Management Information Systems
Management Information Systems (MIS)
 An MIS provides managers with information and support for
effective decision making, and provides feedback on daily
operations.
 A manufacturing MIS can help managers monitor a
manufacturing process to maximize the value to processes
within an organization.
 Information is provided to managers through various summary
reports that are usually generated through accumulation of
transaction processing data.
 Each MIS is an integrated collection of subsystems, which are
typically organized along functional lines within an organization.
 Thus, a financial MIS includes subsystems that address financial
reporting, profit and loss analysis, cost analysis, and the use and
management of funds.
 The architecture of an MIS is shown below.
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Sources of Management Information
 Management information systems is one of the systems that
managers use to obtain information. Other systems include
decision support systems, executive support systems and expert
systems.
Data Inputs to an MIS
 Most of the data source for MIS is the organization’s various
transaction processing systems that capture and store data from
ongoing business transactions.
 Data may also come from various functional areas (accounting,
finance, sales, etc.) of an organization.
 External sources of data may include customers, suppliers,
competitors, stockholders, and so on.
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Outputs of an MIS
 The output of most management information systems is a
collection of reports that are distributed to managers. These
include scheduled reports, key-indicator reports, demand reports,
exception reports, and drill-down reports.
Scheduled Reports
 These reports are produced periodically, or on a schedule, such
as daily, weekly, or monthly.
 Examples: a weekly summary report that lists total payroll costs of
a company. See next page.
Key-Indicator Report
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A key-indicator report summarizes the previous day’s critical
activities and is typically available at the beginning of each
workday.
 Examples include inventory levels, production activity, and sales
volume.
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Demand Report
 These reports are produced on demand or when requested by
managers.
 Example are: hours worked by a particular employee, total sales to
date for a product, and so on.
Exception Reports
 Exception reports that are automatically produced when a situation
is unusual or requires management action.
 For example, Inventory reorder report for items whose stock goes
below a predetermined number.
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Drill Down Report
 These reports provide increasingly detailed data about a situation,
as illustrated below.
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Guidelines for Developing Effective Reports
 Certain guidelines should follow when designing and developing
reports that yield best results. These are mentioned below.
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Characteristics of an MIS
A management information system performs the following functions:
Provides reports with fixed and standard formats:
 All reports are produced in an easy-to-read and standard format,
so managers in various functional areas find consistencies in
reports.
Produces hard-copy and soft-copy reports:
 Standard reports are typically printed on papers and they are
termed as hard copy
 Soft copy reports are displayed on computer screens.
Uses internal data stored in the computer system:
 MIS reports use primarily internal sources of data that are
contained in computer databases (through TPSs).
End users are able to develop their own custom reports:
 Although most of the standard reports are designed by and
analyst, the users should be able to develop reports on an ad-hoc
basis.
Requires formal requests from users
 Whenever an information system personnel (analyst, programmer)
develops a report, a formal request is necessary. This is not
required for ad-hoc reports.
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MIS for Competitive Advantage
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Provides support to managers as they work to achieve corporate
goals.
Enables managers to compare results to established company
goals and identify problem areas and opportunities for
improvement.
MIS and Web Technology
 Data may be made available from management information
systems on a company’s intranet.
 Employees can use browsers and their PC to gain access to the
data.
Functional Aspects of the MIS
 A management information system is organized according to the
business functionality of an organization.
 Thus an MIS contains systems in areas of accounting, human
resources, marketing, manufacturing, research and development,
legal services, operations/support, and finance. See figure next
page.
 Each functional system uses its own set of function-specific
subsystems, all of which interface with both the TPS and the MIS.
 Each functional system requires different information and support
for decision making; but they share some common information
needs.
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An organization’s MIS is an integration of various functional systems
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Financial MIS
Inputs to the Financial MIS
• Strategic plan or corporate policies
 Contains major financial objectives and often projects financial
needs.
• Transaction processing system (TPS)
 Important financial information collected from almost every TPS payroll, inventory control, order processing, accounts payable,
accounts receivable, general ledger.
• External sources
 Annual reports and financial statements of competitors and
general news items.
Financial MIS Subsystems and Outputs
• Financial Subsystems
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Profit/loss and cost systems
Auditing
Internal auditing
External auditing
Uses and management of funds
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A Marketing Management Information System
 A marketing MIS supports managerial activities in product
development, distribution, pricing decisions, and promotional
effectiveness.
 For example, the marketing MIS can be used to analyze
appropriate product prices. A bicycle manufacturing company
wants to sell bikes at a low price while maintaining a certain level
of profit. A marketing MIS can perform a price analysis and
produce a report to guide the pricing decision.
 Many factors such as intense competition and an increasingly
sophisticated customer audience, are forcing companies to rethink
their approach to marketing.
 The marketing MIS is customer driven. The challenge for the
marketer is to:
1. Quickly plan, create, and deliver marketing program according
to customer audience.
2. Capture feedback from the customers.
3. Fine-tune the program to better meet market (customer) needs.
4. Respond quickly to requests for information.
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A marketing management information system has data inputs,
processing subsystems and output reports
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Inputs to the Marketing MIS
As compared to other management information systems, the
marketing MIS relies on external sources of data. The sources
include the Internet, competition, customers, journals and magazines,
and other publications.
Strategic Plan and Corporate Policies
 Marketing relies on the organization’s strategic plan for sales
targets and projections.
 A sales projection of a firm might be that it is expected to increase
sales by steady 10% for the next five years. A marketing MIS
report from such a firm might organize current sales performance
as compared to the sales projection.
 Strategic plan can also contain information about projected needs
for the sales force, product and service pricing, distribution
channels, promotion, and new product features.
Transaction Processing System
 The transaction processing system and E-commerce of an
organization contains a large amount of data on products,
customers, and sales force.
 Sales data on products can reveal which products are selling and
which ones are slow sellers. Reports summarizing order data
might include sales activity by customer, product, and
geographical region.
 The marketing MIS might use the product information to formulate
future sales, develop advertisements, or make product
development decisions.
 Customer data may be used to develop customer incentive
programs such as frequent flyer mileage in airlines.
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External Sources
 Data on competitors such as new products and services, pricing
strategies, strengths and weaknesses of existing product lines,
packaging, marketing and distribution methodology- is important.
 Knowing what the competitors are doing or are likely to do is
helpful in designing new products and services, and marketing an
existing product line.
 Competitive data on competitors can be obtained from their
marketing materials, brochures, sales promotions, and the web.
 The process of obtaining competitive market information is termed
as marketing intelligence.
 Information on the target market of a farm’s product is also
important.
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Subsystems of a Marketing MIS
Subsystems for the marketing MIS include marketing research,
product development, promotion and advertising, and product pricing.
These subsystems produce various market-related reports.
Marketing Research
 The purpose of the marketing research is to conduct a formal
study of the market and customer preferences.
 Surveys, questionnaires, pilot studies, and interviews are popular
marketing research tools.
 Marketing research can identify special features such as style,
color, size, appearance, price, and warranties of a product
expected by current as well as prospective customers.
 Data collected for marketing research can be used to generate
reports on key indicators like customer satisfaction and total
service calls.
Product Development
 Although product development involves the conversion of raw
materials into finished goods and services, many factors such as
materials, plant capacity, labor skills, cost, and engineering factors
are important.
 The product development subsystem analyzes these factors in
developing and pricing new products.
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Promotion and Advertising
 One of the most important functions of any marketing effort is
promotion and advertising. Product success is directly related to
advertisement and sales promotion.
 Television coverage, newspaper ads, Internet ads, promotional
brochures and literature, and training program for salespeople are
part of the process.
 Computer programs can used to set-up budgets for various
promotional activities, and then monitor expenses and overall
effectiveness of each of the activities.
Product Pricing
 Product pricing involves determining retail, wholesale, and
discount price on a product.
 Most companies try to develop pricing policies that maximize total
sales revenue.
 Computer programs are used to help determine the price of a
product depending on supply and demand of the product in the
market.
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Outputs of a Marketing MIS
Reports generated by the marketing MIS can help marketing
mangers make good sales decisions.
 The sales-by-product report lists all major products and their sales
for a period, such as a week or month. This report shows which
product is doing well and which ones need improvement or should
be discarded altogether.
 The sales-by-salesperson report lists total sales for each
salesperson for a period, such as a week or month. This report
can be subdivided to include products sold by each salesperson.
 The sales-by-customer report lists sales for each customer for a
period, such as a week or month. This report can be used to
identify high and low-volume customers.
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A Human Resource Management Information System
A human resource or personnel MIS is concerned with activities
related to employees of an organization. Activities performed include:
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workforce analysis and planning
hiring
training
job and task assignment
other personnel-related issues.
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Inputs to the Human Resource MIS
There are typically three inputs: strategic plan, TPS, and external
sources.
Strategic Plan or Corporate Policies
 Plans such as corporate restructuring, decentralization, mergers,
strategic alliance, and total quality program have impact on human
resources.
 Implication of these plans requires employee training, relocation,
additional budget, and so on.
Transactions Processing System
Payroll Data:
 Costs for employee payroll, healthcare, retirement, and other
expenses come directly from the transactions processing system.
 Summary of this information by department, division, branch, and
location is valuable.
 This information is important to budget payroll expenses for the
next cycle.
Order Processing Data:
 Orders placed by employees of an organization can be arranged
by dollars, items, quantity, and so on.
 Orders placed for a certain cycle can be used to budget for the
next cycle.
Personnel Data:
 Personnel data includes job classification, skill, work experience,
performance evaluation, and so on.
 This data can be to match an employee for a certain type of job or
project.
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External sources
 Data on salaries and benefits paid by job categories from other
companies is an important resource for a company.
 This data can be used to determine wages for new employees.
 Information on various government regulations such as taxes,
ethics rules, union rules, export rules, are also important.
Human Resource MIS Subsystems and Outputs
 Most organizations have computer systems to assist with human
resources planning, hiring, training and skills inventory, and job
and salary administration.
 Outputs include reports such human resources planning report,
job application review profiles, skills inventory reports, and salary
surveys.
Human Resource Planning
 The purpose of this subsystem is to place the right number and
kinds of employees in the right jobs when they are needed.
 Effective planning requires defining the future needs of
employees. Data on current and future projects can provide this
information.
 A typical output is a human resources needs and planning report.
It should identify the number of employees needed by job category
by time line.
 For example, a new software contract may require 10
programmers in three months.
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Personnel Selection and Recruiting
 Companies seeking new employees often use computers to
schedule recruiting efforts and trips, and test a candidate’s skills.
 For example, a computerized testing can be used to test a
candidate’s programming skill, communication skill, ability of group
interaction, personality, and so on.
 Recruitment efforts by HR also include participation in job fairs,
sending managers to college campuses, sending fliers, job posting
in the internet, creating resume database, and so on.
Training and Skills Inventory
 Specialized training may include training for new software, new
instrument, advanced programming, and management skills.
 General training might include corporate policies, ethics, dress
codes, sexual harassment, and so on.
 Scheduling employees in corporate training classes, educational
conferences, self-paced computer programs, and setting up
intranet, are some of the activities of the HR.
 “Skills inventory report” of employees is a typical report that can be
generated on a scheduled basis.
Scheduling and Job Placement
 When a large group of employee is involved in a particular project,
scheduling is important. For example, scheduling engineers and
support personnel for a round-the-clock space shuttle flight at JSC
is very important.
 Placement of military personnel, at various locations of the world,
is facilitated by computers. Employee work schedules can be
developed for each employee.
 Schedules and job placement reports by department and location
are some of the reports to mention.
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Wage and Salary Administration
 Determine wages, salaries, and benefits (medical, dental,
retirement) by job skill and education of employees as compared
to industry standard.
 Develop evaluation procedure for employees. Some large
companies use Intranet to evaluate employees.
 Develop employee retirement plan (savings, IRA, 401K, 403B),
including the utilization of voice, Intranet and Internet for easy
access of this information.
 Create wage and salary report of employees by job skills,
experience, department and so on.
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Other Management Information Systems
Accounting MISs
 Provides aggregated information on accounts payable, accounts
receivable, payroll, and other applications.
 Smaller companies may retain an outside accounting firm to assist
in accounting functions.
Geographic Information Systems (GISs)
 Enables managers to pair pre-drawn maps or map outlines with
tabular data to describe aspects of a particular geographic region.
 A housing company may use it to display various data for a plot
along with the map.
 Government agencies may use it to display good or bad crops for
a region in a broad geographical region.
 Finding a location or distance between to points is common use in
the web.
 Fire department may use it to quickly locate a fire hydrant in case
of emergency.
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