MANAGEMENT INFORMATION SYSTEMS
Chapter 1
Chapter 1: Introduction To Information System
1.1 Learning Outcomes
After complete this lesson, you would be able to:
 Understand about information system.
 Describe about business systems, characteristics of business
systems and types of business systems.
 Find the levels of organization.
 Explain the different roles of an Information Technology (IT)
department.
1.2 Definition Of System
 System is a group of related component interacting with each
another to perform some tasks in order to achieve the goals set.
 Information system is a kind of system that makes use of new
technology to perform tasks.
 For example, information systems handle daily business
transactions, improve company productivity and help managers
make sound decisions.
 Business Information Systems are systems are used specifically
to help in the business related function.
 Model of a simple system
Data
Processing
Information
Input
Output
1.3 Information System Concept
 Five key elements of an information system (IS) are:
- Data
- Software
- Hardware
- Procedures
- People
Data
Data
Software
Hardware
Procedures
Input
Processing
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Information
People
Output
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 Hardware
- Hardware refers to the physical layer of the information system.
- These include computers, networks, communication equipment,
scanners, printers, digital capture devices, Global Positioning
Satellite (GPS) equipment and other technology-based
infrastructure.
 Software
- Software consists of system software and application software.
- System software controls the hardware and software environment
and includes the operating system and utility programs that handle
common function such as sorting data, converting files into a
different format and making backups.
- Application software consists of program that process data into
information. These might includes spreadsheets, word processors,
database management systems, payroll, order entry and accounts
receivable program.
 Data
- Data is all information either is produced directly or derived from
other data, which is related to a particular system or business.
- Data is served as the source to be brought into the information
system for processing and so to produce information after that.
 Procedures
- Procedures define the tasks that must be performed by people who
work with the system, including users, managers and information
system staff.
- Procedures typically are described in written documentation /
manuals or online reference material.
 People
- Primary purpose of an information system is to provide valuable
information to users.
- Information system requires the efforts of skilled professional, such
as system analysts, programmers and IS managers to build it.
- Users, who are sometimes called end users, include employees,
customers, vendors or others who directly interact with the system.
1.4 Business Information System
 Business information system of a company normally consists of a
series of subsystems.
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 Each of the subsystems is a smaller IS that processes data into
useful information.
1.4.1 Characteristics Of Business Information System
- Relationships with other systems
 Business Information Systems often are interdependent.
 For instance, output information from the purchasing system
becomes data input to the production and finance systems.
- Boundaries / Scope
 A boundary between two systems indicates where one system
ends and the other begin.
 The boundary between two systems is not always clear-cut. It
takes coordination and proper system definition to set these
boundaries correctly.
- Specialized business needs
 In addition to the typical type of Business Information Systems,
each system has their own purpose and functions.
 Two same category of Business Information System might use
different procedures in producing the information. Thus,
knowing the accurate user requirement is critical.
 Size of the companies in the same industry may have very
different information systems requirements as well.
 For example, banks can range in size from a local operation
with a main office and one or two branches to a multinational
bank with branches in many states and foreign countries.
1.4.2 Types Of Business Information Systems
 Six broad categories of Business Information Systems are: - Operational Systems / Transaction Processing Systems (TPS)
- Management Information Systems (MIS)
- Decision Support Systems (DSS)
- Expert Systems (ES)
- Office Automation Systems (OAS)
 Operational Systems / Transaction Processing Systems (TPS)
- An Operational System process data generated by the day-to-day
business transactions of a company.
- Eg. Coffee shop, bank, clinic, etc.
- The purpose of TPS is to computerize an existing manual system
for faster processing, reduced clerical costs and improved customer
service.
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 Steps in processing a transaction:
Step 1: Enter Data
Step 2: Validate Data
Online Transaction
Processing (OLTP)
Step 3: Process Data Into Info
Step 4: Store Processed Data
Batch Transaction
Processing (BTP)
Step 5: Generate Output
Step 6: Support User Queries
 Management Information Systems (MIS)
- A computer-based system that generates timely and accurate
information for low and middle management in order to monitor
and control the internal operations of an organization.
- Usually, the information generated by an MIS helps managers
understand the day-to-day operations of the company, such as
weekly sales, daily production, monthly operating expenses, etc
- For example, MIS reports could highlight slow or fast-moving
items, customers with past due balances and inventory items that
need reordering.
- With this kind of information, better management decisions can be
made.
- Input – TPS & other internal company sources.
- Output – Summary & exception report*
- Eg. Bank manager – receives a summary report of yesterday’s
deposits & withdrawals.
 Decision Support Systems (DSS)
- Frequently, top management needs information that is not provided
routinely by operational and management information system.
- For instance, management might want to know the effect on
company profits if sales increase by 10 percent and costs go up by
5 percent. This type of information sometimes called the what-if
analysis, and it needs a DSS to support.
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- DSS helps make business decisions by analyzing internal or
external data.
- Internal data comes from an organization's own files, while
external sources might include information on interest rates,
population trends or new housing construction from external
bodies.
Internal Data
 Cost of raw material
 No. of people required for the job
 Time needed to finish the job
External Data
 State and federal taxes
 Regulatory requirements
 Expert Systems (ES)
- Also called a (knowledge-base or rule-based system) is one in
which the knowledge of one or more human experts along with the
rules for applying that knowledge are stored and later accessed for
use in decision making.
- It is simulate to human reasoning by combining a knowledge base
and inference rules that determine how the knowledge is applied.
- An expert system examines a problem, defines and assesses
solutions to it, and suggests which solutions are better.
- There is increasing use of expert system technology to solve realworld problems in many industries.
 Office Automation Systems (OAS)
- Office automation systems have empowered employees and made
them more productive in their tasks.
- Office systems might include local and wide area networking,
electronic mail, voice mail, fax, video conferencing, word
processing, automated calendars, electronic filing, database
management, spreadsheets, desktop publishing, presentation
graphics, company intranets and Internet access throughout the
company.
 Executive Information System (EIS) or Executive Support System
(ESS)
- Software that analyzes and presents information to executive
decision makers in a useful, friendly and customized format and
their need to make unstructured decisions.
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- It consists of a set of tools and techniques such as color graphics,
touch screens and voice-activated commands that help managers to
retrieve, analyze, navigate, summarize and distribute large volumes
of data quickly and efficiently.
- EIS combines the features and capabilities of both management
information systems and decision support systems, but with more
flexibility and better support for unstructured decision making.
Different between EIS and DSS
1. EIS – used to deliver and display information (Information
Delivery)
2. DSS – more appropriate for analyzing problem (Problem Solving)
1.5 Structured, Semi-Structured And Unstructured Decisions
 Many management decisions are periodic and predictable.
 For example, companies regularly make decisions regarding
minimum inventory levels or customers with past due accounts.
 The information required for these decisions can be predefined and
alternative actions can be specified in advance.
 These decisions are called structured decision, because they occur
regularly, have predefined information requirements and result in
predetermined actions.
 Unstructured decision cannot be predicted and whose information
needs cannot be predefined.
 Unstructured decision making is very common for top managers,
where complex issues of corporate strategy and policy are
involved.
 For instance, corporate researchers often try to predict consumer
tastes and spending patterns for the next five to ten years.
 Semi-structured decisions are not as predictable and definable as
structured decisions.
 An example of a semi-structured decision might involve the impact
of inflation on production costs.
1.6 Organizational Levels
 Most companies organize with operational personnel reporting to
lower managers, who report to middle managers, who report to top
managers.
 In a corporate structure, top managers report to the board of
directors who are elected by the shareholders.
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Top
Management CEO, President, Vice President
Middle Management
Lower Management
Operational Personnel
Director, Manager
Supervisor, Team Leader,
Coordinator
Sales Representative, Retail Associate, Production
Worker, Team Member, Administrative Assistant,
Tech Support, Representative, Accounting Clerk,
Financial Analyst
 Operational Personnel
- Spend most of their time performing repetitive, day-to-day
functions that follow well-defined procedures.
- Production-line workers, clerks, sales representatives and auditors
are examples of operational personnel.
- Operational employees use information system to enter and receive
data they need to perform their job.
 Lower Management
- Supervisors or team leaders who supervise the operational
employees and carry out day-to-day plans.
- They direct operations, ensure that the right tools, materials and
training are available, make necessary decisions and take corrective
actions.
- Most lower-manager decisions are highly structured.
- A supervisor's information needs usually are narrow, because he or
she only requires information in one area of responsibility.
 Middle Management
- Focus on a longer period plans, usually ranging from one month to
one year.
- They develop plans and allocate company resources to achieve
organizational objectives in a process called tactical planning.
- Middle managers delegate authority and responsibility to first-line
supervisors and work closely with them to provide direction,
necessary resources and feedback on performance.
- Most middle management decisions are semi-structured and occur
in routine patterns.
- Compared to supervisor, middle managers need less detail and
more exceptions and summary information.
- Exception reports identify variances from set targets and help
managers identify situations that require action.
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 Top Management
- They responsible for long-range planning and they establish the
overall company mission, policies and goals, including future
products and services.
- This type of planning is called the strategic planning, which
ensures that the company will survive and grow in the future.
- Because top managers are concerned with the entire company, they
need information from the entire company.
- Many top management decisions are unstructured, top managers
also need what-if information from decision support systems to
make unstructured decision.
- Top management need information from outside the company to
address issues involving economic trends, technology, competition,
governmental agencies and shareholders.
Organizational
Level
Responsibility
Decision
Making
Top
Management
Middle
Management
Develop long-range goals,
plans and strategies
Develop short-range goals,
plans and tactics
Unstructur
ed
Semistructured
Lower
Management
Develop day-to-day plans
and supervise operational
personnel
Perform routine functions
Structured
Operational
Personnel
Structured
Information
Systems
Requirements
EIS, MIS summaries,
DSS, OAS
MIS summaries and
exceptions, DSS
OAS
TPS details, some
MIS summaries and
exceptions, OAS
TPS details, ES,
OAS.
1.7 Information Technology Department
 Information Technology (IT) Department develops and maintains a
company’s information systems.
 The structure of the IT department is varies among companies, as does
its name and placement within the organization.
 In a small firm, one person might handle all computer support
activities and services, whereas a large corporation might require
many people with specialized skills to provide information system
support.
 The IT group provides technical support, which includes six main
functions: application development, systems support, user support,
database administration, network administration, and web support.
 These functions overlap considerably and often have different names
in different companies.
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Director
Information Technology
Application
Development
Systems
Support
and
Security
User
Support
Database
Administration
Network
Administration
Application Development
 Traditionally, IT departments had an application development group
composed of systems analysts and programmers who handled
information system design, development, and implementation.
 Today, many companies use development teams consisting of users,
managers, and IT staff members for those same tasks.
Systems Support and Security
 Systems Support provides vital protection and maintenance services
for system h/w and s/w support including enterprise computing
systems, network, transaction processing systems, and corporate IT
infrastructure.
 The systems support and security group implement and monitors
physical and electronic security hardware, software and procedures.
 They install and support operating systems, telecommunications s/w,
and centralized database mgmt systems.
User Support
 User support provides users with technical information, training, and
productivity support.
 This function usually called a help desk or information center (IC).
 A helpdesk staff trains users and managers on application s/w such as
e-mail, word processors, spreadsheets, and graphic packages.
 In many companies, the user support team also installs and configures
s/w applications that are used within the organization.
 Although user support specialists coordinate with other technical
support areas, their primary focus is user productivity and support for
user business process.
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Web
Support
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Database Administration
 Database administration involves database design, mgmt, security,
backup, and user access in a large company.
 However, in small and medium-sized companies, IT support persons
perform those roles in addition to other duties.
 Regardless of company size, mission-critical database applications
require full-time attention and technical support.
Network Administration
 Business operations often depend on networks that enable multi-user
data access and processing.
 It includes h/w and s/w maintenance, support, and security.
 In order to controlling user access, network administrators install,
configure, manage, monitor, and maintain network applications.
Web Support
 Web support specialists, often called webmasters, support a
company’s Internet and intranet operations.
 It involves design and construction of Web pages, managing h/w and
s/w, and linking Web-based applications to the company’s existing
information systems.
The Systems Analyst position
 A system analyst investigates, analyzes, designs, develops, installs,
evaluates, and maintains a company’s information systems.
 To perform those tasks, systems analyst constantly interacts with users
and managers within and outside the company.
 On large projects, the analyst works as a member of IT department
team, whereas he or she might work alone on smaller assignments.
 As a member of a functional team, an analyst is better able to
understand the needs of that group and how information systems
support the department’s mission.
Responsibilities
 The systems analyst’s job overlaps business and technical issues.
 An analyst translate business requirement into practical IT projects
that meet the company’s needs.
 They perform a wide array of tasks, such as building business profiles,
reviewing business process, selecting h/w and s/w packages, designing
information systems, training users, and so on.
 They also plan projects, develop schedules, and estimates costs.
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Skills required
 A systems analyst needs solid technical knowledge, strong oral and
written communication skills, problem solving skills, good analytical
ability, and an understanding of business operations and processes.
 They need to have good interpersonal skills to deal with people at all
levels, from operation staff to senior executives, including people
outsider like s/w and h/w vendors, customers, and government
officials.
 Analyst also maintains their skills by attending training courses and
workshops.
Review Questions
1.
Define information system.
2.
Explain the organizational levels in an organization.
3.
Differentiate between Executive Information System (EIS) and
Decision Support System (DSS).
4.
Discuss the roles of information technology department.
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