Management Information System (MIS) The word “MIS” is not new, only its automation (computerization) is new. Earlier the MIS (Management Information System) was used as a resource of information by the managers. This information would allow them to plan and control different operations used in an organization. Now, since the MIS is computerized, it has increased its accuracy and speed, which has allowed more alternatives while solving the problem as well as in decision-making. MIS provides the following types of information to the companies:
1) Descriptive or “what is” information,
2) Diagnostic or “what is wrong” information,
3) Predictive or “what if’ information, and
4) Prescriptive or “what should be done” information. MIS is also known as the information system, the information and decision system, and the computer-based information system.
Component of MIS
1) Management: Management can be defined as the procedure of planning and regulating the operations of an organization. Framing of policies, its execution, and staffing of employees are its key tasks.
The management procedure can be analyzed with the help of the manager’s actions. These are as follows:
i) Planning Organising
2) Information: The word information is derived from the Latin word informare’ which means “give form to”. Information is data that has been processed and retrieved in such a way so that it is meaningful to the person who receives it.
3) System: A group of elements is called a system. These elements are called sub-systems. All sub-systems are grouped together to serve a common purpose.
Following are some definitions of MIS:
According to G.B. Davis, “A definition of a management information system, as the term is generally understood, is an integrated, user-machine system for providing information to support operations, management, and decision-making functions in an organization. The system utilizes computer hardware and software, manual procedures, models for analysis, planning, control and decision-making, and a database”.
According to Kenneth Hamlett, “Information system refers to the practice of integrating computer systems, hardware, and software used to meet an organization’s strategic goals”.
The Institute of Management Accounts, “MIS is a system in which defined data are collected, processed and communicated to assist those responsible for the use of resources”.
According to Allen S. Lee, “Management Information System is a planned system of collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management”.
Examples of MIS
1) A good example of MIS is the ‘process orders’ for an organization that assists users about the automatic processes related to orders.
2) Processing transactions through the web site of an organization.
3) Another good example of MIS is ‘online bill payment’ at a bank. Many times the bill payment system will also produce an e-mail for users to let them know that the action has occurred and what the outcome of the action was.
Characteristics of MIS
The main features of MIS are as follows:
1) Integrative System: An MIS is a logically integrated system comprising of sub-systems, where activities of each are inter-related. This integration is possible by rotation of data among these sub-systems.
2) Sub-System Concept: Although a system is considered a single entity, but a big system is divided into sub-systems, so that one subsystem can be implemented at a time, for better effectiveness.
3) Provides Relevant Information to Management: MIS should provide only relevant information to managers. At times, determining relevant information becomes very difficult, especially when an analysis of the problem is done differently by different managers, according to the varying circumstances. Thus, MIS provides relevant information and helps in reducing confusion and solving the problem.
4) Flexible: A MIS must be one that can be easily modified to changing circumstances. It must be capable of expansion, accommodate growth or new types of processing activities, and contraction as and when required.
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5) Enhances Productivity: MIS as a whole improves the efficiency of an organization. It helps in efficient document preparation, provides a high level of services to individuals and external organizations, helps in early detection of warnings about internal and external problems, and also in identifying opportunities. It assists in the overall management of the organization and improves the manager’s ability to deal with unexpected problems.
6) Coordinated System: MIS is centrally synchronized so that all its components such as data processing, office automation, intelligence, and decision support systems, are developed and managed in a planned and coordinated manner.
7) Feedback System: MIS provides feedback about its own efficiency and effectiveness. The system itself provides statistics about by ‘whom’ and ‘how much’ the system has been used.
8) Management Oriented: MIS is designed from the top to bottom, but not necessarily starts from management needs or the overall business goals. This means that the system may be developed keeping in mind the needs of the middle/operating management as well as the top management. This ensures a good MIS.
9) Management Directed: It is imperative that management should dynamically direct the development of a system because MIS is management-oriented. Management should decide what information is required and hence help in designing the MIS.
10) Common Database: Since MIS is an integrative system, it has the opportunity to avoid duplication and redundancy in data collection, storage, and sharing. One master file should be maintained; which can then be used by different functional areas for their respective report preparation and analysis.
11) Distributed Data Processing (DDP): Many companies who adopt MIS, have operations at more than one geographic location. These remote locations (sales office or distribution office) have connections with each other and with the main office. Thus, there is a need for some form of distributed data processing that produces an effective MIS with geographic boundaries. Hence, information required by remote location sites of the main office can be provided by this system. That is why DDP is an important part of MIS.
12) Computerized System: Even though the MIS is possible without a computer but its use increases the efficiency and effectiveness of the system and equips it to handle a wide variety of applications. It also provides quick, accurate and consistent information. Besides this, there is a reduction of manpower by using MIS.
13) Transforms the Data into Information: When data is processed or transformed for a specific task or use, then it becomes information. There are various methods by which data can be transformed within a system.
Need of MIS
To implement MIS, the organization should have clarity about the need for information at different levels of management. The need of MIS is due to following reasons:
1) Efficiently storing and managing data of all business functional areas.
2) Fast and accurate delivery of information, as and when needed.
3) Processing of gathered data and developing information from it.
4) Information availability for production and inventory.
5) Providing information about the current economic status of the company.
6) Faster implementation of results available from reliable data sources.
7) Smooth flow of data within various levels of the organization.
8) Make availability of the information required for planning, organizing and monitoring business processes.