Management Information System

1. UNIT-05
MANAGEMENT INFORMATION
SYSTEM

2. INFORMATION-SYSTEMS USERS
• Innovators: Innovators are the first individuals to adopt a new technology. Innovators are willing to
take risks, have the highest social class, have great financial liquidity, and have the closest contact
with scientific sources and interaction with other innovators. Risk tolerance has them adopting
technologies that may ultimately fail. Financial resources help absorb these failures.
• Early adopters: The early adopters are those who adopt innovation after a technology has been
introduced and proven. These individuals have the highest degree of opinion leadership among the
other adopter categories, which means that they can influence the opinions of the largest majority.
They are typically younger in age, have higher social status, more financial liquidity, more advanced
education, and are more socially aware than later adopters. These people realize judicious choice of
adoption will help them maintain a central communication position.

3. INFORMATION-SYSTEMS USERS
• Early majority: Individuals in this category adopt an innovation after a varying degree of
time. This time of adoption is significantly longer than the innovators and early adopters.
This group tends to be slower in the adoption process, has above average social status, has
contact with early adopters, and seldom holds positions of opinion leadership in a system.
• Late majority: The late majority will adopt an innovation after the average member of
the society. These individuals approach an innovation with a high degree of skepticism,
have below average social status, very little financial liquidity, are in contact with others
in the late majority and the early majority, and show very little opinion leadership.

4. INFORMATION-SYSTEMS USERS
• Laggards: Individuals in this category are the last to adopt an innovation. Unlike those in
the previous categories, individuals in this category show no opinion leadership. These
individuals typically have an aversion to change-agents and tend to be advanced in age.
Laggards typically tend to be focused on “traditions,” are likely to have the lowest social
status and the lowest financial liquidity, be oldest of all other adopters, and be in contact
with only family and close friends.

5. DIFFUSION OF INNOVATION

9. TYPES OF INFORMATION SYSTEMS
Transaction processing system (TPS):
A Transaction Processing System is a set of information which processes the data
transaction in database system that monitors transaction programs. The system is
useful when something is sold over the internet. It allows for a time delay between
when an item is being sold to when it is actually sold. An example is that of a
sporting event ticket. While the customer is filling out their information to purchase
the seat ticket; the transaction processing system is holding the ticket so that
another customer cannot also buy it. It allows for a ticket not to be sold to two
different customers.

10. TYPES OF INFORMATION SYSTEMS
• An Information system that processes data arising from the occurrence of business
transactions. Transaction processing systems (TPS) are aimed at improving the routine
business activities on which all organizations depend.
• A transaction is any event or activity that affects the organization which occur as part of doing
business, such as sales, purchases, deposit, withdrawals, refunds and payments.
• Common transactions include placing orders, billing customers, hiring employees, and
depositing cheques.
• The types of transactions that occur vary from organization to organization.
• Transaction processing, the set of procedures for handling the transactions, often includes the
activities like calculation, storage and retrieval, classification, summarization, sorting.
• Transaction processing procedures are often called standard operating procedures.

11. OBJECTIVES OF A TRANSACTION PROCESSING
SYSTEM
• Carrying out the day-to-day transactions of the organization on a regular basis.
• Collecting, processing, editing, updating, storing the data, and generating the required
reports or documents.
• Supplying the necessary information to the organization, this would enable proper
functioning of the business.
• Providing reports and documents which would help in making timely decisions.
• Supplying data to other information systems.

12. COMPONENTS OF TPS
• Inputs: Source documents such as customer orders, invoices, purchase orders, etc.
serves as Inputs to the TPS system.
• Processing: Once the inputs are provided, they are further processed to get an output.
• Storage: Ledgers serves as a source of storage.
• Output: Any document generated is termed as output.

13. DECISION SUPPORT SYSTEM
• Decision support systems (DSS) are interactive software-based systems intended to help
managers in decision-making by accessing large volumes of information generated from
various related information systems involved in organizational business processes, such as
office automation system, transaction processing system, etc.
• DSS uses the summary information, exceptions, patterns, and trends using the analytical
models. A decision support system helps in decision-making but does not necessarily give
a decision itself. The decision makers compile useful information from raw data,
documents, personal knowledge, and/or business models to identify and solve problems
and make decisions

14. PROGRAMMED AND NON-PROGRAMMED
DECISIONS
Programmed decisions are basically automated processes, general routine work, where:
o These decisions have been taken several times.
o These decisions follow some guidelines or rules.
o For example, selecting a reorder level for inventories, is a programmed decision.
Non-programmed decisions occur in unusual and non-addressed situations,
o It would be a new decision.
o There will not be any rules to follow.
o These decisions are made based on the available information.
o These decisions are based on the manger's discretion, instinct, perception and judgment.

15. CHARACTERISTICS OF A DSS
• Support for decision-makers in semi-structured and unstructured problems.
• Support for individuals and groups.
• Support for interdependent or sequential decisions.
• Support for intelligence, design, choice, and implementation.
• Support for variety of decision processes and styles.
• DSSs are adaptive over time.

16. BENEFITS OF DSS
• Improves efficiency and speed of decision-making activities.
• Increases the control, competitiveness and capability of futuristic decision-making of the
organization.
• Facilitates interpersonal communication.
• Encourages learning or training.
• Since it is mostly used in non-programmed decisions, it reveals new approaches and sets
up new evidences for an unusual decision.
• Helps automate managerial processes.

17. COMPONENTS OF A DSS
• Database Management System (DBMS): To solve a problem the necessary data may come from
internal or external database. In an organization, internal data are generated by a system such as
TPS and MIS. External data come from a variety of sources such as newspapers, online data
services, databases (financial, marketing, human resources).
• Model Management System: It stores and accesses models that managers use to make decisions.
Such models are used for designing manufacturing facility, analysing the financial health of an
organization, forecasting demand of a product or service, etc.
• Support Tools: Support tools like online help; pulls down menus, user interfaces, graphical
analysis, error correction mechanism, facilitates the user interactions with the system.

18. EXECUTIVE SUPPORT SYSTEM
• Executive support systems are intended to be used by the senior managers directly to
provide support to non-programmed decisions in strategic management.
• These information are often external, unstructured and even uncertain. Exact scope and
context of such information is often not known beforehand.
• This information is intelligence based:
o Market intelligence
o Investment intelligence
o Technology intelligence

19. ADVANTAGES OF ESS
• Easy for upper level executive to use
• Ability to analyze trends
• Enhance personal thinking and decision-
making
• Contribution to strategic control flexibility
• Enhance organizational competitiveness in
the market place
• Increased executive time horizons.
• Better reporting system
• Improve office automation
• Help improve consensus building and
communication
• Reduce time for finding information
• Early identification of company performance
• Detail examination of critical success factor
• Better understanding
• Time management
• Increased communication capacity and
quality
• Improved mental model of business
executive

20. ENTERPRISE RESOURCE PLANNING (ERP)
SYSTEM
• ERP is an integrated, real-time, cross-functional enterprise application, an enterprise-wide
transaction framework that supports all the internal business processes of a company.
• It supports all core business processes such as sales order processing, inventory
management and control, production and distribution planning, and finance.

21. SCOPE OF ERP
• Finance− Financial accounting, Managerial accounting, treasury management, asset management,
budget control, costing, and enterprise control.
• Logistics− Production planning, material management, plant maintenance, project management,
events management, etc.
• Human resource − Personnel management, training and development, etc.
• Supply Chain− Inventory control, purchase and order control, supplier scheduling,
• planning, etc.
• Work flow − Integrate the entire organization with the flexible assignment of tasks and
• responsibility to locations, position, jobs, etc.

22. ADVANTAGES OF ERP
• Reduction of time
• Better customer satisfaction
• Increased flexibility, quality, and efficiency
• Improved information accuracy and decision making capability
• Improved resource utilization
• Improve supplier performance
• Reduced quality costs
• Quick decision-making
• Forecasting and optimization