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Intro to Business
Table of Contents
Unit 13 Overview: Using Technology to Manage Information
13.1 Transforming Businesses through Information
13.2 Linking Up: Computer Networks
13.3 Management Information Systems
13.4 Technology Management and Planning
13.5 Protecting Computers and Information
13.6 Trends in Information Technology

Management Information Systems are the backbone of modern business operations. They combine hardware, software, data, procedures, and people to process information and support decision-making. MIS helps organizations collect, analyze, and utilize data effectively, improving efficiency and strategic planning.

From transaction processing to executive decision support, MIS covers a wide range of functions. It enables businesses to handle day-to-day operations smoothly while providing valuable insights for long-term strategy. Understanding MIS is crucial for navigating today's data-driven business landscape.

Management Information Systems

Components and Decision Support

  • Management information system (MIS) components:
    • Hardware: Physical devices and equipment used for input (keyboard, mouse), processing (CPU, RAM), output (monitor, printer), and storage (hard drive, SSD) of data
    • Software: Programs and applications that run on hardware to process and manage data, including operating systems (Windows, macOS), databases (Oracle, MySQL), and business applications (ERP, CRM)
    • Data: Raw facts and figures collected, processed, and stored by the system, such as customer information, sales transactions, and inventory levels
    • Procedures: Set of instructions and rules that govern how the system operates and how users interact with it, including data entry guidelines, security protocols, and backup procedures
    • People: Individuals who use and manage the system, including end-users (employees, customers), developers (programmers, analysts), and administrators (IT staff, database administrators)
  • Supporting decision-making:
    • Provides accurate, timely, and relevant information to managers and decision-makers, enabling them to make informed choices based on data rather than intuition
    • Enables data analysis and visualization to identify trends (sales growth), patterns (customer behavior), and insights (market opportunities), facilitating proactive decision-making
    • Facilitates collaboration and communication among stakeholders (departments, partners) by providing a shared platform for accessing and sharing information
    • Allows for scenario planning and what-if analysis to evaluate potential outcomes (revenue projections, resource allocation), helping managers prepare for different situations
    • Supports data-driven decision-making by providing a single source of truth, ensuring that all stakeholders have access to the same accurate and up-to-date information

Transaction Processing and Management Support Systems

  • Transaction processing systems (TPS):
    • Collect, store, modify, and retrieve transactions of an organization, such as sales orders, inventory updates, and financial transactions
    • Examples: Point-of-sale systems (retail stores), order processing systems (e-commerce), payroll systems (human resources)
    • Process large volumes of routine transactions efficiently and accurately, ensuring smooth business operations and data consistency
    • Ensure data integrity and security through validation (error checking), error checking (data type and range), and access controls (user authentication and permissions)
    • Generate reports and summaries for operational and management purposes, such as daily sales reports, inventory levels, and employee timesheets
  • Management support systems (MSS):
    • Provide information and support for managerial decision-making at various levels, from operational to strategic
    • Types of MSS:
      1. Management reporting systems: Generate predefined reports on a regular basis (weekly, monthly), such as sales performance, budget variance, and customer satisfaction
      2. Decision support systems: Interactive tools for analyzing data and making decisions, such as financial forecasting, market segmentation, and resource allocation
      3. Executive information systems: Provide high-level, strategic information to top executives, such as market share, competitive landscape, and long-term trends
      4. Expert systems: Simulate human expertise in a specific domain using artificial intelligence, such as medical diagnosis, equipment troubleshooting, and credit risk assessment
    • Gather and analyze data from internal (databases, transactions) and external (market research, social media) sources to provide comprehensive insights
    • Use statistical analysis, data mining, and machine learning techniques to derive insights and predict future outcomes
    • Present information in user-friendly formats such as dashboards (KPI visualizations), visualizations (charts, graphs), and reports (summaries, drill-downs) for easy comprehension and action

Information Systems Differentiation

  • Information reporting systems:
    • Provide predefined, structured reports on a regular basis (daily, weekly, monthly) to support operational and tactical decision-making
    • Focus on summarizing and presenting historical data, such as past performance, trends, and comparisons
    • Examples: Sales reports (by product, region, sales rep), inventory reports (stock levels, reorder points), financial statements (balance sheet, income statement)
  • Decision support systems (DSS):
    • Interactive systems that support decision-making by providing analytical tools and models for exploring and analyzing data
    • Allow users to explore and analyze data from multiple perspectives (dimensions, hierarchies) and perform ad-hoc queries and simulations
    • Examples: Financial planning systems (budgeting, forecasting), market research analysis tools (segmentation, positioning), logistics optimization systems (route planning, inventory management)
  • Executive information systems (EIS):
    • Provide high-level, strategic information to top executives and decision-makers, focusing on long-term performance and external factors
    • Focus on key performance indicators (KPIs) (revenue, profitability), trends (market growth, customer preferences), and external data (competitor actions, regulatory changes)
    • Present information in highly summarized and visual formats, such as dashboards (real-time metrics), scorecards (goal tracking), and exception reports (alerts, warnings)
    • Examples: Dashboards showing market share (by product, region), profitability (by business unit, customer segment), and competitive landscape (market trends, competitor moves)
  • Expert systems:
    • Simulate human expertise in a specific domain using artificial intelligence techniques, such as rule-based reasoning, case-based reasoning, and machine learning
    • Use a knowledge base of rules (if-then statements) and facts (domain knowledge) to provide advice, diagnoses, or recommendations based on user inputs and system inferences
    • Examples: Medical diagnosis systems (symptom analysis, treatment recommendations), equipment troubleshooting systems (fault detection, repair instructions), financial advisory systems (investment recommendations, risk assessment)

Key Terms to Review (37)

Enterprise resource planning (ERP): Enterprise Resource Planning (ERP) is a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. A key goal of ERP systems is to integrate these various functions into one complete system to streamline processes and information across the entire organization.
Decision support system (DSS): A Decision Support System (DSS) is a computer-based application that collects, organizes, and analyzes business data to facilitate quality business decision-making for managers, analysts, and other business professionals. It combines the use of models or analytical techniques with data retrieval and analysis tools to provide insight on complex decision-making scenarios.
Expert system: An expert system is a computer program that uses artificial intelligence techniques to simulate the judgment and behavior of a human or an organization with expert-level knowledge in a specific field. It employs a knowledge base and inference rules to analyze information and make recommendations or decisions.
Data marts: A data mart is a subset of a data warehouse focused on a specific business line or team, designed to provide users with access to relevant data in a way that is tailored to their specific needs. By isolating relevant data, it allows for quicker and more efficient analysis than querying the entire data warehouse.
Management information systems: Management Information Systems are integrated computer systems designed to provide managers and decision-makers with key data, analysis, and reporting tools to make informed business decisions. These systems collect, process, store, and disseminate information relevant to an organization's operations.
Processing: In the context of Management Information Systems within business, processing is the manipulation of collected data to generate meaningful information that can be used for decision making. This involves converting raw data into a more understandable format through various computational and logical operations.
Online: In the context of Management Information Systems within the realm of business, being online refers to systems or processes that are connected to and accessible through the internet. This enables real-time data sharing, communication, and operations across global networks.
Management support systems (MSS): Management Support Systems are computer-based systems that provide managers with the tools to organize, evaluate, and efficiently manage departments within an organization. They facilitate strategic planning, operational control, and other managerial functions by delivering pertinent information in a timely manner.
Batch processing: Batch processing is a method of data processing where similar data are collected and processed together at a specified time. This approach is used in management information systems to handle large volumes of data efficiently by executing tasks as a group rather than individually.
Transaction processing system (TPS): A Transaction Processing System (TPS) is an information system that collects, stores, modifies, and retrieves the transactions of an organization. It ensures the smooth execution of daily operations by processing data generated from business transactions such as sales or payments.
Executive information system (EIS): An Executive Information System (EIS) is a type of management information system specifically designed to aid and support senior executives in decision-making processes. It provides top-level management with easy access to relevant internal and external information critical for strategic planning.
Data warehouse: A data warehouse is a centralized repository that stores large amounts of data collected from various sources across an organization, structured for query and analysis. It enables businesses to consolidate data in a single location for better decision-making and reporting.
Union Pacific: Union Pacific is a major freight hauling railroad that operates in the Western United States, providing critical logistics and transportation services for various industries. In the context of Management Information Systems (MIS) within Introduction to Business, it serves as an example of how advanced technologies are utilized to manage complex information systems for efficient operation and strategic planning.
Real-time: Real-time in the context of management information systems refers to the processing and reporting of data almost immediately after it is received. It enables organizations to make decisions based on the most current information available.
Cloud computing: Cloud computing is the delivery of various services through the Internet, including data storage, servers, databases, networking, and software. It allows users to access and store data online rather than on a personal computer or local server.
Cloud Computing: Cloud computing refers to the delivery of computing services, including storage, processing power, software, and other resources, over the internet. It allows users to access and utilize these services remotely, without the need for local infrastructure or hardware management.
Artificial Intelligence: Artificial Intelligence (AI) refers to the development of computer systems and software that can perform tasks typically requiring human intelligence, such as learning, problem-solving, decision-making, and even creative expression. AI systems leverage advanced algorithms, machine learning, and data processing capabilities to mimic and exceed human cognitive abilities across a wide range of applications.
Key Performance Indicators (KPIs): Key Performance Indicators (KPIs) are quantifiable metrics used to evaluate the success or progress of an organization, department, or individual in achieving their objectives and goals. KPIs provide a clear and measurable way to track performance and identify areas for improvement across various business functions, including planning, controlling, management, and information systems.
Management Information Systems: Management Information Systems (MIS) refers to the study of how organizations use information technologies and systems to achieve business objectives. It is the integration of information technology solutions and business processes to meet the information needs of businesses and other enterprises, enabling effective decision-making and achieving competitive advantage.
Internet of Things: The Internet of Things (IoT) refers to the network of interconnected devices, appliances, vehicles, and other physical objects that are embedded with sensors, software, and network connectivity, enabling them to collect and exchange data. This technology allows for the automation and remote control of various aspects of our lives and environments.
Enterprise Resource Planning: Enterprise Resource Planning (ERP) is an integrated system that manages and automates the core business processes of an organization, such as finance, human resources, supply chain, and customer relationship management. ERP systems provide a centralized database and a common user interface, allowing for seamless information flow and decision-making across an organization.
Business Intelligence: Business intelligence (BI) refers to the strategies, technologies, and practices used by organizations to collect, analyze, and transform data into actionable insights that support effective decision-making. It is a crucial component in transforming businesses and managing information systems within an organization.
Cybersecurity: Cybersecurity refers to the practice of protecting digital systems, networks, and data from unauthorized access, theft, or damage. It is a critical component in safeguarding businesses, individuals, and governments in the digital age, particularly as technology continues to transform various industries and aspects of our lives.
Executive Information Systems (EIS): Executive Information Systems (EIS) are computer-based information systems designed to support the information needs of top-level managers and executives within an organization. EIS provide easy access to internal and external data, helping executives make more informed strategic decisions by consolidating and presenting critical information in a clear, concise manner.
Decision Support System (DSS): A Decision Support System (DSS) is an interactive computer-based information system that assists decision-makers in compiling useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions. DSS systems are designed to support rather than replace decision-making in organizations.
MBMS: MBMS, or Mobile Broadcast Multimedia Services, refers to the delivery of multimedia content such as video, audio, and data to mobile devices over a broadcast network. It is a technology that enables the efficient distribution of rich media content to a large number of mobile users simultaneously, providing them with an enhanced multimedia experience on the go.
Management Information Systems (MIS): Management Information Systems (MIS) refers to the study of how organizations use information technologies and systems to achieve business objectives. MIS integrates business operations with information technology to support decision-making and improve organizational performance.
Transaction Processing Systems: Transaction processing systems (TPS) are computer-based information systems that capture, process, and store data related to the basic business transactions of an organization. These systems automate the recording and processing of routine business transactions, ensuring accurate and efficient record-keeping to support the organization's operations and decision-making processes.
Data Analytics: Data analytics refers to the process of examining and interpreting data to uncover meaningful insights, patterns, and trends that can inform decision-making. It involves the application of various statistical and computational techniques to transform raw data into actionable information.
DBMS: A Database Management System (DBMS) is a software application that manages and controls the creation, storage, and retrieval of data within a database. It serves as an intermediary between the database and the users or applications that interact with the data, providing a structured and efficient way to organize and access information.
Transaction Processing System (TPS): A Transaction Processing System (TPS) is a type of information system that captures, processes, and stores data related to the basic business transactions of an organization. It serves as the foundation for managing and recording the fundamental activities that keep a business running, such as sales, purchases, payments, and inventory management.
Database Management System: A database management system (DBMS) is a software application that enables users to create, manage, and maintain databases. It serves as an intermediary between the database and the end-users or applications, providing a structured and efficient way to store, retrieve, and manipulate data.
Model Base Management System: A model base management system (MBMS) is a software system designed to manage and maintain a repository of models, which are representations of real-world systems or processes. MBMS provides the necessary tools and functionalities to create, store, retrieve, and manipulate these models, enabling organizations to make informed decisions based on the insights derived from the models.
Information-Reporting Systems: Information-reporting systems are a crucial component of Management Information Systems (MIS), responsible for collecting, processing, and disseminating relevant data and information to support decision-making within an organization. These systems gather data from various sources, analyze it, and present it in a clear and concise manner to help managers and executives make informed decisions.
Executive Information Systems: Executive Information Systems (EIS) are computer-based information systems designed to support the information and decision-making needs of senior-level executives within an organization. They provide executives with easy access to critical data and facilitate the identification and analysis of key performance indicators to support strategic decision-making. EIS are a specialized type of Management Information Systems (MIS) that focus on providing executives with the information they need to effectively lead and manage their organizations.
Expert Systems: Expert systems are a type of artificial intelligence (AI) software that emulate the decision-making and problem-solving abilities of human experts within a specific domain. They are designed to provide reliable and consistent advice or recommendations based on a comprehensive knowledge base and sophisticated inference mechanisms.
Decision Support Systems: Decision Support Systems (DSS) are computer-based information systems that assist decision-makers in solving complex problems and making informed decisions. They combine data, analytical models, and user-friendly interfaces to provide relevant information and support the decision-making process. DSS are designed to enhance the effectiveness and efficiency of decision-making by providing timely, accurate, and relevant information to managers and executives. They help organizations navigate the increasingly complex business environment by integrating data from various sources, analyzing it, and presenting it in a meaningful and actionable way.