query language and report writer allow users to interactively interrogate the database, analyze its data and update it according to the users privileges on data.

Backup and replication

Copies of attributes need to be made regularly in case primary disks or other equipment fails. A periodic copy of attributes may also be created for a distant organization that cannot readily access the original. DBMS usually provide utilities to facilitate the process of extracting and disseminating attribute sets. When data is replicated between database servers, so that the information remains consistent throughout the database system and users cannot tell or even know which server in the DBMS they are using, the system is said to exhibit replication transparency.

Rule enforcement

Often one wants to apply rules to attributes so that the attributes are clean and reliable. For example, we may have a rule that says each car can have only one engine associated with it (identified by Engine Number). If somebody tries to associate a second engine with a given car, we want the DBMS to deny such a request and display an error message. However, with changes in the model specification such as, in this example, hybrid gas-electric cars, rules may need to change. Ideally such rules should be able to be added and removed as needed without significant data layout redesign.

Security

Often it is desirable to limit who can see or change which attributes or groups of attributes. This may be managed directly by individual, or by the assignment of individuals and privileges to groups, or (in the most elaborate models) through the assignment of individuals and groups to roles which are then granted entitlements.

Computation

There are common computations requested on attributes such as counting, summing, averaging, sorting, grouping, cross-referencing, etc. Rather than have each computer application implement these from scratch, they can rely on the DBMS to supply such calculations.

Change and access logging

Often one wants to know who accessed what attributes, what was changed, and when it was changed. Logging services allow this by keeping a record of access occurrences and changes.

Automated optimization

If there are frequently occurring usage patterns or requests, some DBMS can adjust themselves to improve the speed of those interactions. In some cases the DBMS will merely provide tools to monitor performance, allowing a human expert to make the necessary adjustments after reviewing the statistics collected.

Basic concepts of MIS

Basic concepts

Data versus Information

Data refers to raw, unevaluated facts, figures, symbols, objects, events, etc. Data may be a collection of facts lying in storage, like a telephone directory or census records.

Information is data that have been put into a meaningful and useful context and communicated to a recipient who uses it to make decisions. Information involves the communication and reception of intelligence or knowledge. It appraises and notifies, surprises and stimulates, reduces uncertainty, reveals additional alternatives or helps eliminate irrelevant or poor ones, and influences individuals and stimulates them to action. An element of data may constitute information in a specific context; for example, when you want to contact your friend, his or her telephone number is a piece of information; otherwise, it is just one element of data in the telephone directory.

Computers have made the processing function much easier. Large quantities of data can be processed quickly through computers aiding in the conversion of data to information. Raw data enter the system and are transformed into the system's output, that is, information to support managers in their decision making.

Characteristics of Information

The characteristics of good information are relevance, timeliness, accuracy, cost-effectiveness, reliability, usability, exhaustiveness, and aggregation level. Information is relevant if it leads to improved decision making. It might also be relevant if it reaffirms a previous decision. If it does not have anything to do with your problem, it is irrelevant. For example, information about the weather conditions in Paris in January is relevant if you are considering a visit to Paris in January. Otherwise, the information is not relevant.

Timeliness refers to the currency of the information presented to the users. Currency of data or information is the time gap between the occurrence of an event in the field until its presentation to the user (decision maker). When this amount of time is very short, we describe the information system as a real-time system.

Accuracy is measured by comparing the data to actual events. The importance of accurate data varies with the type of decisions that need to be made. Payroll information must be exact. Approximations simply will not suffice. However, a general estimate of how much staff time was devoted to a particular activity may be all that is needed.

Information as an Aid to Decision Making

Simon (1977) describes the process of decision making as comprising four steps: intelligence, design, choice, and review. The intelligence stage encompasses collection, classification, processing, and presentation of data relating to the organization and its environment. This is necessary to identify situations calling for decision. During the decision stage, the decision maker outlines alternative solutions, each of which involves a set of actions to be taken. The data gathered during the intelligence stage are now used by statistical and other models to forecast possible outcomes for each alternative. Each alternative can also be examined for technological, behavioural, and economic feasibility. In the choice stage, the decision maker must select one of the alternatives that will best contribute to the goals of the organization. Past choices can be subjected to review during implementation and monitoring to enable the manager to learn from mistakes. Information plays an important role in all four stages of the decision process. Figure 1 indicates the information requirement at each stage, along with the functions performed at each stage and the feedback loops between stages.

Understanding Decision Support System (DSS)

A Decision Support System (DSS) is a class of information systems (including but not limited to computerized systems) that support business and organizational decision-making activities. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from a combination of raw data, documents, personal knowledge, or business models to identify and solve problems and make decisions.

Typical information that a decision support application might gather and present are:

• an inventory of all of your current information assets (including legacy and relational data sources, cubes, data warehouses, and data marts),
• comparative sales figures between one week and the next,
• projected revenue figures based on new product sales assumptions.

Development Frameworks

DSS systems are not entirely different from other systems and require a structured approach. Such a framework includes people, technology, and the development approach.^[10]

DSS technology levels (of hardware and software) may include:

1. The actual application that will be used by the user. This is the part of the application that allows the decision maker to make decisions in a particular problem area. The user can act upon that particular problem.
2. Generator contains Hardware/software environment that allows people to easily develop specific DSS applications. This level makes use of case tools or systems such as Crystal, AIMMS, and iThink.
3. Tools include lower level hardware/software. DSS generators including special languages, function libraries and linking modules

An iterative developmental approach allows for the DSS to be changed and redesigned at various intervals. Once the system is designed, it will need to be tested and revised for the desired outcome.

DSS components may be classified as:

1. Inputs: Factors, numbers, and characteristics to analyze
2. User Knowledge and Expertise: Inputs requiring manual analysis by the user
3. Outputs: Transformed data from which DSS "decisions" are generated
4. Decisions: Results generated by the DSS based on user criteria

Decisin Making

Decision making can be regarded as an outcome of mental processes (cognitive process) leading to the selection of a course of action among several alternatives. Every decision making process produces a final choice. The output can be an action or an opinion of choice.
Decision making is a reasoning or emotional process which can be rational or irrational, can be based on explicit assumptions or tacit assumptions.Thus here an important concept comes of RATIONAL DECISION MAKING

Rational Decision Making
A rational decision is the one which, effectively and efficiently, ensures the achievement of the goal for which the decision is made. In reality, there is no right or wrong decision but a rational or an irrational decision. The quality of decision making is to be judged on the rationality and not necessarily on the result it produces. The rationality of the decision made is not the same in every situation. It will vary with the organization, the situation and the individual’s view of the business situation. The rationality, therefore, is a multi-dimensional concept. For example, the business decisions in a private organization and a Public Sector Undertaking differ under the head of rationality. The reason for this difference in rationality is the different objectives of the decision makers.

Simon Herbert differentiates among the types of rationality. A decision, in a given situation is:
Objectively rational if it maximizes the value of the objective.
•
Subjectively rational if it maximizes the attainment of value in relation to the knowledge and awareness of the subject.
•
Consciously rational to the extent the process of the decision making is a conscious one.
•
Organizationally rational to the degree of the orientation towards the organization.
•
Personally rational to the extent it achieves an individual’s personal goals.

Importance Of MIS In Organizations

In today's scenario MIS plays a pivotal role in Organizations. Organizations worldwide makes extensive use of MIS.Its desgined by the top management of an organization, is a tool to assembling & accumulating facts & figures of all the important business processes.
MIS is a very vast topic , its very difficult to cover the whole in one article. Thus here are some of the major importance / advantages of MIS in organizations:

• The organization that uses MIS is able to record ,process, route & tabulate all important business transactions. As & when need arises the organization is able to incorporate the needed changes & improvements in the area of concern.
• MIS facilitates informed DECISION MAKING.It usuallly represents a number of options from which one can choose the best.
• The top management ANALYSES whether its resources are being utillized optimally.
• A TWO WAY COMMUNICATION FLOW is greatly enhanced by the MIS. The management freelytells the jobv responsibilities to its employees.The employees in return discuss their doubts & grievances.
• MIS supports the planning & controlling function of managers in the organization.Managers use past/historical data as well as the current data to analyse the performance & hence apply controlling measures.
• MIS encourages DECENTRALISATION in the organisation.Decentralisationis possible when there's a system to measure operations at the lower levels.
• It brings COORDINATION.It facilitates integration of specialized activities by keeping each department aware of the problems & requirements of other departments.

Hence, in some way MIS keeps the organization binded.

CLASSIFICATION OF DECISION MAKING SYSTEMS

The decision making systems can be classified in a number of ways. There are two types of systems based on the manager’s knowledge about the environment.

A. Closed decision making system:

If the manager operates in a known environment then it is a closed decision making system. The conditions of the closed decision making system are:
(a) The manager has a known set of decision alternatives and knows their outcomes fully in terms of value, if implemented.
(b) The manager has a model, a method or a rule whereby the decision alternatives can be generated, tested, and ranked.
(c) The manager can choose one of them, based on some goal or objective.

A few examples are:

1. a product mix problem,
2. an examination system to declare pass or fail, or
3. an acceptance of the fixed deposits.

B. Open decision making system:

If the manager operates in an environment not known to him, then the decision making system is termed as an open decision making system. The conditions of this system are:

(a) The manager does not know all the decision alternatives.

(b) The outcome of the decision is also not known fully. The knowledge of the outcome may be a probabilistic one.

(c) No method, rule or model is available to study and finalize one decision among the set of decision alternatives.

(d) It is difficult to decide an objective or a goal and, therefore, the manager resorts to that decision, where his aspirations or desires are met best.

Deciding on the possible product diversification lines, the pricing of a new product, and the plant location, are some decision making situations which fall in the category of the open decision making systems.

The MIS tries to convert every open system to a closed decision making system by providing information support for the best decision. The MIS gives the information support, whereby the manager knows more and more about the environment and the outcomes, he is able to generate the decision alternatives, test them and select one of them. A good MIS achieves this.

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INFORMATION AS AN AID TO DECISION MAKING

How do we ensure rationality?
It is ensured, if the process of decision making is carried out systematically, whereby all the aspects of the decision making discussed above are taken care of. Herbert Simon said that a decision maker follows the process of decision making disregarding the decision or the type of decision and the motive behind the decision. This process is followed consciously or without knowing it. We can put this process in the Decision Making Mode.

Simon (1977) describes the process of decision making as comprising four steps:
1.Intelligence
2.Design
3.Choice
4.Later stage has been added with a view of improving the decision i.e. Review.

The intelligence stage: encompasses collection, classification, processing, and presentation of data relating to the organization and its environment. This is necessary to identify situations calling for decision.

During the design stage:, the decision maker outlines alternative solutions, each of which involves a set of actions to be taken. The data gathered during the intelligence stage are now used by statistical and other models to forecast possible outcomes for each alternative. Each alternative can also be examined for technological, behavioral, and economic feasibility.

In the choice stage:, the decision maker must select one of the alternatives that will best contribute to the goals of the organization.

In the review stage:, past choices can be subjected to review during implementation and monitoring to enable the manager to learn from mistakes. Information plays an important role in all four stages of the decision process.

An example of the Simon Model would illustrate further its use in the MIS. For example, a manager finds on collection and through the analysis of the data that the manufacturing plant is under-utilized and the products which are being sold are not contributing to the profits as desired. The problem identified, therefore, is to find a product mix for the plant, whereby the plant is fully utilized within the raw material and the market constraints, and the profit is maximized. The manager having identified this as the problem of optimization, now examines the use of Linear Programming (LP) Model. The model used to evolves various decision alternatives. However, selection is made first on the basis of feasibility, and then on the basis of maximum profit.The product mix so given is examined by the management committee. It is observed that the market constraints were not realistic in some cases, and the present plant capacity can be enhanced to improve the profit.

NATURE OF DECISION

Decision making is a complex situation. To resolve the complexity, the decisions are classified as

• programmed
• non-programmed decisions.

If a decision can be based on a rule, method or even guidelines, it is called the programmed decision. If the stock level of an item is 200 numbers, then the decision to raise a purchase requisition for 400 numbers is a programmed-decision-making situation. The decision maker here is told to make a decision based on the instructions or on the rule of ordering a quantity of 400 items when its stock level reaches 200.If such rules can be developed wherever possible, then the MIS itself can be designed to make a decision and even execute. The system in such cases plays the role of a decision maker based on a given rule or a method. Since the programmed decision is made through MIS, the effectiveness of the rule can be analyzed and the rule can be revived and modified from time to time for an improvement. The programmed decision making can be delegated to a lower level in the management cadre.

A decision which cannot be made by using a rule or a model is the non-programmed decision. Such decisions are infrequent but the stakes are usually larger. Therefore, they cannot be delegated to the lower level. The MIS in the non-programmed-decision situation can help to some extent, in identifying the problem, giving the relevant information to handle the specific decision making situation. The MIS, in other words, can develop decision support systems in the non-programmed-decision-making situations.

FOUR ESSENTIAL DESCISIONS

1.Consider solutions

2.Choose a solution

3.Is there a problem or opportunity?

4.Is the choice working?

A significant part of decision making skills is in knowing and practicing good decision making techniques. One of the most practical decision making techniques can be summarized in those simple decision making steps:

1. .Identify the purpose of your decision. What is exactly the problem to be solved? Why it should be solved?
2. Gather information. What factors does the problem involve?
3. Identify the principles to judge the alternatives. What standards and judgment criteria should the solution meet?
4. Brainstorm and list different possible choices. Generate ideas for possible solutions.
5. Evaluate each choice in terms of its consequences. Use your standards and judgment criteria to determine the cons and pros of each alternative.
6. Determine the best alternative. This is much easier after you go through the above preparation steps.
7. Put the decision into action. Transform your decision into specific plan of action steps. Execute your plan.
8. Evaluate the outcome of your decision and action steps. What lessons can be learnt? This is an important step for further development of your decision making skills and judgment.

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DECISION MAKING PROCESS

We use our decision making skills to solve problems by selecting one course of action from several possible alternatives. Decision making skills are also a key component of time management skills. Decision making can be hard. Almost any decision involves some conflicts or dissatisfaction. The difficult part is to pick one solution where the positive outcome can outweigh possible losses. Avoiding decisions often seems easier. Yet, making your own decisions and accepting the consequence is the only way to stay in control of your time, your success, and your life.

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TYPES OF DECISIONS

The types of decisions are based on the degree of knowledge about the outcomes or the events yet to take place. If the manager has full and precise knowledge of the event or outcome which is to occur, then his problem of the decision making is not a problem. If the manager has full knowledge, then it is a situation of certainty. If he has partial knowledge or a probabilistic knowledge, then it is decision making under risk. If the manager does not have any knowledge whatsoever, then it is decision making under uncertainty.

A good MIS tries to convert a decision making situation under uncertainty to the situation under risk and further to certainty. Decision making in the operations management, is a situation of certainty. This is mainly because the manager in this field has fairly good knowledge about the events which are to take place, has full knowledge of environment, and has predetermined decision alternatives for choice or for selection.Decision making at the middle management level is of the risk type. This is because of the difficulty in forecasting an event with hundred per cent accuracy and the limited scope of generating the decision alternatives.

At the top management level, it is a situation of total uncertainty of account of insufficient knowledge of the external environment and the difficulty in forecasting business growth on a long-term basis.A good MIS design gives adequate support to all the three levees of management.

A manager can make two kinds of decision:

• Structured – which are repetitive and need a definite routine and procedure to deal with them, e.g. stock is below 15 %, so an order need to be place with a supplier.
• Unstructured – require knowledge, insight, and evaluation. They may well crop up without warning, and the right decision can be critical.

Understanding MIS risk

Risks Associated With MIS

Risk reflects the potential, the likelihood, or the expectation of events that could adversely affect earnings or capital. Management uses MIS to help in the assessment of risk within an institution. Management decisions based upon ineffective, inaccurate, or incomplete MIS may increase risk in a number of areas such as credit quality, liquidity, market/pricing, interest rate, or foreign currency. A flawed MIS causes operational risks and can adversely affect an organization's monitoring of its fiduciary, consumer, fair lending, Bank Secrecy Act, or other compliance-related activities. Since management requires information to assess and monitor performance at all levels of the organization, MIS risk can extend to all levels of the operations. Additionally, poorly programmed or non-secure systems in which data can be manipulated and/or systems requiring ongoing repairs can easily disrupt routine work flow and can lead to incorrect decisions or impaired planning.

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, accuracy, consistency, completeness, and relevance. The usefulness of MIS is hindered whenever one or more of these elements is compromised.

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.

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.

Consistency

To 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.

Completeness

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

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.

Achieving Sound MIS

Achieving Sound MIS

The development of sound MIS is the result of the development and enforcement of a culture of system ownership. An "owner" is a system user who knows current customer and constituent needs and also has budget authority to fund new projects. Building "ownership" promotes pride in institution processes and helps ensure accountability. Although MIS does not necessarily reduce expenses, the development of meaningful systems, and their proper use, will lessen the probability that erroneous decisions will be made because of inaccurate or untimely information. Erroneous decisions invariably misallocate and/or waste resources. This may result in an adverse impact on earnings and/or capital. MIS which meets the five elements of useability is a critical ingredient to an institution's short- and long-range planning efforts. To achieve sound MIS, the organization's planning process should include consideration of MIS needs at both the tactical and strategic levels. For example, at a tactical level MIS systems and report output should support the annual operating plan and budgetary processes. They should also be used in support of the long term strategic MIS and business planning initiatives. Without the development of an effective MIS, it is more difficult for management to measure and monitor the success of new initiatives and the progress of ongoing projects. Two common examples of this would be the management of mergers and acquisitions or the continuing development and the introduction of new products and services.

Management needs to ensure that MIS systems are developed according to a sound methodology that encompasses the following phases:

• Appropriate analysis of system alternatives, approval points as the system is developed or acquired, and task organization.

• Program development and negotiation of contracts with equipment and software vendors.

• Development of user instructions, training, and testing of the system.

• Installation and maintenance of the system.

Management should also consider use of "project management techniques" to monitor progress as the MIS system is being developed. Internal controls must be woven into the processes and periodically reviewed by auditors.

Management also should ensure that managers and staff receive initial and ongoing training in MIS. In addition, user manuals should be available and provide the following information:

• A brief description of the application or system.

• Input instructions, including collection points and times to send updated information.

• Balancing and reconciliation procedures.

• A complete listing of output reports, including samples.

Depending on the size and complexity of its MIS system, an institution may need to use different manuals for different users such as first-level users, unit managers, and programmers.

THE PROBLEMS IN MAKING RATIONAL DECISIONS

(a) Ascertaining the problem:As Peter Drucker points out, .the most common source of mistakes in the management decisions is the emphasis on finding the right answers rather than the right questions.. The main task is to define the right problem in clear terms. The management may define the problem as the .Sales are declining. Actually, the decline of sales is symptomatic; the real problem may be somewhere else. For example the problem may be the poor quality of the product and you may be thanking of improving the quality of advertising.

(b) Insufficient knowledge:For perfect rationality, total information leading to complete knowledge is necessary. An important function of a manager is to determine whether the dividing line is reached between insufficient knowledge and the enough information to make a decision.

(c) Not enough time to be rational:The decision maker is under pressure to make decisions. If time is limited, he may make a hasty decision which may not satisfy the test of rationality of the decision.

(d) The environment may not cooperate:Sometimes, the timing of the decision is such that one is forced to make a decision but the environment is not conducive for it. The decision may fail the test of rationality as the environmental factors considered in the decision-making turn out to be untrue. For example, in a product pricing, the factor of oil and petroleum product price is considered as stable. But the post decision environment proves the consideration to be wrong.

(e) Other limitations:Other limitations are the need for a compromise among the different positions, misjudging the motives and values of people, poor communications, misappraisal of uncertainties and risks, an inability of a human mind to handle the available knowledge and human behavior.

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RATIONAL DECISION MAKING

A rational decision is the one which, effectively and efficiently, ensures the achievement of the goal for which the decision is made. If it is raining, it is rational to look for a cover so that you do not get wet. If you are in business and want to make profit, then you must produce goods and sell them at a price higher than the cost of production. In reality, there is no right or wrong decision but a rational or an irrational decision. The quality of decision making is to be judged on the rationality and not necessarily on the result it produces. The rationality of the decision made is not the same in every situation. It will vary with the organization, the situation and the individual’s view of the business situation. The rationality, therefore, is a multi-dimensional concept. For example, the business decisions in a private organization and a Public Sector Undertaking differ under the head of rationality. The reason for this difference in rationality is the different objectives of the decision makers. Any business decision if asked to be reviewed by a share-holder, a consumer, an employee, a supplier and a social scientist, will result in a different criticism with reference to their individual rationality.This is because each one of them will view the situation in different contexts and the motive with the different objectives. Hence, whether a decision is right or wrong depends on a specific rational view.

Simon Herbert differentiates among the types of rationality. A decision, in a given situation is:

•Objectively rational if it maximizes the value of the objective.

•Subjectively rational if it maximizes the attainment of value in relation to the knowledge and awareness of the subject.

•Consciously rational to the extent the process of the decision making is a conscious one.

•Organizationally rational to the degree of the orientation towards the organization.

•Personally rational to the extent it achieves an individual’s personal goals.

In other words, so long as the decision maker can explain with logic and reason, the objectivity and the circumstances in which the decision is made, it can be termed as a rational decision.

Whether the rationality applied is appropriate or not could be a point for debate. GrossBertram M* suggests three dimensions of rationality.

1.First, the degree of satisfaction of human interest.

2.Second, the degree of feasibility in achieving the objectives.

3.Third, a consistency in decision making. If a decision maker shows a consistent behavior in the process of decision making, then one can say that he meets the test of the rationality.

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DECISIONS MAKING

Decision making can be regarded as an outcome of mental processes (cognitive process) leading to the selection of a course of action among several alternatives. Every decision making process produces a final choice. The output can be an action or an opinion of choice.


Human performance in decision making terms has been the subject of active research from several perspectives. From a psychological perspective, it is necessary to examine individual decisions in the context of a set of needs, preferences an individual has and values they seek. From a cognitive perspective, the decision making process must be regarded as a continuous process integrated in the interaction with the environment. From a normative perspective, the analysis of individual decisions is concerned with the logic of decision making and rationality and the invariant choice it leads to.

Yet, at another level, it might be regarded as a problem solving activity which is terminated when a satisfactory solution is found. Therefore, decision making is a reasoning or emotional process which can be rational or irrational, can be based on explicit assumptions or tacit assumptions.

Logical decision making is an important part of all science-based professions, where specialists apply their knowledge in a given area to making informed decisions. Some research shows, however, that in situations with higher time pressure, higher stakes, or increased ambiguities, experts use intuitive decision making rather than structured approaches.

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MIS

MIS provides the following advantages.

1. It Facilitates planning : MIS improves the quality of plants by providing relevant information for sound decision – making . Due to increase in the size and complexity of organizations, managers have lost personal contact with the scene of operations.

2. In Minimizes information overload : MIS change the larger amount of data in to summarized form and there by avoids the confusion which may arise when managers are flooded with detailed facts.

3. MIS Encourages Decentralization : Decentralization of authority is possibly when there is a system for monitoring operations at lower levels. MIS is successfully used for measuring performance and making necessary change in the organizational plans and procedures.

4. It brings Co ordination : MIS facilities integration of specialized activities by keeping each department aware of the problem and requirements of other departments. It connects all decision centers in the organization .

5. It makes control easier : MIS serves as a link between managerial planning and control. It improves the ability of management to evaluate and improve performance . The used computers has increased the data processing and storage capabilities and reduced the cost .

6. MIS assembles, process , stores , Retrieves , evaluates and Disseminates the information .

Types of Management Information Systems

A management information system (MIS) is a computer-based system that provides the information necessary to manage an organization effectively. An MIS should be designed to enhance communication among employees, provide an objective system for recording information and support the organization's strategic goals and direction. There are four types of MIS that will be introduced in ascending order of sophistication.

Transaction Processing Systems

1. These systems are designed to handle a large volume of routine, recurring transactions. They were first introduced in the 1960s with the advent of mainframe computers. Transaction processing systems are used widely today. Banks use them to record deposits and payments into accounts. Supermarkets use them to record sales and track inventory. Most managers use these systems to deal with tasks such as payroll, customer billing and payments to suppliers.

Operations Information Systems

2. These systems were introduced after transaction processing systems. An operations information system gathers comprehensive data, organizes it and summarizes it in a form that is useful for managers. Most of these systems access data from a transaction processing system and organize it into a form usable by managers. Managers use operations information systems to obtain sales, inventory, accounting and other performance-related information.

Decision Support Systems (DSS)

3. A DSS is an interactive computer system that can be used by managers without help from computer specialists. A DSS provides managers with the necessary information to make intelligent decisions. A DSS has three fundamental components:
   1. Database management system (DBMS): Stores large amounts of data relevant to problems the DSS has been designed to tackle.
   2. Model-based management system (MBMS): Transforms data from the DBMS into information that is useful in decision making.
   3. Dialog generation and management system (DGMS): Provides a user-friendly interface between the system and the managers who do not have extensive computer training.

Expert Systems and Artificial Intelligence

4. These systems use human knowledge captured in a computer to solve problems that ordinarily need human expertise. Mimicking human expertise and intelligence requires that the computer (1) recognize, formulate and solve a problem; (2) explain solutions and (3) learn from experience. These systems explain the logic of their advice to the user; hence, in addition to solving problems they can also serve as a teacher. They use flexible thinking processes and can accommodate new knowledge.

Considerations

5. A potential problem with relying on electronic communication and processing of information is the loss of the vital human element. Sometimes because of the complexity of information, an MIS report cannot effectively summarize it. Very rich information is needed to coordinate and run an enterprise and certain classes of information cannot be quantified. For example, it might be wrong to evaluate an employee's performance solely based on numbers generated by an MIS. Numbers can indicate a performance problem but a face-to-face meeting will be necessary to discuss the nature of the problem.

MIS Functions

According to Milind Gandhi

MIS is set up by an organization with the prime objective to obtain management information to BE used by its managers in decision making. Thus, MIS must perform the following functions in order to meet its objectives.

• Data Capturing: MIS captures data from various internal and external sources of an organization. Data capturing may BE manual or through computer terminals. End users typically, record data about transactions on some physical medium, such as a paper form, or enter it directly into a computer system.

· Processing of Data: The captured data is processed to convert it into the required management information. Processing of data is done by such activities as calculating, comparing, sorting, classifying and summarizing. These activities organize, analyze, and manipulate data using various statistical, mathematical, operations research and other business models.

· Storage of Information: MIS stores processed or unprocessed data for future use. If any information is not immediately required, it is saved as an organizational record. In this activity, data and information are retained in an organized manner for later use. Stored data is commonly organized into fields, records, files and databases.

· Retrieval of Information: MIS retrieves information fro its stores as and when required by various users. As per the requirements of management users, the retrieved information is either disseminated as such or it is processed again to meet the exact MI demands.

· Dissemination of MI: Management Information, which is a finished product of MIS, is disseminated to the users in the organization.

MIS CHARACTERISTICS

According to Milind Gandhi:

A management information system has the following characteristics.

· System Approach: The information system follows a System’s approach. The system’s approach implies a holistic approach to the study of system and its performance in the light for the objective for which it has been constituted. This approach is anti-piecemeal in nature.

· Management Oriented: This is an important characteristic of MIS. For designing of MIS, top-down approach should BE followed. Top-down approach suggests that the system development starts from the determination of management needs and overall business objectives. The MIS development plan should BE derived from the overall business plan. Management oriented characteristic of MIS also implies that the management actively directs the system development efforts.

· Need Based: MIS design and development should BE as per the information needs of managers at different levels, viz., strategic planning level, management control level and operational control level. In other words, MIS should cater to the specific needs of managers in an organization’s hierarchy.

· Exception Based: MIS should BE developed on the exception based reporting principle, which means an abnormal situation, i.e. the maximum, minimum or expected values vary beyond tolerance limits. In such situations, there should BE exception reporting to the decision maker at the required level.

· Future Oriented: Besides exception based reporting, MIS should also look at the future. In other words MIS should not merely provide past or historical information; rather it should provide information, on the basis of projections based on which actions may BE initiated.

· Integrated: Integration is a necessary characteristic of a management information system. Integration is significant because of its ability to produce more meaningful information. For example, in order to develop an effective production scheduling system, it is necessary to balance such factors as:

1. Set-up costs,

2. Work force

3. Overtime rates

4. Production capacity

5. Inventory level

6. Capital requirements

7. Customer services

· Long Term Planning: MIS is developed over relatively long periods. Such system does not develop overnight. A heavy element of planning is involved. The MIS designer must have the future objectives and needs of the company in mind.

· Sub-System Concept: The process of MIS development is quite complex and one is likely to lose insight frequently. Thus, the system, though viewed as a single entity, must BE broken down into digestible sub-systems which are more meaningful at the planning stage.

· Central Database: A central database is the mortar that holds the functional systems together. Each system requires access to the master file of data covering inventory, personnel, vendors, customers, etc. If the data is stored efficiently and common usage in mind, one master file Can provide the data needed by any of the functional systems. It seems logical to gather data once, to properly validate it and to place it on a central storage medium, that Can BE accessed by any other sub system.