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Definition of Management Information Systems: A management information system (MIS) is an organized process which provides past, present, and projected information on internal operations as well as external intelligence to support decision making.
Due to the increased advancement in technology, many organizations and businesses are using Management Information Systems to manage themselves efficiently and effectively.
Information is the knowledge gained from processing facts and figures. If a small business has a well managed information system, it can gain competitive advantagein a very competitive market, for example; small businesses can be in position to gather data about the demographics of a targeted market or needs and wants of people in those markets, this gathered information can be processed and used to createcompetitive decisions.
However, as competition increases in the business world, small business owners must look for opportunities to provide high quality products and services basing on consumers needs and wants, but all this can be possible if they use technology and information. This all process makes information a frontier for businesses seeking to gain and maintain an edge over their competitors.
Many organizations and small businesses use technology to collect, process and manage information. Information systems can be tailored to facilitate various business functions and activities. A well managed information system can provide reports on each and every function in a business, for example; it can provide reports on human resource management, manufacturing, finance and accounting, consumer behaviors and so much more…
Businesses use different types of information systems, and these include;
In brief, lets see how a ”Marketing information system” helps a business. A marketing information system (MIS) can be used to be used by marketing managers or researchers to manage an overwhelming flood of information by organizing data in a logical and accessible manner. Through this system, a business can monitor its performance in the market and identify obstacles and opportunities with in a defined market. A marketing information system will collect data from inside and outside the business; then it will processes that data to produce relevant information which can be used to support marketing functions. Data processed can be stored for later use; it can be classified or retrieved when needed.
Well established businesses use a combination of high-tech and low-tech solutions to mange the flow of information. The speed at which information flows within and outside a business determines the success of that business, because, all businesses depend on information to make decisions.
USING DATABASES TO MANAGE INFORMATION:
Since management information systems deal with gathering and processing of data, all businesses use Databases to store this gathered data. A database is a centralized integrated collection of data resources. A database is designed basing on a company’s structure of information; it serves as an electronic filing cabinet which stores massive amounts of data and retrieves that data within minutes.
Small businesses can hire IT specialists to design an simple database to manage and store their data, however, this database has to be updated on a daily bases, information stored in a database can be updated at anytime, because, if you store outdated information on a data base, you will be misguided during the process of decision making.
USING INFORMATION SYSTEMS FOR DECISION MAKING:
Now that we have seen that management information systems (MIS) are used to organize and process information, this information can be used to make decisions in an organization or business. MIS reports summarize or aggregate information to support decision-making tasks. MISs provide reports in many different ways. For example, MISs reports can be periodic, summarized, exception, comparative and ad hoc.
So, once a company has created a database, managers have to mine data which should be stored and processed in this database. Data mining is a task of using sophisticated technology to retrieve and evaluate data in a database to identify useful trends. If data is well mined and managed, it can help a business discover patterns in the sale of specific goods and services, it can also help a business find new customers, track customer complaints, requests and also evaluate cost of production and operation.
The process of making decisions in an organization is not easy, we have different types of decisions, and these include; structured decisions and non structured decisions. So, to simplify the all process of decision making, business managers and owners need to use different types of information systems to speed up the decision making process. Below I have listed some detailed points on how to use information systems to make decisions in an organization or business.
A decision support system is commonly referred to as an interactive information technology system which is designed to support decision making when the problem is not structured. A Decision Support System has three components and these include; (Data management component, Model Management component and User Interface Management component), in brief, let me explain about each of these components of a decision support system.
RECOMMENDED BOOKS ON MANAGEMENT INFORMATION SYSTEMS:
ROLE OF 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 work faster and supplies more blood when needed. It regulates and controls the incoming impure blood, processed 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 system ensures that an appropriate data is collected from the various sources, processed and send 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 top management.
Here are some of the important roles of the MIS:
i. The MIS satisfies the diverse needs through variety of systems such as query system, analysis system, modeling system and decision support system.
ii. The MIS helps in strategic planning, management control, operational control and transaction processing. The MIS helps in the clerical personal in the transaction processing and answers the queries on the data pertaining to the transaction, the status of a particular record and reference on a variety of documents.
iii. 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 operation level to correct an out of control situation.
iv. The MIS helps the middle management in short term planning, target setting and controlling the business functions. It is supported by the use of the management tools of planning and control.
v. The MIS helps the top level management in goal setting, strategic planning and evolving the business plans and their implementation.
vi. 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 operation of an organization.
IMPACT OF THE MANAGEMENT INFORMATION SYSTEM
MIS plays a very important role in the organization; it creates an impact on the organization’s functions, performance and productivity.
The impact of MIS on the functions is in its management with a good MIS supports the management of marketing, finance, production and personnel becomes more efficient. The tracking and monitoring of 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 and probable trends in the various aspects of business. This helps in forecasting and long-term perspective planning. The manager’s attention is bought to a situation which is expected in nature, inducing him to take an action or a decision in the matter. Disciplined information reporting system creates structure 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 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 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 systematization of the business operations for an effective system design. This leads to streaming of the operations which complicates the system design. It improves the administration of the business by bringing a discipline in its operations as everybody is required to follow and use systems and procedures. This process brings a high degree of professionalism in the business operations.
The goals and objectives of the MIS are the products of business goals and objectives. It helps indirectly to pull the entire organization in one direction towards the corporate goals and objectives by providing the relevant information to the organization.
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 simple. The impact is on the managerial ability to perform. It improves decision-making ability considerably high.
Since, the MIS work on the basic system such as transaction processing and database, the drudgery of the clerical work is transferred to the computerized system, relieving the human mind for better work. It will be observed that lot of manpower is engaged in this activity in the organization. Seventy (70) percent of the time is spent in recording, searching, processing and communicating. This MIS has a direct impact on this overhead. It creates information –based working culture in the organization.
IMPORTANCE OF MIS
It goes without saying that all managerial functions are performed through decision-making; for taking rational decision, timely and reliable information is essential and is procured through a logical and well structured method of information collecting, processing and disseminating to decision makers. Such a method in the field of management is widely known as MIS. In today’s world of ever increasing complexities of business as well as business organization, in order to service and grow , must have a properly planned, analyzed, designed and maintained MIS so that it provides timely, reliable and useful information to enable the management to take speedy and rational decisions.
MIS has assumed all the more important role in today’s environment because a manager has to take decisions under two main challenges:
First, because of the liberalization and globalization, in which organizations are required to compete not locally but globally, a manager has to take quick decisions, otherwise his business will be taken away by his competitors. This has further enhanced the necessity for such a system.
Second, in this information age wherein information is doubling up every two or three years, a manager has to process a large voluminous data; failing which he may end up taking a strong decision that may prove to be very costly to the company.
In such a situation managers must be equipped with some tools or a system, which can assist them in their challenging role of decision-making. It is because of the above cited reasons, that today MIS is considered to be of permanent importance, sometimes regarded as the name centre of an organization. Such system assist decision makers in organizations by providing information at various stages of decision making and thus greatly help the organizations to achieve their predetermined goals and objectives. On the other hand, the MIS which is not adequately planned for analyzed, designed, implemented or is poorly maintained may provide developed inaccurate, irrelevant or obsolete information which may prove fatal for the organization. In other words, organizations today just cannot survive and grow without properly planned, designed, implemented and maintained MIS. It has been well understood that MIS enables even small organizations to more than offset the economies of scale enjoyed by their bigger competitors and thus helps in providing a competitive edge over other organizations.
