MANAGEMENT OF INFORMATION RESOURCES AND CONTROL SYSTEMS (Unit10)
UNIT 10 MANAGEMENT OF INFORMATION
RESOURCES AND CONTROL SYSTEMS
10.2 Information, Organisation and the System View
10.3 Concept, Structure and MIS Growth
10.4 Strategic Planning for MIS
10.5 Top Management Interest and A Corporate MIS Plan
10.6 Information Requirements, Analysis and Critical Success Factor (CSF) Method
10.7 Resource Allocation and Charging for Services
10.8 Information Resource Assessment
10.9 Management Steering Committees and Information Network
10.10 Role of MIS at Various Management Levels
10.11 Desirable Characteristics of MIS
10.12 Let Us Sum Up
10.13 Key Words
10.14 Clues to Answers
After going through this Unit, you should be able to:
• understand the growth process related to MIS function in an organisation,
• relate the issues concerned with Information Resource Management in the organisations with
• comprehend and conceptualise the systems basically using a classification of input,
processor, output, control and the environment,
• appreciate and understand the management functions at various levels in the context of
relationships between management and informational needs, and
• define clearly the concept of management information.
Information has already been recognised as one of the crucial corporate resources. The
significance of producing more information; information processing and making information
available to users is being realised more and more in the recent years. Whether it is industry,
commerce, banking, education, economics or tourism, information is needed everywhere. The
investors need information on the financial health of the organisation before extending any credit
facility to the organisation; the government agencies need information for national planning and
industrial control. The organisations have long since realised the need for the availability of
information resource for the interested groups as well as individuals on time.
A significant part of an individual’s working and personal time is spent on searching for,
recording and absorbing information. Information is ‘live’ as it is required to be updated all the
time, and it is renewable. Information is substitutable and transportable and can be made to travel
nearly at the speed of light in a communication networks. Today, information gets doubled in just
five years. The exponential growth of information all around makes it necessary that it is properly
collected, stored and retrieved in various fields so that it could be usefully exploited where and
when needed. Information resources have to be managed and management of Information has
emerged as a specialisation in its own way. The management of information resource has also
been subjected to a lot of thinking. Organisations have been made to think seriously about the
growth and development of this function as an independent support function rather than as part of
a major function, such as, finance and accounting. Serious thought has been given to the
involvement of the users in the information processing activity as well as to the conversion of the
function to a profit centre by developing and implementing change-out systems for the services
rendered to the user groups.
To develop an understanding about the information resource management in an organisation and
other related issues, the present Unit discusses various concepts related to the information
systems management. Here, we are interested in a system for providing the necessary
management information. Thus, we need to conceptualise a management information system
Before describing explaining each term, let us give a crude definition of sub-systems which may
be composed of further sub-systems. We could carry on this refinement till we arrive at the so
called ‘black box’ level which is some perceptible manageable level. Just as a system is made up
of sub or sub-sub-systems it itself is part of a super or supra system. This could be termed as the
environment in which the system operates. The forces in the environment impinge on the system
while the system itself exerts pressure outwardly on the environment thereby having some sort of
a dynamic equilibrium at the boundary which separates the environment from the system.
Whether the MIS is computer based or non-computer based, it ought to focus on managerial
effectiveness and in the earlier Units you have been introduced to the various aspects related to
MIS. However, once again in this Unit certain issues related to MIS, which have not been
discussed earlier, are to be taken up to complete your knowledge on MIS. Issues related to
Information resources and control systems have also been discussed in this Unit.
10.2 INFORMATION, ORGANISATION AND THE SYSTEMS VIEW
The organisational factors play a major role in what type of information is to be processed and
communicated to the decision-makers. These factors include nature of the organisation, category
of the organisation, structure of the organisation, size of the organisation and the management
style followed in the organisation.
Information is the primary tool that will help the management, its products and services in the
competitive environment. It should be clearly understood that the information technology
and quality information are not the goals but merely the competitive weapons that support
the organisations in their activities. Without quality information, organisations are operating in
a world of uncertainty, and quality information could be produced by taking a number of steps
and making sure that the information generated and presented to the decision-makers is accurate,
timely and relevant.
There has been a subtle but definite shift in the way the MIS function is looked upon in an
organisation. This change is characterised by the change in the nomenclature of the titles under
which the function exists in various organisations. Initially, the executive looking after the
function of data processing with the help of the computer was referred to as the computer
manager, and, in the 1960’s the same position was renamed as Electronic Data Processing
Manager. During this period, the department was also named as the EDP Department. It is during
the seventies and eighties that the function has been recognised as MIS function and the manager
is called the MIS Manager. There are other titles also given to the information processing
function. Some of the common ones are Management Services Division, Corporate Services
Division and Information Resource Management.
A change that has occurred in recent years is the adoption of the so called ‘systems approach’. In
the past, managers, decision-makers and problem-solvers attempted piecemeal solutions, thinking
in an isolated compartmentalised fashion independent of other operational units in the
organisation. Today besides professional managers, political administrators have also become
aware of the need for adopting an integrated holistic perspective by adopting the systems
approach to problem conceptualisation and decision-implementation.
Today we find everyone talking of systems — the transport system, educational system, healthcare
delivery system, defence system, economic system, communication system, management
information system, transaction processing system, decision support system, computer systems,
etc. We are in the midst of an era of systems so to say. But what exactly do we mean by a
A system is an organised or complex whole. It is an entity, conceptual or physical, which consists
of interdependent parts or components. It is this interdependency which is a characteristic of the
parts of the system. It is an interlocking complex of processes characterised by many reciprocal
cause effect pathways. A system is a complex of elements or components directly or indirectly
related in a casual network. This brings in the notion of some type of feedback and control to see
whether or not the system is in a position to achieve the goals/purpose/objectives of the system.
Any system must have an objective or a set of objectives or a hierarchical set of objectives. In a
large context, a system is an assembly of procedures, processes, methods, routine techniques, etc.
united by some form of regulated interaction to form an organised whole. In fact no system,
unless it be a totally closed system, can exist in isolation.
A system is made up of sub-systems which may be composed of further sub-systems. We could
carry on this refinement till we arrive at the so called ‘black box’ level which is some perceptible
manageable level. Just as a system is made up of sub or sub-sub-systems, it itself is part of a
super or supra system. This could be termed as the environment in which the system operates.
The forces in the environment impinge on the system while the system itself exerts pressure
outwardly on the environment thereby having some sort of a dynamic equilibrium at the
boundary which separates the environment from the system.
Super or supra system
The system under consideration Other Systems
Sub system-1 Sub system-2 Sub system-N
(SSS-1) SSS-2 SSS-M
Black Box BB-2 BB-Q
Figure I: Hierarchy of Systems
The above narrative description has been graphically depicted in Figure I. This figure, while
depicting the Hierarchy of systems, shows that every system is a part of another system. The
inter-linking of sub-systems and systems make a system work better and gives the best results in
a given situation and system.
10.3 CONCEPT, STRUCTURE AND MIS GROWTH
Few concepts have been more vague than an MIS as understood in its definition and scope. Many
experts think that an MIS is the computerisation of clerical work. This is incorrect. Others hope
that some day it might be possible to have an all knowing expert computer system which will
provide answers and decisions for complex problems when a manager/executive simply presses a
few buttons. This view would perhaps remain a dream. An MIS is a means for connecting the
managed operating systems by exchange of information. An MIS is more than a set of ideas or
concepts. It is an operational system performing a variety of functions to produce outputs which
are useful to the operating personnel and management of an organisation. Managers have always
had ‘sources’ of information, the MIS provides a system of information. It is imperative to realise
that a systems approach to managing is necessary to compete in today’s world. The systems
approach to management must precede the design and use of an MIS. The computer is only a
component, or a tool of the MIS, not the MIS itself or the central focus of MIS. Management
must take an active part in the design of the MIS. Technical knowledge of the computer, though
preferable, is not necessary for the manager to perform his or her role in the design of MIS.
Davis and Olson define MIS as an integrated user machine system for providing information to
support operations, management and decision-making functions in an organisation. The system, if
it is computer based, utilities computer hardware and software, manual procedures, decision
models and preferably a data base. A data base is a centrally controlled integrated collection of
logically organised data. The underlying concept of a data (bank) base is that data needs to be
managed in order to be available for processing and have appropriate quality and value. Over
time, the concept of a single highly integrated system was demonstrated to be too complex to
implement. The MIS concept is now veering around to that of a federation of sub-systems
developed and implemented as needed but conforming to the overall plan. Thus, rather than a
single global MIS, an organisation may have many related information systems which serve
managerial needs in various ways.
MIS is also an organised method of providing past, present and projected information relating to
internal operations of an organisation and external intelligence by good environmental scanning
techniques. All organisations have some kind of information system even though some systems
might be nothing more than filing cabinets and an accounts ledger. An information system
should have a systematic formal assemblage of components that performs data processing
operations to :
• meet the legal and transactional data processing requirements,
• provide information to managers at all levels for carrying out their functions effectively,
• provide a variety of useful reports, as required to internal and external constituents.
If a report does not have an element of utility, why generate it or ask for it, unless it is a statutory
requirement. Since the facts are too many and keeping track of them means getting bogged down
in day-to-day routine matters, the managers do not have sufficient time for creative and
innovative work and for decision-making of a strategic nature. It is, therefore, imperative to ask
for ‘exception’ reports. Perhaps it is well to introduce a brainstorming session of executives
involved at different levels to specify what they are looking for, what is to be done, by whom, by
what data and in what form? It would be worth creating confidence and mutual trust about not
reporting normal things. Perhaps some type of a selective information management could be
pursued somewhat similar to the selective inventory management of value based ABC analysis
and critically based VED (Vital, Essential, and Desirable) form.
For studying the growth of the MIS activity in an organisation we could apply the model
developed by Richard Nolan in 1979, popularly known as the Stage Growth Hypothesis. This
six-stage model very clearly explains the stage by stage development of the MIS function in an
organisation. This model provides a framework for the analyst to understand the reasons for
success or failure of the MIS function in an organisation and also assists in developing solutions
to take the functions ahead.
According to this model, there are distinctive features associated with each and every stage of the
growth of the MIS function in an organisation from which the decision-makers can understand
the growth pattern and use the MIS function to the strategic advantage of the organisation.
Figure II depicts the framework suggested by Nolan. In this figure, the horizontal axis shows the
stages of growth, and the vertical axis shows the growth processes of the MIS function. The
curve on the graph shows the trend of the MIS budgets. It could be noted that the budget curve
shows an upward trend till the third stage, and becomes more level towards the beginning of the
fifth stage onwards. The different stages discussed in the model are as under:
D P Planning
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6
Initiation Contagion Control Integration Data Admn. Maturity
Figure II: Nolan Six Stage Growth Model
Stage-1 : Initiation
The first time the organisation buys and installs a computer system, the MIS function in the
organisation has entered this phase. Since most medium and large-sized companies have
installations of the computer systems, this stage is already reached as far as the majority of the
organisations are concerned. During this stage, the following features may be distinctive :
a) Functional cost reduction applications;
b) Specialist DP organisation for technological learning;
c) Lack of strict planning and control in the MIS function;
d) Hands-off training for user awareness.
Stage-2 : Contagion
The second stage involves a rapid proliferation of the computer resource all over the organisation,
sometimes based on the actual organisational needs and sometimes just to add some equipment to
feel important in the organisation. This is the phase when most of the organisational units feel
that they should have an access to the computer hardware, develop software and have the trained
manpower working in their units. Every unit head wishes to have some computer resource
controlled exclusively by himself or herself. Due to this non-planned proliferation, the MIS
function grows disproportionately and, there is, absolutely no control on the MIS budgets
resulting in confusion in the organisation. The budgets go shooting up without any controls. The
applications are developed in an independent manner, and this results in duplicated efforts and
systems. This stage is marked by the following characteristics :
a) Proliferation of applications,
b) User-oriented departmental programmers,
c) More relaxed planning and control of MIS function,
d) Users are superficially enthusiastic without sincere involvement.
Stage-3 : Control
It is towards the end of the second stage that the management gets conscious of the fact that the
benefits being derived are not in proportion to the actual expenditure on the MIS activity, and the
organisation starts exercising control and some restraint in sanctioning the budgets. The
management takes serious interest in planning the function, and it results in a better control on the
activity. The MIS budgets get checked with the result that the users also get aware of the fact that
information technology should be used to some meaning rather than just have some infrastructure
under them. The major highlights of this stage are :
a) Upgradation of the documentation and modification of existing applications,
b) Middle level management to look after the MIS function,
c) Formalised planning and control of MIS function,
d) Users are involved with some accountability imposed on them.
Stage-4 : Integration
After the management has been able to provide the control guidelines to the MIS function, the
organisation starts thinking in terms of integrated applications so as to avoid the duplication of
efforts and systems, as well as, providing better levels of integrity to the systems and data. Data-
based systems are used and the applications are designed as subsystems of the organisational
systems, unlike the earlier ones interfunctional and intrafunctional integration is ensured through
the database. Capable database management systems are used to manage the data, and the data
communication facilities are used to transfer data from one location to another. The budgets, once
again, start looking high. This stage is marked by the following characteristics :
a) Retrofitting the existing applications using data base technology,
b) Establishing the computer utility and the user accounts teams,
c) Tailor-made planning and control systems,
d) The user accountability to learn and involve in the systems.
Stage-5 : Data Administration
With the integration of the applications using a data base environment in the fourth stage, the
MIS function in the organisation undergoes a major change in the functional outlook. The
technical expertise looses over to the management process and responsiveness to the users, and
the data becomes the most crucial resource in the organisation to be managed. Since the data is
being stored, used, manipulated and processed from integrated files in the database, the function
of the database administrator to plan, supervise, provide, control and secure the data becomes
most important. The stage is characterised by the following features :
a) The application are further integrated as per the organisational requirements,
b) The data-processing organisation is for the data administration,
c) The systems are based on data and system sharing basis,
d) The user becomes effectively accountable for the MIS systems.
Stage-6 : Maturity
It is almost impossible to attain the sixth stage of maturity when everything has been achieved,
and the MIS systems will never fail themselves or fail the organisations. The applications by this
stage have been incorporated into the organisational functioning and these are as per the strategic
requirements of the organisation. The technology has become an integral part of the
organisational thinking, philosophy and systems. Some of the major features related to this stage
a) Integration of application mirrors the organisational strategic choices,
b) The emphasis is on the data resource management rather than on the system management,
c) Data resource has become the key factor in strategic planning,
d) The users and data-processing professionals share the responsibility of the MIS function,
jointly and willingly.
It is towards the end of the third stage that the information technology becomes a turning point
for the strategic performance of the organisation and the full benefits of the information
technology are realised by the organisation. Some of the organisations are able to go beyond this
point, but some organisations may never reach this point at all. Such organisations can never have
the advantages of the technology, and may find it difficult to survive in the competitive
Check Your Progress – 1
1) Explain ‘Black Box’ level.
2) What do you understand by Stage Growth Hypothesis?
10.4 STRATEGIC PLANNING FOR MIS
Planning of the MIS effort is very crucial for organisations. Absence of proper planning may
result in the sky-rocketing of MIS budgets, thereby leading to a resource crunch during the later
stages of MIS growth. In the initial stages, the application development projects and operations
of completed application systems are the focus of the planning efforts. As the MIS activities
grow in an organisation, the planning shifts its attention from operational planning to strategic
planning. For operational planning of MIS, common techniques such as structural flow, charting,
structured programming and walk throughs are used. For managerial and strategic planning of
MIS, formation of steering committees composed of key executives from the user and MIS
groups is a common practice. These steering committees are generally created to monitor proper
functioning of MIS activity towards the achievement of long range organisational goals.
Organisations commonly face the following problems in MIS planning :
a) The MIS plan may not be compatible with the overall strategies and objectives of the
b) The framework of MIS structure may be difficult to design,
c) Allocations of development resources to various applications may be difficult,
d) Project management, to control time and cost schedules, may be lacking.
The overall objectives of planning for MIS have changed from linking processing strategy with
business strategy in 1970s to linking the information technology strategy with the business
strategy in 1980s.
10.5 TOP MANAGEMENT INTEREST AND A CORPORATE MIS
For successful growth of the MIS activities in any organisation, the top management’s
continuous interest as well as involvement is crucial. Not only that the top management should be
involved in computerisation, it should also insist on having a corporate plan for MIS activities.
The top management involvement could be in the following areas :
• Providing appropriate infrastructural facility,
• Linking MIS with business activities,
• Monitoring the level of user awareness and understanding,
• Making strategies that can be understood among users,
• Monitoring the financial/capital requirements of all application areas on a time frame basis,
• Providing flexibility for future designs,
• Reviewing major system changes, and
• Establishing overall schedules for implementation.
One of the greatest hurdles to using information technology for strategic purposes, has been the
inability of the top management to appreciate and manage the information systems. Mostly it has
been due to the lack of understanding on part of the top management and a fear of
uncontrollability of information systems, which leads to a lower level of interest.
Corporate Systems Plan
Equipment & Staff Needs
Figure III: Framework for Managing IR (Information Resource)
For the top management to be involved in information processing activities, a framework for
managing information systems has been suggested as shown in Figure III. Positive top
management actions are needed in all these areas to avoid decisions by default. Since information
technology affects the entire business from organisation structure to product market strategies,
chief executives should not skip the corporate policy decisions by delegating or postponing.
10.6 INFORMATION REQUIREMENTS, ANALYSIS AND
CRITICAL SUCCESS FACTOR (CSF) METHOD
Once the overall MIS goals and strategy have been laid down, the next stage is to ascertain
organisational information requirements. Information requirements are vital for MIS planning,
application, identification and planning an information structure. Three levels at which the
information requirements need to be established for the design and implementation of CBIS have
been identified as:
i) Organisation level to define the overall information system, and to specify a portfolio of
applications and data bases.
ii) Database level to specify data models and other specifications.
iii) Traditional approaches adopted by system analysts to assess information requirements. These
are as follows:
a) Asking questions from the users by available methods,
b) Deriving from an existing system, or from descriptions in textbooks/hand books,
c) By object system analysis,
d) Experimentation with an evolving information system.
John F. Rockart, while advocating the CSF approach, evaluated the existing four methods of
determining executive information needs, viz., the by-product technique, the null approach,
the key indicator system and the total study process.
These four techniques have their relative merits and demerits, and to overcome the disadvantages,
the Research Team at Sloan School of Management, suggested a creative approach termed as
CSF approach for information requirement analysis. Its application was found effective and
response-provoking amongst the executives. As a part of the exercise, the executive goals and the
CSFs are identified and reviewed to the satisfaction of both the executives and the system
The CSFs for any business are the limited number of areas in which results, if they are
satisfactory, will ensure successful competitive performance for the organisation. These are a
few areas where the things “must go right”, for the business to flourish. The CSFs must receive
constant and consistent attention from the management as well as individual managers. CSFs
differ from company to company and from manager to manager and like organisations may have
differing CSFs. There are four prime sources for identifying the CSFs as listed below:
• Structure of the particular industry,
• Competitive strategy, industry position and geographical location of the company,
• Environmental factors,
• Temporal organisational factors needing immediate attention.
The CSFs are generally not meant for strategic planning, since the data requirements are
impossible to pre-plan. The CSF method centres around information needs for management
control where data requirements could be defined and pre-planned. Most executives have
four to eight CSFs.
10.7 RESOURCE ALLOCATION AND CHARGING FOR SERVICES
Allocation of resources is one of the important issues related to the MIS function in an
organisation. It is during this stage that we prioritise the applications and decide on their
implementation schedules. The following four factors should be kept in mind while allocating
resources to different applications:
• Quantifiable returns,
• Judgmental benefits,
• Institutional factors or constraints,
• System priority factors.
Intangible benefits, such as, improved levels of service, better financial control, standardisation
and better quality of information are also considered important while considering resource
It is an accounting approach for allocating costs of information systems to their users. There are
two different ways of charging the users for the information services:
• Charging by allocation of costs to the users as corporate overhead, and
• Charging for services the individual users get.
The second approach is based on the user’s willingness to buy the information services and
willingness to pay for the new system development.
The reasons for having a charge-out system include cost assignment, control, incentives and
budgeting. The different techniques which are used for allocating costs are:
a) No charge-out,
b) Complete Charge-out,
c) Partial Charge-out.
10.8 INFORMATION RESOURCE ASSESSMENT
Let us look at Figure IV. The lower arrow in the Figure represents Information Resource
Assessment (IRA) — a process of using information and knowledge to support the
development of the organisation’s strategic business direction. In effect, it is the mirror
image of “Strategic Planning for Information Resource”, in the sense that it is the process
through which information and knowledge are used to identify the strategic comparative
advantages and a create and evaluate new strategies, i.e., to influence change in the
“Organisational Strategy Set”.
IR Strategy Set
Strategy Planning for IR
Role of Information and IS in the Organisation
Organisational Strategy Set IR Objectives
IS Design-Development Strategies
Organisational Mission Information Acquisition Plan
Organisational Objectives Model Development Plan
Organisational Comparative Advantages
Organisational Strategies Implementation
Other Strategies Attributes
Information Resource Assessment Information and Decision Support Systems
Figure IV: Operationalising Information as a Strategic Resource
(Source: Management Information Systems: The Technology Challenge, edited by Nigel Piercy;
Croom Helm London & Sydney Nichols Publishing Company New York; 1987, p.240)
Figure IV shows that this influence does not come directly from the Information Resource (IR)
Strategy Set, but rather from the Information Systems (IS) databases and model-bases that have
been created to implement the ‘IR Strategy Set’.
The basic IRA process is one of identifying information that is crucial, or potentially crucial, to
the organisation’s strategy set. This may be of the nature of ‘new’ information, that has not
previously been used to advantage, or it may be information that has been re-evaluated and
updated. Such information and knowledge may be put to use in creating information products or
in developing new and more effective business strategies, objectives, or organisational missions.
One variety of IRA influences the creation of information that is available to the firm through its IS.
However, the creation of information products is only one of the ways in which information can
be made to be a strategic resource. King and Cleland, (1978) have developed a technique of
‘strategic databases’ that may be used to illustrate the way in which IRA can be conducted. The
basic idea is that much of the data on which the organisation’s strategy may be based is often
routinely collected and analysed as ‘data’, rather than as strategic ‘information’. The distinction
between data and information may appear to be pedantic, but it is a useful one to be made in this
As you are already aware, data are the numbers, letters and other symbols that are used to
represent events, activities, entities, etc. (The best-known set of organised data may be the
telephone directory) Information is data that has been evaluated for some use or purpose. (For
instance, a name and phone number on a message that says that your offer to purchase a tour
package has been accepted, is information rather than data). Information is clearly required for
the effective support of strategic planning and for the making of vital decisions in an
organisation. Yet, many of the processes that are directed towards decision-support utilise and
present data rather than information. Illustrative of this, are the strength-weakness assessments
that are frequently made by a firm in support of its strategic decision-making and planning. Most
concepts of strategic management and planning incorporate strength-weakness assessment as an
important determinant of strategy. According to these concepts, the firm should base its future
strategy on its primary strengths and avoid basing strategy, even implicitly on weakness. To
implement this concept, many firms charge staff planners with doing a ‘staff study’ of strengths
and weaknesses. The predictable result of such a study, is often a voluminous report, that more
represents data than information. The same is true in other areas of critical information that are
essential to the development of an effective business strategy. Environmental opportunities and
risks are routinely assessed and reported in the form of voluminous data that are not easy to use in
the strategy-making process. Indeed, it may be argued, that such reports cannot realistically be
directly used in strategy formulation and assessment.
Formal models, may be well used, in providing such strategic decision support. For instance,
models may ‘automatically’ review companies for their ‘acquisition potential’ – the degree to
which their acquisition would serve to enhance the goals of the firm. However, the effective use
of such models requires the input of criteria that can only be generated by the organisation’s
These ‘acquisition criteria’, like strength and weaknesses, environmental opportunities, and a
variety of other strategic information, must be developed through the organisational processes
that are here termed as ‘IRA’. The ‘Strategic data base’ represent one way to implement IRA.
They are concise statements of the most significant strategic parameters that will guide the use of
the models that are in the IS and their application to the development of strategy. A set of criteria
to be used in the evaluation of the acquisition of the candidates is a strategic database (SDB), if it
is developed through an organisational process that ensures that the different points of view of the
managers of various functions and product-market groups have been taken into account, that
there is a reasonable degree of organisational consensus concerning it, and that it is accepted by
the organisation’s managers.
To illustrate this, consider, for example, the traditional process that might be used in an
organisation to conduct a strength-weakness assessment. This approach commonly relies on staff
analysts, who gather data and prepare documents which are to serve as background information
for the support of planning activities and strategic choices. Because the planners and analysts,
who perform these tasks, often have neither the managerial expertise nor the authority to make
the significant choices that are involved in any information evaluation process, the typical output
of such an exercise is a document, which seems to have been prepared on the basis of ‘not leaving
anything out’. Such an emphasis on ensuring that nothing relevant is omitted rather than on
attempting to distinguish the most strategically relevant information from the mass of the less
relevant serves only to perpetuate the existing state of affairs regarding the informational support
provided to managers at all levels; top executives and planners are deluged with irrelevant
information, while, at the same time, they are unable to find the elements of information which
are crucial to the identification of comparative advantages and to the determination of strategy.
The ‘strategic-database’ approach to implementing IRA, on the other hand, involves the
institutionalisation of ongoing processes in which task forces, each of which is made up of
managers representing various of the parochial interests within the organisation, are charged with
gathering and evaluating the data in strategic areas, such as, strength-weakness analysis,
acquisition criteria, etc. In effect, these task forces use the information resources of the
organisation to change and up-date its organisational strategy set. Such ‘strategic databases’
produce and represent information in its most valuable form rather than data since, in this
process, large quantities of data have been evaluated and condensed to a form which can be
feasibly used in the direct support of strategic decision-making.
The strength-weakness, SDB, may be used as an illustration. A task force, composed of key
managers in each of the major functional and product sub-units of the organisation, is charged
with developing a concise consensus list of the most important strengths on which the
company (business) should base its future and the most significant weaknesses on which it
should avoid having its future become dependent. Thus, a team is given the job of producing
the strength-weakness ‘answers’, and of making the strategic information choices of those
strengths and weaknesses on which the future will depend.
This team of managers, supported by their staff, is charged with arriving at conclusions
concerning a specified approximate number (usually from 10 to 15) of the most important
strengths and weaknesses which should influence the future of the organisation.
The development of conclusions on the 10 to 15 most important organisational strengths and
weaknesses can be, as any experienced manager knows, is a difficult task when it involves
managers representing various organisational interests and points of view. Developing a twenty
page list of strengths and weaknesses could be accomplished relatively easily, but a list of the 10
to 15, most significant ones requires substantial analysis, debate and negotiation among the
various individuals and interest areas that are involved. This is so because of both, the judgements
which are needed, and the potential organisational impact which such a list will inevitably have
as it is used in the development of strategy.
The strength-weakness, SDB, that may be so developed, is clearly a substantial basis for
assessing potential comparative advantages, and for evaluating proposed strategies. For instance,
once such an SDB is in place, proposed strategies can be screened using it as a standard, in a
somewhat mechanical fashion, just as a proposed acquisition candidate might be ‘automatically’
screened using an ‘acquisition criteria’ SDB that has been similarly developed. In the case of the
strength-weakness SDB, this would be done through the routine application of a set of questions
a) Which specific strength of our firm does the proposed strategy build on?
b) What is the relative importance of each strength to using the proposed strategy in achieving
the firm’s goals?
c) Does the proposed strategy, implicitly or explicitly, assume the existence of some strength
that the firm does not possess?
d) Is the proposed strategy explicitly or implicitly dependent on any weakness, though it may be
primarily based on strengths?
This illustration of a strength-weakness SDB process illustrates the information resources
assessment process of Figure IV. It is a routine organisational process that is used to translate the
informational resources of the organisation into sources of potential strategic comparative
It is, in effect, the mirror-image of the ‘strategic planning for information resources’ process,
which makes the reverse transformation to ensure that business strategies are supported by
appropriate information and knowledge bases.
Check Your Progress – 2
1) List the problems commonly faced in MIS planning.
2) Evaluate Critical Success Factor Method for the purpose of Information Requirement
10.9 MANAGEMENT STEERING COMMITTEES AND
Due to active involvement of human beings, organisational powers, needs and politics in the
functioning of the MIS department, a steering committee composed of senior personnel from
various user groups, such as, the finance and EDP function proves to be a better alternative to
prepare the priority list for allocation of resources. Though this method also suffers from major
disadvantages, such as, the time wasted on meetings and negotiations and powerful group
politicking, some of the experts have considered the steering committee approach as the most
suitable approach to get the best results in the MIS function. The user involvement can be
ensured by having their representatives on the steering committee. A steering committee formed
under the chairmanship of the chief executive with 5-10 members (may be less in small
organisations) has been found to be an effective experience.
Invariably we find information flowing from one place to another, from one decision-maker to
another in an organisation. Perhaps it is this phenomenon which motivated Forrester to
conceptualise an organisation as an Information Network. He observes that enterprises are very
complex multiloop interconnected systems. Decisions are made at multiple points throughout the
system at various hierarchical levels. Each resulting action generates information that may be
used at several, though not necessarily at all decision points. This structure of cascaded and
interconnected information feedback loops, when taken together, describe the total system. The
interlocking network of information channels emerges at various points to control physical
processes such as the hiring of employees, the building of factories, and the production of goods
and/or services. Every action point in the system is backed up by a local decision point whose
information sources reach into other parts of the organisation and the surrounding environment.
Management is a process of converting information into action-a process analogous to decision-
making. Forrester conceptualises six information feedback networks in an industrial setting
namely, materials, orders, money, personnel, capital equipment and information. A policy is
a rule that states how the day-to-day operating decisions are made. Decisions are the result of
applying the policy rules to the particular conditions that prevail at any moment.
In essence, therefore, there is essentially an activity centre where certain actions or activities
take place which change the level or state of the system. These activities are carried out because
of higher level direction received from the managers at the decision centres which have their
own set of decision procedures or norms. The combination of an activity centre plus decision
centre is termed a functional unit because it performs a function. The functional unit is
represented in Figure V, which shows the flow of information. Hence the information system
could be designed to provide information to each functional unit, in fact at each of the strategic
planning level, management control level and operational level. The information system for
related functional units can be clustered into an information sub-system.
An operational function is a class of any one or more types of actions, carried on by the same or
different functional units which regulate the inflow and/or outflow to or from sequence of levels
as a group.
A management control centre is one or more management people together with their supporting
staff which acts as a decision centre for a group of functional units or for a group of subordinate
management control centres.
An information sub-system is a special operational function unit and MIS is an operational
function whose parts (corresponding to functional units) are information sub-system of other
operation functions. We could also think of an Operational Control Module as that part of an
information sub-system which supports the functional units of an operational function.
A Management Control Module is that part of an information sub-system which supports the
management control centres of an operational function. Parts of information sub-systems, termed
modules, are the basic entities which help in adopting a modular approach to an MIS design. The
use of modules is desirable because it allows improved project control. The modules can be
written and tested separately allowing more efficient planning and implementation in phases.
Other decision Decision Other decision
centres centre centres
Level or state
Figure V: Flow of Information in a Functional Unit
The Non-formal Element
An MIS model has to reflect formal and informal flow of communication of
messages/data/information. At the bottom is the physical system – the workers and all equipment
and facilities used to produce the products and/or services. Internal data generated here is passed
on to the information processing resources (which could be manual or computer based, preferably
making use of a data base) which generate internal information formally. The internal and
external environmental information is passed on to the appropriate executives/managers who also
acquire on their own internal and external information on an informal, non-formal manner.
Gordon Davis has conceptualised the various MIS components chart as shown in Figure VI.
Public Public formal Public
Private Private formal Private
Figure VI: Davis’ MIS Formal & Informal Components
Part of the MIS is available for use by anyone in the organisation, and part is private, restricted to
only the person establishing it. The computer resource (in case of computer based MIS) is a part
of the public MIS, whereas the information that an executive receives from telephone calls,
letters and memos sent on a personal basis are examples of the private MIS. Likewise, part of the
MIS is formal and part is informal. The formal MIS is prescribed by procedure such as computer
programme. The informal MIS has no spelled-out routine. The size of the four boxes in Figure
VI are what it ought to be like – the largest being public-formal and the smallest being private-
informal (which in an ideal case ought to be at the zero level which perhaps will never occur).
Attention must be directed also to the informal organisation structure. Management should try to
identify information needs that are not being fulfilled by the formal system and to incorporate as
many of these flows as possible into the formal MIS. Certainly those informal power centres of
the organisation that can influence the success of the MIS should be identified and included in
the design effort. One often wonders whether an MIS should straightaway be superimposed on
the existing organisation structure.
10.10 ROLE OF MIS AT VARIOUS MANAGEMENT LEVELS
Some say that management can be understood by observing what managers do. Managers get the
work done through others. Management can also be understood by the type of functions a
manager performs (see course MTM-01). In fact management is a process of achieving an
organisation’s goals and objectives by judiciously making use of resources of men, materials,
machines, money, methods, messages and moments (the last two in the context of information
being a vital resources to the manger/decision-maker).
Management can also be seen as structured into three hierarchical levels namely, top level,
middle level and bottom level or strategic, tactical and operational levels, respectively. Although
lines of demarcating are not absolute and clear-cut, one can usually distinguish certain layers
within the organisation which are characterised by classical pyramidical type of structures. Top
management established the policies, plans and objectives of the company as well as a budget
framework under which the various departments will operate. These factors are promulgated and
passed down the middle management. They are translated into specific revenue, cost and profit
goals particularly if each department works under a cost or profit centre concept. These are
reviewed, analysed and modified in accordance with the overall plans and policies until
agreement is reached. Middle management then issues the specific schedules and measurement
yardsticks to the operational management. The operational level has the responsibility of
producing goods and services to meet the revenue, profit and other goals, which in turn will
enable the organisation achieve its overall plans and objectives.
Top Level Bottom Level
Figure VII: The Allocation of Managers’ Time
The hierarchical view of management is important for two reasons: information needs tend to be
different at different levels of management and the amount of time devoted to any given function
varies considerably with the level as can be seen in Figure VII. The job content at various
management levels is further elaborated in Table 1.
Table 1: Job Content of Management Levels
Sl. Top Middle Operating
No Character Management Management Management
1. Focus on planning Heavy Moderate Minimum
2. Focus on Control Moderate Heavy Heavy
3. Time Frame 1 – 5 Years Upto a year Day to day
4. Scope of activity Broad Entire functional Single sub- function or
5. Nature of activity Relatively Moderately Highly structured
6. Level of complexity Very complex, Less complex, Straightforward
many variables better defined
7. Job measurement Difficult Less difficult Relatively easy
8. Result of activity Plans, policies Implementation End product
and strategies schedules,
9. Type of information External Internal, reasonable Internal, historical;
accuracy high level of accuracy
10. Mental attributes Creative innovative Responsible, Efficient, effective
11. Number of people Few Moderate number Many
12. Department divisional Intra-division Intra-division, Intra-dependent
interaction Inter department
In the context of MIS, management can perhaps be best defined as a process of
a) selection of objectives,
b) judicious allocation of resources,
c) determining operational plans and schedules,
d) keeping control of progress, and
e) evaluation through feedback.
Each of these areas require certain decisions to be made.
Thus, we take strategic decisions at the top level, tactical decisions at the middle and
operational decisions at the junior level. As can be seen from Table 1, the type of problems and
decisions at the junior level are quite deterministic and structured and we can have programmed
But as we move to higher level, situations become fuzzy, ambiguous and unstructured, and thus
we are faced with non-programmed decisions. We find that with the introduction of computers,
we have gone about routine EDP type of an activity for the essentially programmed decisions that
take place at the operating level. Perhaps with the rapid advances that are taking place in the field
of electronics, communication and computers, we might have good progress in the field of AI
(Artificial Intelligence) and accordingly devise knowledge based expert systems which would be
helpful at the strategic level to cater to non-programmed complex type of decision-making
Though the classic pyramidical structure is generally acceptable, unfortunately in the modern
complex organisation this neat, militaristic, configuration seldom(!) fits the reality. Under
conditions facing modern management the strategy and the control tend to become more remote
from the resources that are geographically spread and organisationally diverse. Between the
decision-maker and the resources lie systems – of people and data handling equipment – that can
distort, delay, amplify, and dampen messages. External to the enterprise, interest groups – in
government, consumers, labour representatives and other national and international agencies are
involved in an information exchange. The modern manager must be capable of managing his or
her information systems for strategic planning, management control and operational control.
The following guidelines for fitting the MIS function into the overall organisation could be of
help to the organisation :
• The level of reporting has a correlation with the performance of the MIS function. The
organisation where MIS function reports to Chief Executive has showed a higher success
• For enhancing capabilities of the MIS function beyond providing services to a select user
group or limited range of services, it is very important to have MIS as an independent
10.11 DESIRABLE CHARACTERISTICS OF MIS
It would be proper if we recall the desired characteristics of information, i.e., accuracy,
timeliness, objectivity, relevance, conciseness, etc. You will discover that some of these
characteristics are also the desirable characteristics of a good, effective and efficient MIS. The
process of developing an MIS is never ending as organisations strive to take advantage of new
technology and methodology. Indeed, even the newly-emerging computer systems concept of
‘information resource management’ (IRM) merely ‘upgrades’ the computer system and its
attendant information to the position of a resource that is to be husbanded and administered,
much as are other organisational resources.
This pervasiveness of computers and the increasing familiarity of people at all levels of the
organisation with them will, inevitably lead to a wide variety of new computer applications. More
importantly, however, it will lead to the amplification and acceleration of a phenomenon that is
already beginning to be experienced – the creation of a comparative business advantage
The evolutionary process followed in achieving an MIS is called the MIS life-cycle which
consists of phases in a sequence of planning, analysis and design, implementation, operation and
control. The manager is ultimately responsible both for developing and using it. The information
specialists ought to serve as valuable technical assistants. No doubt, the information specialists
play a vital role in the development of MIS. They often trigger the manager’s interest in a new
system by informing the manager of a new technology or method. Though the specialists
recommend a particular system design, it is the manager’s responsibility to approve its
implementation. Once the manager makes the decision, it is the information specialists’ task to
implement the system. The MIS would have to preferably cater to the management/leadership
styles also. If there could be greater user-involvement at all stages of the MIS life-cycle, then the
end results would tend to be superior.
The system should help each executive in his or her decision-making process for problem
identification, generation and evaluation of alternative courses of action, to acquire necessary
feedback on implementing his or her decision and help him or her to take corrective action. The
MIS should develop the much needed management information rather than facts. It should
provide relevant data in a summarised form to the higher echelons, viz., the system should be
integrated through a centralised data base to cut down on redundancies, overlaps and costs. Apart
from the appropriateness of information at different levels, it is important to recognise that
different types of information are required for planning, control, and other managerial functions.
It might become necessary to computerise your system especially if you are dealing with a large
complex organisation or if you find that the existing manual based MIS is not in a position to
provide you with timely information. Make sure that the reports churned out from the MIS are
relevant and meaningful. They should be easy to understand and read with good documentation.
It is a good practice to distribute the reports only to those that genuinely need and make use of it.
The MIS should be robust but at the same time it should be flexible and sensitive enough to cater
to relevant changes in technologies, methodologies and the changed parameters. There should be
some type of a review undertaken periodically to assess the worth of the MIS.
Another crucial issue is the positioning of the MIS function in an organisation. It would always
be better to put this function under an independent charge with its chief directly reporting to the
chief executive. However, in some cases a decentralised user group reporting to chief executive is
also suggested. In fact, this positioning will depend on the nature of the organisation.
Check Your Progress – 3
1) What do you understand by the term “functional Unit”?
2) List a few desirable characteristics of MIS.
10.12 LET US SUM UP
The Unit discussed various issues related to the management of information resources in
organisations and we have also tried to conceptualise management information and control
systems. Systems concepts and systems approach were also discussed along with certain concepts
of management in the context of MIS. A manager is primarily a decision-maker and a problem-
solver. Information is one of the prime resource inputs to his or her decision-making. It becomes
necessary to provide the right type of information to the right decision-maker at the right time.
Thus, the need for an effective system to provide information to management at all levels.
We studied Nolan’s Six Stage Growth Hypothesis to show how the MIS function grows in an
organisation. Initially, the organisations commit their financial resources little realising that these
commitments have to be carried on even subsequently. The control stage on this model explains
the relevance of management intervention in the functioning of the MIS department, so as to
develop certain control measures to avoid the unplanned growth of the MIS resource. It is during
the second part of the growth cycle from the fourth stage onwards that the actual benefits of
technology could be realised in organisations.
Top management interest is indicated by way of steering committees, set up to forward the cause
of the MIS function and the relative organisational position of the chief of MIS function. A
policy for charging for the services rendered to the users could be in the interest of the MIS
function, because only then the function can justify its existence. Critical success factor analysis
has been identified as the best approach to assess the need for this function in any organisation.
The whole organisation could be thought of as an information network, both formal and informal,
connecting various decision centres at various levels. Managers at different levels perform
different managerial functions and hence require different types of information. A conceptual
framework outlining the desirable features of MIS have been described which could lead you
toward the design of an MIS, if you do a little more reading on the subject.
10.13 KEY WORDS
Analysis : The methodical study of a problem. Especially the
modularising of a problem into smaller and simpler
problems. Usually used in a nonbusiness sense (such as
numerical analysis, operations analysis) unless combined
with a business term.
Audit : Examination and verification of records.
Business System : A system used to accomplish some business goal.
Typical business system include accounts receivable
systems, payroll systems, banking systems and so on.
Central Processing Unit : Directs the operation of other units in a computer
and performs the data manipulation and computations
needed to effect the desired transformation of the input data.
Frequently written CPU. When the word computer is used to
mean less than a complete computing system, it generally
denotes the CPU. The computers referred to as mainframe.
Communication System : Used to convey data from one point to another.
Consists of a message source, message channel and message
receiver. Also called data transmission system, data
communication system and the like.
Data Base : Some number of files. Most data bases have names
(corporate data base, financial data base, production data
base and so on).
Implementation : The step in the system life-cycle where a system
design is constructed as a real business system.
Installation : The step in the system life-cycle where a new
business system is put into use. Also used to mean a business
or computing facility.
Management by Exception : A principle of management where attention is
focused only on performance. The phrase used in connection
with the presumed action required where reports on
performance differ from original projections.
Characteristically these reports bring out ‘favourable’ and
‘unfavourable’ variances, the latter being the basis for
‘Management by exception’.
Modular System : A system composed of distinct sub-systems. The
sub-systems are called modules.
Storage : A mechanism into which data can be entered, in
which it can be held, and from which it can be retrieved at a
later time. Loosely any mechanism that can store data.
Systems Analysis : The step in the system life-cycle where a detailed
study is made of the need and its solutions and the
environment in which they must exist.
Systems Life-Cycle : The sequence of steps through which a typical
business system passes; need, conception, feasibility study,
system analysis, design, implementation testing installation
or conversion, production maintenance and cessation.
10.14 CLUES TO ANSWERS
Check Your Progress – 1
1) A system is made up of sub-systems which may be composed of further sub-systems. We
could carry on this refinement till we arrive at the ‘black box’ level which is some perceptible
Read carefully Sec. 10.2 and expand the above answer.
2) For studying the growth of the MIS activity in an organisation we could apply the model
developed by Richard Nolan in 1979, popularly known as the Stage Growth Hypothesis.
This is a six-stage model which very clearly explains the stage by stage development of the
MIS function in an organisation.
Read Sec. 10.3 to answer in detail.
Check Your Progress – 2
1) Organisations commonly face the following problems in MIS planning:
a)The MIS plan may not be compatible with the overall strategies and objectives of the
b) The framework of MIS structure may be difficult to design,
c)Allocations of development resources to various applications may be difficult, and
d) Project management to control time and cost schedule, may be lacking.
Read Sec.10.4 to know more about MIS planning.
2) The Research team at Sloan School of Management, suggested a creative approach termed as
CSF approach for information requirement analysis. Its application was found effective and
response-provoding amongst the executives. As a part of the exercise, the executive goals and
the CSFs are identified and reviewed to the satisfaction of both the executives and the system
Read carefully Sec. 10.6 and answer in details.
Check Your Progress – 3
1) An activity centre is where certain actions or activities take place which change the level or
state of the system. These activities are carried out because of higher level direction received
from the managers at the decision centres which have their own set of decision procedures or
norms. The combination of an activity centre plus decision centre is termed as Functional
Unit because it performs a function.
Read carefully Sec. 10.9 and answer with figure.
2) A few desirable characteristics of MIS are:
a)Accuracy, timeliness, objectivity, relevance, conciseness, etc. are the desired
characteristics of information. Of these characteristics some are also the desirable
characteristics of a good, effective and efficient MIS.
b) The MIS should develop the much needed management information rather than facts.
c)The reports churned out from the MIS should be relevant and meaningful.
d) The reports should be easy to understand and read with good documentation.
Read carefully Sec. 10.11 and expand the above answer.