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1. FUNCTIONS OR ROLES OF THE MANAGEMENT INFORMATION SYSTEM:
The role of the MIS in an organization can be compared to the role of heart in the body. The information is
the blood and MIS is the heart. In the body the heart plays the role of supplying pure blood to all the
elements of the body including the brain. The heart works faster and supplies more blood when needed. It
regulates and controls the incoming impure blood, processes it and sends it to the destination in the
quantity needed. It fulfills the needs of blood supply to human body in normal course and also in crisis.
The MIS plays exactly the same role in the organization.
The MIS is a system to support the decision making function in the organization. It is used to collect the
data and present the information to the managers. MIS is a computerized business processing system
generating information for the people in the organization to meet the decision making needs to achieve
the corporate objective of the organization. In any organization, small or big, a major portion of the time
goes in data collection, processing, documenting it to the people. Since the people are instrumental in
any business transaction, a human error is possible in conducting the same. Since a human error is
difficult to control, the difficulty arises in ensuring a hundred per cent quality assurance of information in
terms of completeness, accuracy, validity, timeliness and meeting the decision making needs.
The system ensures that an appropriate data is collected from the various sources, processed, and sent
further to all the needy destinations. The system is expected to fulfill the information needs of an
individual, a group of individuals, the management functionaries: the managers and the top
management.
1. The MIS satisfies the diverse needs through a variety of systems such as Query Systems, Analysis
Systems, Modeling Systems and Decision Support Systems the MIS helps in Strategic Planning,
Management Control, Operational Control and Transaction Processing.
2. The MIS helps the clerical personnel in the transaction processing and answers their queries on the
data pertaining to the transaction, the status of a particular record and references on a variety of
documents. The MIS helps the junior management personnel by providing the operational data for
planning, scheduling and control, and helps them further in decision making at the operations level to
correct an out of control situation.
3. The MIS helps the middle management in short them planning, target setting and controlling the
business functions. It is supported by the use of the management tools of planning and control. The
MIS helps the top management in goal setting, strategic planning and evolving the business plans
and their implementation.
4. The MIS plays the role of information generation, communication, problem identification and helps in
the process of decision making. The MIS, therefore, plays a vital role in the management,
administration and operations of an organization.
5. MIS ensure that appropriate and relevant data is collected from various sources, processed and is
sent further to the needy destination.
6. It fulfills the need of individual, workgroup and management.
7. MIS helps in strategic planning, management control, operational control and transaction processing
level.
8. With good MIS support marketing, finance, production, and personal functions increases efficiently.
9. MIS helps in streamlining of the operations.
10. MIS creates structured database and therefore saves the time.
11. MIS bring clarity in communication and understanding this help in bringing high degree of
professionalism.
12. MIS helps in systemization of business operation through tools and techniques of the computer,
which makes task simpler, accurate and faster.

2. 13. MIS takes care of the following points:
 Collects Data – Data can be obtained from sources within organization and outside world.
 Stores & Processes Data – After creation of the data, a database must be stored and process in
the form useful to manager's data is generally stored to CD ROM or hard disk.
 Presents Information to Managers – After collection, storing and processing of data, the next step
is to present information to the managers.
 Handles voluminous data.
 Confirms of the validity of data and transaction.
 Performs complex processing of data and multidimensional analysis.
 Performs quick search and retrieval.
 Contains Mass storage.
 Communicates the information with the user on time.
 Fulfills the changing needs of the information.
 MIS generates reports: These reports can be income statements, balance sheets, cash flow
reports, accounts receivable statements, inventory status reports, production efficiency reports,
or any report on the status of a situation of interest to the decision maker. The reports can be
historical or refer to the current status of the situation.
 MIS answers “what-if" kinds of questions asked by management: These information systems take
the information stored in the data base and reply to questions asked by management. These
questions are in the form of "what would happen if this or that happened?" The information
system thus uses its stored information, its comparison and calculation capabilities, and a set of
programs especially written for this situation to provide management with the consequences of
an action they are considering.
 MIS which supports decision making (decision support systems). These advanced systems
attempt to integrate the decision maker, the data base, and the models being used.
* The management information system uses computers and communication technology to deal
with these points of supreme importance.

3. Organizational Need for MIS in a Company (Why MIS is needed in a Business):
To facilitate the management decision making at all levels of company, the MIS must be integrated. MIS
units are companywide. MIS is available for the Top management. The top management of company
should play an active role in designing, modifying and maintenance of the total organization wide
management information system. Information system and Information technology have become a vital
component of any successful business and are regarded as major functional areas just like any other
functional area of a business organization like marketing, finance, production and HR. Thus it is important
to understand the area of information system just like any other functional area in the business. MIS is
important because all businesses have a need for information about the tasks which are to be performed.
Information and technology is used as a tool for solving problems and providing opportunities for
increasing productivity and quality. Information has always been important but it has never been so
available, so current and so overwhelming. Efforts have been made for collection and retrieval of
information. However, challenges still remain in the selection analysis and interpretation of the information
that will further improve decision making and productivity.
MIS for a Business Organization:
1. Support the Business Process : Treats inputs as a request from the customer and outputs as
services to customer. Supports current operations and use the system to influence further way of
working.
2. Support Operation of a Business Organization : MIS supports operations of a business organization
by giving timely information, maintenance and enhancement which provides flexibility in the operation of
an organizations.

4. As a consumer, you regularly encounter information systems that support the business processes and
operations at the many retail stores where you shop. For example, most retail stores now use computer-
based information systems to help their employees record customer purchases, keep track of inventory,
pay employees, buy new merchandise, and evaluate sales trends. Store operations would grind to a halt
without the support of such information systems.
3. To Support Decision Making : MIS supports the decision making by employee in their daily
operations. MIS also supports managers in decision making to meet the goals and objectives of the
organization. Different mathematical models and IT tools are used for the purpose evolving strategies to
meet competitive needs.
Information systems also help store managers and other business professionals make better decisions.
For example, decisions about what lines of merchandise need to be added o r discontinued and what kind
of investments they require are typically made after an analysis provided by computer -based information
systems. This function not only supports the decision making of store managers, buyers, and others, but
also helps them look for ways to gain an advantage over other retailers in the competition for customers.
4. Support of strategies for competitive advantage: Today each business is running in a competitive
market. MIS supports the organization to evolve appropriate strategies for the business to assent in a
competitive environment.
Gaining a strategic advantage over competitors requires the innovative application of information
technologies. For example, store management might make a decision to install touch-screen kiosks in all
stores, with links to the e commerce Web site for online shopping. This offering might attract new
customers and build customer loyalty because of the ease of shopping and buying merchandise provided
by such information systems. Thus, strategic information systems can help provide products and services
that give a business a comparative advantage over its competitors.
5. MIS - A Tool for Management Process
The process of management requires a lot of data and information for execution of the plan. This
requirement arises on account of the fact in each step of management, a variety of decisions are taken to
correct the course of development. The decisions or actions are prompted due to the feedback given by
the control system incorporated in the management system. The control of overall performance is made
possible by way of Budget Summarizes and reports. The summary showing sales, costs, profit and return
on investment throws light on the direction the organization is moving to. The exception reports identify
the weaknesses in the system of management.
If effective management system is to be assured, it has to rest on business information. The
management performance improves if the business risk and uncertainties are handled effectively. If the
information provided is adequate, one can deal with these factors squarely. The information support
improves the lack of knowledge, enriches experience and improves analytical abilities leading t o better
business judgment. So, if efficient information support is to be provided, it calls for a system with the
goals of generating management information. A good MIS must furnish information to the managers to
expand their knowledge base. He must know the adverse trends in business, the shortfalls and failures in
the management process.
The impact of the Management Information System: The impact of MIS on the functions is in its
management. With a good MIS support, the management of marketing, finance, production and
personnel becomes more efficient, the tracking and monitoring the functional targets becomes easy. The
functional managers are informed about the progress, achievements and shortfalls in the activity and the
targets. The manager is kept alert by providing certain information indicating the probable trends in the
various aspects of business. This helps in forecasting and long-term perspective planning. The manager''

5. attention is brought to a situation which is exceptional in nature, inducing him to take an action or a
decision in the matter. A disciplined information reporting system creates a structured database and a
knowledge base for all the people in the organization. The information is available in such a form that it
can be used straight away or by blending and analysis, saving the manager's valuable time.
The MIS creates another impact in the organization which relates to the understanding of the
business itself. The MIS begins with the definition of a data entity and its attributes. It uses a dictionary
of data, entity and attributes, respectively, designed for information generation in the organization. Since
all the information systems use the dictionary, there is common understanding of terms and terminology
in the organization bringing clarity in the communication and a similar understanding of an event in the
organization.
The MIS calls for a systemization of the business operations for an effective system design. This
leads to streamlining of the operations which complicate the system design. It improves the
administration of the business by bringing a discipline in its operations everybody is required to follow and
use systems and procedures. This process brings a high degree of professionalism in the business
operations.
A well designed system with a focus on the manager makes an impact on the managerial
efficiency. The fund of information motivates an enlightened manager to use a variety of tools of the
management. It helps him to resort to such exercises as experimentation and modeling. The use of
computers enables him to use the tools and techniques which are impossible to use manually. The ready -
made packages make this task simpler. The impact is on the managerial ability to perform. It improves the
decision making ability considerably.
5. MIS - a Support to the Management (Continued):

6. 6. MIS and the User
Every person in the Organization is a user of the MIS. The people in the organization operate at all levels
in the hierarchy. A typical user is a clerk, an assistant, an officer, an executive or a manager. Each of
them has a specific task and a role play in the management of business. The MIS caters to the needs of
all persons.
The main task of a clerk is to search the data, make a statement and submit it to the higher level. A clerk
can use the MIS for a quick search and reporting the same to higher level. An assistant has the task of
collecting and organizing the data, and conducting a rudimentary analysis of it. The MIS offers the user
tools to perform these tasks. An officer has a role of integrating the data from different systems and
disciplines to analyze it and make a critical comment if anything adverse is found.
In MIS offers the methods and facilities to integrate the data and report the same in a proper
format. An executive plays the role of a decision maker. He is in a position of responsibility and
accountability; a position of a planner and a decision maker. He is responsible for achieving the targets
and goals of the organization. The MIS provides facilities to analyze the data and offers the decision
support systems to perform the task of execution. The MIS provides action-oriented information.
The manager has a position of responsibility and accountability for the business results. The MIS
provides information in a structured or unstructured format for him to react. The MIS caters to his constant
changing needs of information.
Through the MIS, the information can be used as a strategic weapon to counter the threats to
business, make businesses more competitive, and bring about the organizational transformation through
integration. A good MIS also make an organization seamless by removing all the communication
barriers.
BUSINESS DRIVERS OF INFORMATION SYSTEMS (REASONS TO USE MIS:
What makes information systems so essential today? Why are businesses investing so much in
information systems and technologies? They do so to achieve six important business objectives:
 Operational excellence;
 New products, services, and business models;
 Customer and supplier intimacy;
 Improved decision making;
 Competitive advantage; and
 Survival.
1). Operational Excellence
Businesses continuously seek to improve the efficiency of their operations in order to achieve higher
profitability. Information systems and technologies are some of the most important tools available to
managers for achieving higher levels of efficiency and productivity in business operations, especially
when coupled with changes in business practices and management behavior.
Walmart, the largest retailer on Earth, exemplifies the power of information systems coupled with brilliant
business practices and supportive management to achieve world-class operational efficiency. In 2010,
Walmart achieved more than $405 billion in sales—nearly one-tenth of retail sales in the United States—
in large part because of its Retail Link system, which digitally links its suppliers to every one of Walmart’s
8,400 stores worldwide. As soon as a customer purchases an item, the supplier monitoring the item

7. knows to ship a replacement to the shelf. Walmart is the most efficient retail store in the industry,
achieving sales of more than $450 per square foot, compared to its closest competitor, Target, at $425 a
square foot, with other large retail firms producing less than $12 a square foot.
Amazon, the largest online retailer on earth, generating $34 billion in sales in 2010, invested $1.7 billion
in information systems so that when one of its estimated 121 million customers searches for a product,
Amazon can respond in milliseconds with the correct product displayed (and recommendations for other
products).
2). New Products, Services, and Business Models:
Information systems and technologies are a major enabling tool for firms to create new products and
services, as well as entirely new business models. A business model describes how a company
produces, delivers, and sells a product or service to create wealth. Today’s music industry is vastly
different from the industry in 2000. Apple Inc. transformed an old business model of music distribution
based on vinyl records, tapes, and CDs into an online, legal distribution model based on its own operating
system and iTunes store. Apple has prospered from a continuing stream of innovations, including the
original iPod, iPod nano, iTunes music service, iPhone, and iPad.
3). Customer and Supplier Intimacy:
When a business really knows its customers and serves them well, the way they want to be ser ved, the
customers generally respond by returning and purchasing more. This raises revenues and profits.
Likewise with suppliers: the more a business engages its suppliers, the better the suppliers can provide
vital inputs. This lowers costs. How to really know your customers, or suppliers, is a central problem for
businesses with millions of offline and online customers. The Mandarin Oriental in Manhattan and other
high-end hotels exemplify the use of information systems and technologies to achieve custome r intimacy.
These hotels use computers to keep track of guests’ preferences, such as their preferred room
temperature, check-in time, frequently dialed telephone numbers, and television programs, and store
these data in a giant data repository. Individual rooms in the hotels are networked to a central network
server computer so that they can be remotely monitored or controlled. When a customer arrives at one of
these hotels, the system automatically changes the room conditions, such as dimming the lights, s etting
the room temperature, or selecting appropriate music, based on the customer’s digital profile. The hotels
also analyze their customer data to identify their best customers and to develop individualized marketing
campaigns based on customers’ preferences. JCPenney exemplifies the benefits of information systems-
enabled supplier intimacy. Every time a dress shirt is bought at a JCPenney store in the United States,
the record of the sale appears immediately on computers in Hong Kong at TAL Apparel Ltd., a giant
contract manufacturer that produces one in eight dress shirts sold in the United States. TAL runs the
numbers through a computer model it developed and decides how many replacement shirts to make, and
in what styles, colors, and sizes. TAL then sends the shirts to each JCPenney store, completely
bypassing the retailer’s warehouses. In other words, JCPenney’s surplus shirt inventory is near zero, as is
the cost of storing it.
4). Improved Decision Making :
Many business managers operate in an information fog bank, never really having the right information at
the right time to make an informed decision. Instead, managers rely on forecasts, best guesses, and luck.
The result is over- or underproduction of goods and services, misallocation of resources, and poor
response times. These poor outcomes raise costs and lose customers. In the past 10 years, information
systems and technologies have
made it possible for managers to use real-time data from the marketplace when making decisions.
For instance, Verizon Corporation, one of the largest regional Bell operating companies in the United
States, uses a Web-based digital dashboard to provide managers with precise real -time information on

8. customer complaints, network performance for each locality served, and line outages or storm-damaged
lines. Using this information, managers can immediately allocate repair resources to affected areas,
inform consumers of repair efforts, and restore service fast.
5). Competitive Advantage:
When firms achieve one or more of these business objectives—operational excellence; new products,
services, and business models; customer/supplier intimacy; and improved decision making—chances are
they have already achieved a competitive advantage. Doing things better than your competitors, charging
less for superior products, and responding to customers and suppliers in real time all add up to higher
sales and higher profits that your competitors cannot match. Apple Inc., Walmart, and UPS are industry
leaders because they know how to use information systems for this purpose.
6). Survival:
Business firms also invest in information systems and technologies because they are necessities of doing
business. Sometimes these necessities are driven by industry-level changes. For instance, after Citibank
introduced the first automated teller machines (ATMs) in the New York region to attract customers
through higher service levels, its competitors rushed to provide ATMs to their customers to keep up with
Citibank. Today, virtually all banks in the United States have regional ATMs and link to national and
international ATM networks, such as CIRRUS. Providing ATM services to retail banking customers is
simply a requirement of being in and surviving in the retail banking business. Many federal and state
statutes and regulations create a legal duty for companies and their employees to retain records,
including digital records. For instance, the Toxic
Substances Control Act (1976), which regulates the exposure of U.S. workers to more than 75,000 toxic
chemicals, requires firms to retain records on employee exposure for 30 years. The Sarbanes-Oxley Act
(2002), which was intended to improve the accountability of public firms and their auditors, requires public
companies to retain audit working papers and records, including all e-mails, for five years. Firms turn to
information systems and technologies to provide the capability to respond to these information retention
and reporting requirements. The Dodd–Frank Act (2010) requires financial service firms to greatly expand
their public reporting on derivatives and other financial instruments.
ROLE OF MIS IN A Business Organization (TOPIC CONTINUED):
Example: Information System and the Value Chain:
The role of information systems within the value chain model has been contextualized and analyzed
here. The value chain covers all the activities a company undertakes in order to offer a product or service.
Value chain activities fall into two main categories: primary and support activities. Primary activities are
more closely related to creating value. Support activities allow primary activities to take place by providing
the necessary inputs and infrastructure. These activities link together to form the value chain.

9. The primary activities are:
o Input logistics: the procurement of raw materials and supplies from suppliers.
o Operations: the transformation of raw materials into finished products with the appropriate quality,
time and cost conditions.
o Output logistics: the transport of products to customers.
o Marketing: to detect customers’ needs and procure orders.
o Service: activities designed to maintain the conditions of use for the sold product.
The Support activities are:
o Company infrastructure: the organizational framework that impacts all primary activities in a
generalized way. These include all managerial activities, such as drawing up strategies, planning
and control.
o Human resource management: all activities related to the selection, training and motivation of the
company’s staff.
o Technological development: all activities designed to procure and subsequently manage
technologies.
o Purchasing: procurement of the elements needed to carry out the production process.
The information system forms part of the support activity known as company infrastructure. This
tells us that all the value chain activities need support based on the information system. Because all the
support activities sustain each other, the information system’s role is to interact with all the company’s
activities, whether basic or support.
We now explore how information technologies can have a profound effect on each one of these activities,
sometimes by simply improving efficiency, and at other times by changing the activity in a fundamental
way:
1). Supply logistics:
Information technology can have major repercussions on the supply of materials to manufacturing points.
Some large chain stores are directly linked to several of their suppliers, particularly in the clothing

10. industry. This link improves deliveries and reduces stock volumes, and affords greater flexibility to
respond to changing
demand almost immediately.
2). Operations:
Many Spanish banks offer what is known as household or family accounts. Essentially, these accounts
are traditional savings accounts with an added service: a regular summary of the account’s transactions
arranged by concept (outgoings such as rent, electricity, telephone, school fees, courses and so on, and
income,
usually the monthly salary). The client receives the equivalent of a balance sheet for a given period. The
more transactions the client makes through the bank, the greater the value of the service; if all
transactions are made through the same account, the summary will give the client a thorough analysis of
his or her income and expenditure. Preparing these reports is a relatively simple task for the bank: the
only information needed is reliable data on the type of transactions made.
Another example is that of cash point machines or ATMs, which have changed radically in recent years. A
cash point service was previously considered to give competitive advantage, but now it has become
necessary in order to compete and remain in the sector and all banks offer the same type of service.
Information technologies can also affect operations; one case is that of a cable news company which now
offers a new line of financial services including instant financial information (foreign exchange rates, for
example).
3). Dispatch Logistics:
Information technology has a major impact on the way in which products and services are delivered to
customers, for example, connections to travel agency booking systems.
4). Marketing and Sales:
One agrochemical company has designed an on-line crop planning service for its main customers. With
just a standard telephone line and their PC, farmers can consult agricultural databases with information
on crop prices, the conditions necessary to grow the crop and the prices of fertilizers, pesticides, etc.
They are
then helped to reach a decision by a range of models and systems, which they can experiment with and
adapt to their own growing conditions (climate, soil, etc.) to study the implications of different crop
rotations and planting programmes. The model helps the farmers to choose fertilizers, insecticides and
other chemicals, and
also to maximize discounts by grouping their purchases. Marketing and sales activity, somewhat forgotten
during the initial decades of the IT revolution, is now the area where these technologies are having the
greatest
repercussions.
5). After Sales Service:
One lift manufacturer has installed black boxes similar to those used in aviation in its new line of products.
This is a response to the numerous occasions when customers call the company’s technical service
without explaining how the breakdown in the lift has occurred. The maintenance engineer can now
connect the device to the company’s computer, find out the cause of the breakdown and then repair the
lift, thereby reducing repair costs and increasing customer satisfaction by solving the problem on the first
visit.

11. 6). Company infrastructure:
Management control: a financial services company used to pay its sales team a commission for each
product they sold. The result of this policy was that the sales team were highly motivated to make the
initial sale but had no incentive to make sure that clients were satisfied and kept their money in the same
place (extremely important for the managers of a financial services company). With a new integrated
client database, the company has reduced the commission on the initial sale, and now pays a new
commission if clients remain with the company and increase the assets they hold with it. This new
approach (only possible with new technology) has brought the company’s strategy and the sales team’s
incentives into line much more effectively.
Some airlines use a network to monitor the situation of each of their planes in any given moment.
Information on the plane’s position and passenger list, and the passengers’ connection times, enables
airlines to take better decisions by speeding up delayed flights or delaying takeoff where connections
have to be made with other
flights. The company therefore avoids income losses due to passengers continuing their journey on their
competitors’ flights if they miss their own connections.
7). Human resources:
An oil company has installed desktop terminals for all the members of its management board, to give
complete on-line access to all personnel records of the top four hundred employees in the company.
These records provide data such as performance over the last five years and a list of positions that each
person has held. The company claims that this capacity has facilitated its most important personnel
decisions.
The systematic examination of a company’s added value chain is an effective way of finding
advantageous it applications. All the value chain activities, whether basic or support activities need and
generate
information. The information system compiles information generated by different activities that is later
needed for other activities to function. The information system distributes this information to each activity.
From this perspective, the information system plays an important role in coordinating the various value
chain activities. This role involves coordinating:
o between basic activities (e.g., ensuring that orders reach the production department);
o between basic activities and support activities (e.g., any control activity);
o between support activities (e.g., monitoring personnel involved in support activities).

12. The information system therefore plays a central role in ensuring the smooth working of interactions
among value chain activities. The information system is also highly relevant to the links between the value
chain activities. For example, the systematic compilation of customer complaints by the information
system can help to guide quality control procedures during the manufacturing process. The links between
activities in the value chain can be improved through the information system. Exploitation of the links
between activities can, in some cases, bring about a reconfiguration of the value chain, leading to new
approaches to the same business and even to notable competitive advantages. Thus, the information
system influences the design of the organization's structure.
The information system compiles and distributes the information necessary for taking decisions or
implementing initiatives throughout the whole value chain when this information is generated in other
activities of the chain. For example, sales information may be relevant in taking decisions on after sales
service; it may also be useful in designing the most appropriate service actions for a given set of
circumstances.
By considering the information system as an integral part of the company’s infrastructure, the information
that it manages – although it is generated or used by specific activities – does not belong to any activity in
particular but rather to the company as a whole. However, it is possible that some value chain activities
need to produce, process and use considerable volumes of information that are not required in other
areas of the company.
To provide for these circumstances, there are information systems or subsystems that are limited to
specific activities; these are not part of the basic information system that is integral to the company’s
infrastructure. This information system or subsystem processes may also use or generate relevant
information for other activities, so long as the quantity of this information is relatively small.
Some applications belonging to specific information systems or functional subsystems of the organization
are:
o Marketing: sales forecasts, sales planning, customer and sales analysis and evolution, campaign
effectiveness.
o Manufacturing: production and schedule planning, cost control and analysis.
o Logistics: planning and control of purchasing, distribution, inventories, transport routes.
o Personnel: staff vacancies, evaluation (performance analysis), personnel administration (payroll...)
o Accounting and finances: accounting, costs, financial analysis.
o General management: strategic planning, resource allocation.