Management Information Systems are computer based systems that are able to capture, process and communicate information, from low level to the high level information. In this paper we basically take a bird’s eye view over the theory of Information systems, the categories of management information systems and how they relate to the level of information in an organization. We also explore briefly the basic steps to design an MIS for an organization, the need for MIS within an organization, and the Advantage and Disadvantage of using an MIS. We conclude that an MIS is a powerful tool, that when used correctly can benefit an organization by improving effectiveness and efficiency of the decision making process.
In these highly competitive times, organizations have looked to enhance their ability to react quickly and easily to changes in internal or external stimuli by improving their decision making process, streamlining the process to make it more efficient and effective (Karim, 2011). One of the major societal activities being performed today is the use of Information processing (Khan ; Khan, 2011).
In this overview, we will be looking at the use of MIS, management information systems, in information processing. Before that we have to first understand what Management, Information and systems are and develop the conceptual framework before we can understand the concept of MIS (Management Information systems).
Henry Fayol – “To manage is to forecast, to plan, to organize, to command, to coordinate and to control”.
F. W. Taylor –”Art of knowing what you want to do and then seeing that it is done the best and the cheapest way”.
Basically management emphasizes having a plan that is, knowing what you want to do and knowing how you want to do it. As well as, optimizing the process of achieving what you want to do, that is using the least amount of resources available to achieve your goal. Resources available could be in the form of finance, human, raw material and time. While accounting for possible shifts in the desired goal, that is forecasting.
To understand this, we must first understand what data is and then the distinction between Data and Information.
Dr. Quentin L. Burrell, Isle of Man International Business School stated, “Data are the basic individual items of numeric or other information, garnered through observation; but in themselves, without context, they are devoid of information. Information is that which is conveyed, and possibly amenable to analysis and interpretation, through data and the context in which the data are assembled. ” (Zins)
Information can be fully described as meaningful data. That is, information is data that has been processed into a form that is meaningful to its end recipient. Data becomes meaningful when used in the correct context (Annoymous). It obtains its actual value from current or prospective decisions. Information has the following characteristics:
• Source trustworthiness
• Communication with the right person
• Punctuality or timeliness
In the context of MIS information is the processed data which is used for informative purposes and decision making (Khan ; Khan, 2011).
For the purpose of this paper, a system refers to an information system. An information system is a set of interrelated components that collect, manipulate, store, and disseminate data and information and provide a feedback mechanism to meet an objective (Laudon ; Laudon, 2012).
In this overview we look at MIS (Management Information Systems), however to understand MIS we first have to understand that an MIS is a category of IS (Information Systems) that provides information for users with similar needs. As such, we will first look at Information Systems.
According to Ricart and Valor (1991) “the information system is a formal set of processes that, working from a collection of data structured depending to the company’s needs, gathers, processes and distributes the information necessary for the company’s operations and for its corresponding management and control activities, thereby supporting, at least in part, the decision-making processes necessary for the company to perform its business function in line with its strategy”. (Alcami ; Caranana, 2012)
Alternatively we use the more recent definition as stated above, “Information system is a set of interrelated components that collect, manipulate, store, and disseminate data and information and provide a feedback mechanism to meet an objective” (Laudon ; Laudon, 2012).
These definitions above serve to define formal information systems and do not acknowledge informal information systems. This is not to say informal information systems are not significant but rather to recognize that they are more difficult to study, predict, and manage. Informal systems are not designed but rather provide chance information. This makes informal information systems highly unreliable in terms of the timeliness of data, and at times unreliable in the trustworthiness of information.
An information system can also be seen as a social system whose behavior is largely influenced by the objectives, values and beliefs of individuals and groups and by the performance of technology (Alcami ; Caranana, 2012). An IS differs from a computer system in the sense that it is not determinist. That is, for one specific input there is no one specific output, unlike with a computer system.
Components of IS include:
• Human resources
The primary functions of an IS are:
• Data capture and collection
• Information processing
• Distribution and dissemination
Levels ; Types of IS
Figure 1: Pyramid showing the various levels at which MIS’s systems are used.
Due to the complexity of information processing and the varying degrees at which data and processes can be structured an information system that is able to deal with all the needs of the organization is impossible to attain (Alcami & Caranana, 2012). Therefore several categories of information systems are required. Figure 1 shows a pyramid structure to that illustrates which information system category is best suited for the levels at which data needs to be processed.
Types/Categories of IMS
Transaction processing systems
Transaction Processing System (TPS) have the task of recording an organizations daily business. As operations are carried out, the TPS collects processes and stores data and provides in the form of documents, reports or information systems. TPS aids with structured clear routines, for which procedures have been extensively defined. As such, the objective of a TPS is to improve the organizations routine activities. The four major components of a TPS are input, processing, storage and output.
Decision support systems
Though all information systems can aid with the decision making process, a Decision Support System (DSS) is developed with the express purpose of supporting the decision making process. It is usually used by middle to high level managers to provide a tool which will aid in solving problems or making decisions that are semi-structured to unstructured. Unstructured decisions refers to decisions where there are few to no clear procedures in place. A DSS achieves this by combining human judgement with computerized information to solve problems or make decisions. (Alcami & Caranana, 2012)
Executive Information System/Executive Support System
An Executive Information System is basically a DSS for higher level decisions. It is used by top managers at the strategic level of the organization. EIS are used to assist in addressing unstructured decisions. These types of systems provide quick and easy access to summarized information from all levels of the organization. They also provide internal and external information to help support a top level manager’s decision making. Characteristics of an EIS include:
• Capacity to access and manage information from all levels of an organization
• Presentation of information in a meaningful and manageable way, through summary reports and graphics.
• Oriented to provide information on critical factors
• Capacity for communication and time organization
• Must be easy to use.
Management Information System
The main purpose of Management Information System (MIS) is to provide managers with the information they need to take decisions and solve problems. MIS provides managers with the relevant information to solve problems as well as make and support decisions. All organizations make decisions periodically, be it weekly, monthly, quarterly, bi-quarterly or annually. As such, they need information to be able to make sound decisions and plan appropriately. MIS prepares reports in a predetermined structure. This enable managers to make semi-structured/structured decisions with relative ease as they already know what factors to account for. MIS utilizes reports to provide the information. The reports produced by the MIS are enhanced by management through exception. (Alcami ; Caranana, 2012). This is done in one of four possible ways:
• Preparing a report only when exceptions occur
• By using the report’s sequence to highlight exceptions
• By grouping exceptions together
• By showing deviation from the norm
Figure 2 below, shows the basic flow of data through an MIS is represented below:
Figure 2: Flow of Information through an MIS
Inputs are entered into the MIS, this information is then processed using procedures in the MIS and output reports are generated and sent via telecommunications to the necessary recipients.
Need for MIS within an organization
• Encourages information sharing, that is the right people have access to the same information and are able to make decisions based on the same information available through all subsystems of the organization. This negates any claims that information was not available.
• To guide staff in the most effective way. That is, decisions are streamlined so they are able to carry out routine services effectively and efficiently.
Major Factors influencing the success of the IS
• Availability of Information: Is the right information available? Is it adequate? Does it address the user’s needs?
• Manager capable of utilizing the IS (Human resource): Are the people in place are unable to utilize the IS to its full capability?
• Emphasis on technology: Is the IS more technology based? Or instruction based?
• Adequate analysis of information: Do the procedures outlined in the IS provide adequate analysis of the information? That is, an outlay of the facts as well as comparison with previous benchmark standards. This would provide information to support manager’s decisions.
• Adaptability to changing environment: Is the system able to adapt and evolve to change with the needs of the organization?
Examples of the uses of MIS
Two examples of the possible applications of MIS are outlined below:
Material management, in this context an MIS could be used to measure, monitor, and output the amount of material left in a warehouse. This would assist managers in decisions on material, such as when to order and how much to order?
A Marketing MIS would cut through various departments of marketing such as, market research, product development, delivery, promotion and advertising. A typical use of the MIS would be to produce sales reports. These reports could then be used by the promotion and advertising department to focus their efforts on products with low sale.
Maintenance Information System
The maintenance information system would provide historical data of machines within the plant, specify equipment inspection and service schedules, prioritize important equipment tasks and assignment. It would also include inventory control of spare parts and other functions. Lastly, it would be able to produce written reports to management and other necessary departments to notify them if critical or safety-related components or systems are out of service for maintenance.
Design steps for an MIS
The basic process to design an MIS follows the following procedure:
Figure 3: Flowchart of the design process for an MIS.
As illustrated by Figure 3 above the design steps to building or choosing an appropriate MIS for an organization.
The first step in the process is to identify the system needed. That is, will it be a system with manual or automated system; where an automated system relies on a computer to produce aggregate data and input it to the MIS (Khan & Khan, 2011).
The next step would be to identify the type of information required. As to collect information without a purpose would be wasted effort. We identify the purpose of the MIS, this helps decide which type of information is required. The types of Information required could be predictive, diagnostic, or descriptive.
In the third step we look at developing methods for data collection and select the best one. For example, in a maintenance plant, you could either have sensors that measure performance of a machine and transmit to a central computer or alternatively you could have an inspector that uses measuring equipment go and physically inspect the machine.
The fourth step is to establish and implement a reporting system. That is, what type of reports do you need to generate?
Lastly, establish a quality control system to monitor the entire system and allow for modifications to the system if necessary.
Advantages & Disadvantages of MIS
Advantages of using MIS
• Better decisions are made because the relevant information to make decisions is easily available.
• It improves effectiveness and efficiency through streamlining routine tasks/services.
• It could potential improve profits and deliver measureable cost saving.
• Provides total system integration, as now all parts of the system have access to relevant information.
Drawbacks of MIS
• An MIS uses predetermined structures in accordance with previous benchmarks and standards as per the programming of the MIS; it is unable to make decisions when confronted with a previously undefined/unexpected situation. That is, they can be Ineffective.
• MIS systems can be expensive to implement.
• Maintenance, there are associated cost of using an MIS. For example, the costs of the technology used as well as updates to the system.
• Data quality issues, the system is only as good as those using the system. Therefore, if the initial data inputs to the system are poor the outputs of the system would also be poor.
• Security issues, there is potential for the system to be hacked and sensitive company information leaked.
MIS if used correctly can be a very powerful tool that will aid in the decision making process that manager’s at all levels are faced with. In this paper we explored the concepts of Information systems, describing the types of systems such as Transactional Processing System, Decision Support System, Executive Information systems and Management Information system. We also outlined the basic steps of designing an MIS for your organization.
To sum MIS is a management tool that provides managers with the information they need to take decisions and solve problems. It cuts across the communication barrier delivering information directly to the individuals who need to it affect change and inspire growth of the organization.
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