4 Management Information System (Mis) : Backdrop
4 Management Information System (Mis) : Backdrop
4 Management Information System (Mis) : Backdrop
DEFINITIONS OF MIS
In competitive business world, processing and communicating information
consumes most of the time of managers. Information is used for making and
implementing different types of decisions for the achievement of organisational
objectives. Such a system is generally referred to as ‘information processing system’,
‘organisational information system’, ‘information system’, or ‘management information
system’.
However, the term management information system is the most popular because it
is more descriptive and generally understood. Since in an organisation, management
information system may consist of a number of subsystems which may also be termed
as systems at a specific level, there is a tendency to use plural form as management
information systems or abbreviated form as MIS concerns, but it would be wrong to
think that such a system cannot be operated without the help of computers.
According to Raymond J. Coleman and M. J. Riley, “MIS applies to all
management levels; is linked to an organization’s sub-systems; it functions to measure
performance, monitors progress, evaluates alternatives or provides knowledge for
change or corrective action; and is flexible, both internally and externally”.
G. B. Davis defines management information system as “an integrated
man/machine system for providing information to support the operations, management
and decision-making functions in an organization”. The system utilizes computer
hardware and software, manual procedures, management and decision models, and a
database. According to him, “managerial information structure must be of a pyramidal
shape and it should be in conformity with the pyramidal pattern of the structure of a
particular organization”.
According to Jerome Kanter, “MIS is a system that aids management in making,
carrying out, and controlling decisions”. Here, MIS is a system that aids management in
performing its job. Computerized MIS is a system that reacts instantaneously to top
management requests. A Company can employ MIS concepts that focus on middle and
operating management rather than top management.
James A. O’Brien has defined management information system as “to provide
information to support management decision-making”.
A management information system (MIS) is a system or process that provides
information needed to manage organizations effectively. It is a planned system of
collecting, processing, storing and disseminating data in the form of information needed
to carry out the functions of management. In a way, it is a documented report of the
activities that were planned and executed. According to Philip Kotler "A marketing
information system consists of people, equipment, and procedures to gather, sort,
analyze, evaluate, and distribute needed, timely, and accurate information to marketing
decision makers”.
MIS Concept is, “Right information to the right person at the right place at the right
time in the right form at the right cost”.
MIS: NATURE AND SCOPE
The management information system is an organized approach to the study of
information needs of the management at every level in making operational, tactical,
and strategic decisions. Its objective is to design and implement man-machine
procedures, processes, and routines that provide suitably detailed reports in an
accurate, consistent, and timely manner. It presents data such as the organization's
processes, operating procedures, internal controls and audit preparation, which the
management uses to make effective and efficient decisions. The internal controls for
each department contain guidelines for operation. The flow of work assigned to
employees, their responsibilities and duties, for example, are listed under internal
controls.
The concept of MIS gives high regard to individual and his ability to use
information. An MIS gives information through data analysis. While analyzing the data, it
relies on many academic disciplines. These include the theories, principles and concepts
from the Management Science, Psychology and Human Behavior, making the MIS more
effective and useful. These academic disciplines are used in designing the MIS, evolving
the decision support tools for modeling and decision - making.
The foundation of MIS is the principles of management and its practices. MIS uses
the concept that a system can be evolved for a specific objective after systematic
planning and design. It calls for an analysis of a business, management views and
policies, organization culture and the management style. The information should be
generated in this setting and must be useful in managing the business. This is possible
only when it in conceptualized as a system with an appropriate design.
The MIS, therefore, relies heavily on the systems theory offering solutions to
handle the complex situations of the input and output flows. It uses theories of
communication which help to evolve a system design capable of handling data inputs,
process, and outputs with the least possible noise or distortion in transmitting the
information form a source to a destination. It uses the principles of system design viz.
the ability of continuous adjustment or correction in the system in line with the
environmental change in which the MIS operates. Such a design helps to keep the MIS
tuned with the business management needs of the organization.
The concept, therefore, is a blend of principles, theories and practices of
Management, Information and System giving rise to a single product known as
Management Information System (MIS).
The Physical view of the MIS can be seen as assembly of several subsystems
based on the databases in the organization. These subsystems range from data
collection, transaction processing and validating, processing, analyzing and storing the
information in the databases. The subsystem could be at a functional level or a
corporate level. The information is evolved through them for a functional or a
departmental management and it provides the information for the management of
business at the corporate level.
The MIS is product of a multi- disciplinary approach to the business management.
It is a product which needs to be kept under constant review and modification to meet
the corporate needs of the information. The MIS may differ since the people in two
organizations involved in the same business also differ. The MIS is basically for the
people in the organization. The MIS model may be the same but it differs greatly in the
contents.
The MIS, therefore, is a dynamic concept, subject to change, time and again, with
a change in the business management process. It continuously interacts with the
internal and the external environment of the business and provides a corrective
mechanism in the system so that the change needs of information are met with
effectively. The MIS, therefore, is a dynamically designed system, the primary objective
of which is to provide information for decision making and it is developed considering
the organizational fabric, giving due regard to the people in the organization, the
management functions and managerial control.
The MIS model of an organization changes over a period of time as the business
passes through several phases of developmental growth cycle. It supports the
management of the business in each phase by giving information which is crucial in that
phase. Every business or organization has certain critical success factors in each phase
of growth cycle and an efficient and effective MIS model provides more and more
information keeping in view its sensitivity, on the critical success factors for decision
making.
The Purpose and Scope of Management Information Systems can be defined as
“The combination of human and computer based resources that results in the collection,
storage, retrieval, communication and use of data for the purpose of efficient
management of operations and for business planning”. Management Information
Systems are primarily concerned with the delivery of information (both internal and
external) to organisational members from the shop floor workers to the top level
management. The purpose of MIS is to help the smooth running of the business by
providing information on the firms data (such as accounting figures) employees from
different levels will then evaluate this information so that decisions can be made to
ensure that the business remains competitive and successful. MIS has been created to
support the whole range of business's administration and regulatory activities and can
be seen in all parts of the world and in all types of environments.
Management information systems are basis for conducting business today. In
many industries, survival and even existence is difficult without extensive use of
information technology. MIS has become essential for helping organizations operate in a
global economy. Organizations are trying to become more competitive and efficient by
transforming themselves into digital firms where nearly all core business processes and
relationships with customers, suppliers, and employees are digitally enabled.
Businesses today use information systems to achieve six major objectives: operational
excellence; new products, services, and business models; customer/supplier intimacy;
improved decision making; competitive advantage; and day-to-day survival.
Management Information Systems have the following objectives:
• Pre-specified and preplanned reporting to managers is accomplished by
“Information Reporting Systems “.
• Interactive and ad hoc support for decision making by managers is
accomplished by ‘Decision Support Systems’, for optimal decisions.
CHARACTERISTICS OF MIS
Main characteristics of MIS are the following:
(i) Comprehensiveness: Management Information System is comprehensive
in nature. It includes transactions processing systems and other information
systems designed primarily for managers at all levels. It embraces manual
and computer systems, office information systems, forecasting information
systems, intelligence information systems, decision support systems and
other computer models that process business.
(ii) Well Coordinated: Management information system is centrally
coordinated to ensure that information is passed back and forth among all
the sub-systems of the organization as and when needed.
(iii) Subsystem Concept: MIS is composed of all the subsystems that are the
part of the overall system. These sub-systems share the goals of the
management information system and of the organization. These sub-
systems serve multi-levels or multiple activities.
(iv) Integrated System: MIS is rationally integrated so as to produce more
meaningful MIS. Sub-systems are integrated so that the activities of each
are inter-related with those of the others. This integration is accomplished
by passing data between these systems. Computer networks can be
designed to facilitate data flows among these various systems. Integration
makes information processing more efficient by reducing both intermediate
processing. Senior managers benefit from integrated systems because they
need cross functional information. A substantial degree of integration is
required for an effective management information system.
(v) Transformation of Data into Information: MIS transforms data into
information in variety of ways. When data is processed, it becomes
information. There are many ways in which data are transformed within an
information system. The ways in which MIS should transform data into
information are determined by the organizational personnel and the task
for which information is needed.
(vi) Enhances Productivity: MIS enhances productivity of the organisation in
many ways. It provides early notice of opportunities and facilitates the
management processes. It enhances managers’ ability to deal with
unanticipated problems.
(vii) Management Oriented: Management information system is developed as
per the unique managerial styles of the personnel who use it. The
management information system is carefully tailored to each individual
manager’s requirements. At the lower levels, the management information
system is developed for clerical and operations purpose. At middle level,
the information system is tailored to the requirements of departmental
managers. For professional personnel, the information system is tailored
according to the specialized tasks.
(viii) Management Directed: When MIS is management-oriented, it should be
directed by the management because it is the management who tells their
needs and requirements more effectively than anybody else. Manager
should guide the MIS professionals not only at the stage of planning but
also on development, review and implementation stages so that effective
system should be the end product of the whole exercise in making an
effective MIS.
(ix) Relevant Information: MIS should provide only relevant information. It is
very difficult to decide about relevancy. Systems designers must carefully
consider the human factor when developing a management information
system.
(x) Quality Criteria: Management information system must be designed for
timeliness, relevance, and accuracy of information.
(xi) Feedback: management information system should provide feedback
about its own efficiency and effectiveness. The transactions processing
error rate is a simple example of this feedback. Feedback system helps in
improving the efficiency of the system. Usage statistics can be used for
managerial analysis.
(xii) Flexibility: MIS must be designed in such a manner that it can be easily
modified. The information system should be capable of being easily
expanded to accommodate growth or new types of processing activities.
(xiii) Modularity: Modular approach increases the efficiency in MIS design. The
MIS should be composed of many modules or sub-systems rather than be
designed as one.
(xiv) Sharing of Data: In an organization, common database is used for all
managers. Two or more managers often utilize the same information. So
the system should have the feature of multiple uses by managers.
Sometimes, it is important to reserve certain information for the exclusive
use of selected managers. This selective sharing quality can be established
by controls that are part of the computer programs.
(xv) Computerized: Now-a-days it is not possible to have an MIS system
without using a computer. IT has increased the effectiveness of the System.
Presently management information system is based on the computers.
(xvi) Heavy Planning Element: The preparation of MIS is not a one or two days
exercise. It usually takes a much longer period. So the system expert has to
keep two things in mind – one is that he has to keep future objectives as
well as the firm’s information well in advance and also he has to keep in
mind that his MIS will not be obsolete before it gets into action.
FUNCTIONS OF MIS
Management Information System is a combination of computers and procedures
for providing information to managers for making decisions.
Data Collection: The first function of an MIS is to determine the information
requirements to make decisions and to organize it into a database. Data Base is an
integrated collection of data stored in one place for, efficient access and information
processing. Data can be obtained from within and outside the organisation. At
operational level most data collected for an MIS come from internal sources such as
company records but at strategic level external sources are used for collecting data.
External sources include trade publications, customers and consultants.
Data Storage and Processing: After creation of a database, it must be stored
and processed in a form which is useful to managers. Data are stored on magnetic tape
or hard disks. The data can be loaded into computers in seconds for easy access by the
user.
Information Provider to Managers: After collection of data, storing and
processing of data, the next function is to present the information to managers for their
use.
Prediction
It predicts the future situation by applying modern mathematics, statistics or
simulation.
Planning
It arranges reasonably the plans of each functional department in accordance with
the restrictions afforded by enterprises and provides the appropriate planning reports
according to different management.
Controlling
It monitors and inspects the operation of plans and comprises with the differences
between operation and plan in accordance with the data afforded by every functional
department, and be assistant to managers to control timely each method by analyzing
the reasons why the differences comes into being.
Assistance
It derivates instantly the best answers of related problems by applying to various
of mathematics’ mode and analyzing a plentiful data stored in computers in the hope of
using rationally human resource, financial resource, material resource and information
resource for relative abundant economic benefits.
ELEMENTS OF MIS
There are three elements constituting an MIS - Management, Information and
System.
Management
Management Information System (MIS) is a subset of the overall internal controls
of a business covering the application of people, documents, technologies, and
procedures by management experts to solve business problems such as costing a
product, service or a business-wide strategy.
MIS is a support system for organizational functions and decision making.
Organization theory has provided many important concepts which are directed towards
understanding the functions of MIS.
Information
Every aspect of management in the modern age relies heavily on information to
thrive. Nothing moves without information and it is generally believed that information
is power and that he who has it has power. It is an important resource needed to
develop other resources. Changing circumstances and environments have necessitated
the need for proper dissemination of information at various levels of management. The
development and use of information management systems (MIS) is a modern
phenomenon concerned with the use of appropriate information that will lead to better
planning, better decision making and better results.
System
Information flow in a system is becoming of ever greater interest in progressive
and dynamic organizations. The need to obtain access conveniently, quickly and
economically makes it imperative to devise procedures for the creation, management
and utilization of databases in organizations. Management information and information
systems, in particular those related to effective decision-making processes in an
organization, i.e. MIS, are regarded as valuable organizational resources. Simply put, an
information system is a system for accepting data/information as a raw material and
through one or more transmutation processes, generating information as a product. It
comprises the following functional elements which relate to the organization and its
environments:
• Perception - Initial entry of data whether captured or generated, into the
organization;
• Recording - Physical capture of data;
• Processing - transformation according to the "specific" needs of the
organization;
• Transmission - the flows which occur in an information system;
• Storage - presupposes some expected future use;
• Retrieval - search for recorded data;
• Presentation - reporting, communication; and
• Decision making - a controversial inclusion, except to the extent that the
information system engages in decision making that concerns itself.
STRUCTURE OF MIS
On one side many experts think that MIS is computerization of routine clerical
work, whereas on the other hand others think it provides answers and solutions for all
the managerial problems. MIS is more than a set of ideas and it provides means for
connecting the organizational systems with exchange of information. The systems
approach to management helps in designing the MIS systems. IT is tool used by the MIS.
The interaction between information technology and organizations is very complex. It is
influenced by the organization’s structure, standard procedures, politics, culture and
surrounding environment. An organization is a stable, formal, social structure that takes
resources from the environment and processes them to produce outputs. The
organization transforms these inputs into products and services.
MIS is more than a set of ideas or concepts. It is an operational system performing
a variety of functions to produce outputs which are useful to the management of an
organisation. The systems approach to management must precede the design and use
of an MIS. The computer is only a tool of the MIS, not the MIS itself. Management must
take an active part in the design of the MIS. System designer should use participatory
design process. Technical knowledge of the computer, is preferable, but the essence of
MIS is integrated planned systems and not “the islands of mechanisation” or data
processing systems.
Davis and Olson define MIS as an integrated user machine system for providing
information to support operations management and decision-making functions in an
organisation. The computer based system utilises computer hardware and software,
manual procedures, decision models and a database. A database is a centrally
controlled integrated collection of logically organised data. The data needs to be
managed in order to be available for processing and have appropriate quality and value.
The MIS concept is now developed around a federation of subsystems and implemented
as per overall plan. MIS is an organised method of providing past, present and future
information relating to internal operations of an organisation. It also provides external
intelligence by environmental scanning techniques. All organisations have information
system that performs data processing operations to meet the legal and transactional
data processing requirements, carrying out their functions effectively and a variety of
useful reports. Structure of an MIS can be described in the following three forms:
• Functional form
• MIS at Different Levels
• Comprehensive Structure of MIS
Functional Form
Under this type of structure, MIS may be viewed as assisting in functions of an
organization such as marketing, production, purchasing, technical, finance and
accounting. Each of these functional areas has their own information system to cater to
its need of information.
MIS at Different Levels
The following three levels in an organization are important from the point of view
of MIS:
(i) Strategic Information Level.
(ii) Tactical Information Level.
(iii) Operational Information Level
(i) Strategic Information Level- This level is concerned with determining,
maintaining and supplying information required by top level management. Top
management requires information for formulating long-term objectives, strategies,
major policies and programmes of the concern. It also requires information about
external environment for strategic planning. Strategic planning is the process of
deciding on objectives of the organisation, on changes in these objectives, on the
resources used to attain these objectives, and on the policies that are to govern the
acquisition, use and disposition of these resources.
Top management in any organization is mainly responsible determining the overall
goals and objectives of the business. It deals mainly with long-term strategic plans,
policy matters and broad objectives of the organization. They are responsible for
interacting with representatives of the external environment, such as financial
institutions, political figures, and important clients of the organization. The top level
normally consists of Chairman and members of the Board of Directors, Chief Executive
Officer and the heads of the major departments of the organisation. In fact, these
executives, responsibilities relate to the whole organization and they are accountable
for effectiveness and efficiency of the operations of the organization as a whole.
Top management needs the information on the trends in the external environment
(economic, technological, political and social) and on the functioning of the internal
organization. Top management requires historical as well as current and future
information. Mostly the information utilized by top management is futuristic and
external in nature. Much of the information so generated for strategic planning purpose
tends to be incomplete and not fully reliable. The strategic planning information often
has the following characteristics:
• Ad hoc Basis: Information for strategic planning is more often produced
when it is needed, on an ad hoc basis. The information may be produced
either regularly or periodically.
• Unexpected Information: The information produced by the system may not
be as per expectation. The result of the forecast may be a surprise to the
organization planners.
• Predicted nature: The information produced at this level is usually of
predictive nature about future events rather than descriptive of past events.
• Summary Form: The information produced at this level is usually not
detailed but in summary form. For example strategic planners may not be
interested in the customer invoices but overall buying trends.
• External Data: A large part of data used for input at this level is acquired
from the external sources.
• Unstructured format: The data used for input are unstructured in format.
• Subjectivity: The input to the system may be highly subjective in nature.
(ii) Tactical Information Level: This level meets the information requirements of
the middle level of management. Middle management level requires information for
management control. Management control is the process by which managers assure
that organisational resources are obtained and used effectively and efficiently in the
accomplishment of the organisation’s objectives. It also requires information to
translate strategies and policies in terms of action programmes and norms of
performance. Tactical level also supplies information to strategic level for strategic
decisions by top management. This level collects the required information from
strategic and operational level and thus serves as a bridge between strategic and
operational levels of information.
Tactical Level Management and its Information Needs: Middle level
management is a group of management positions, which consist of heads of functional
departments and chiefs of technical staff and service units. It includes the Sales
Manager, Finance Manager, and the Manager of Personnel etc. Middle management is
responsible for the elaboration, and operability of organization goals, strategies and
policies in terms of action programmes. Middle management is also concerned with the
task of formulating operating policies and procedures for the guidance of operational
management.
The information required at the middle management level is less diverse and
complex. Much of the information used by the middle management is internal in nature.
Middle management does not require much “futuristic” information since its decisions
are not strategic in nature. For example, a sales manager needs information on sales
potential and trends in different market segments, geographical territories, competitive
conditions etc. He also needs information to generate a variety of reports, including
summary reports, exceptional reports, and ad hoc reports. Characteristics of
information required at this level are the following:
Predictive Nature: The information by a tactical system is sometimes produced
periodically.
Unexpected Findings: The information provided by a tactical information system
may not be the information that was expected.
Comparative Nature: The information produced at tactical level is usually
comparative in nature. These information alert managers to major variation from the
accepted standards. These types of information systems are similar to the control
process systems.
Summary Form: The Information produced at this level is not detailed but is in
summary form.
Both External and Internal Sources: The data used, as input are internal to the
organizations well as external.
(iii) Operational Information Level: This level meets the information
requirements of operational level of management. Operational level requires
information for implementing and regulating operational plans for the purpose of
converting inputs into outputs and operational control. Operational control is the
process of assuring that specific tasks are carried out effectively and efficiently. This
level supplies routine and other information to tactical level in summarized form.
Operational management is defined as a team of management positions at the
base of the hierarchy. It consists of section officers, office managers and
superintendents, foreman and supervisors who are directly responsible for instructing
and supervising the tasks in the organisation. It is concerned with implementing
operational plans, policies and procedures. At this level, managers are responsible for
routine, day-to-day decision and activities of the organization, which do not require
much judgment and discretion. Operational management mostly needs internal
information on operational aspects. It generates internal information for and also
receives information from the middle management levels on operational plans and
programmes. The nature of information is routine and structured. There is little element
of complexity and uncertainty involved in the information at this level.
The major characteristics of information at this level are as follows:
• Repetitiveness: The information produced by these systems is usually
repetitive in nature
• Predictability: The information they produce usually does not contain any
surprises for the users of the information. These systems produce results at
the expected time.
• Emphasis on the past: The information generated by the systems usually
describes the past.
• Detailed nature: The information produced is very detailed.
• Internal origin: The data for operational system usually originate entirely
from internal sources. That is data for paychecks come from internal
documents of the organization.
• Structured form: The form of the data input and the form of the output
produced by the operational information systems is structured.
• Great accuracy: The accuracy of the data used as input to such systems and
of the output produced by such systems is usually very high.
Comprehensive Structure of MIS
An ideal MIS structure should support for decision making based on
management activity and organizational function. The comprehensive structure of an
MIS should possess the following characteristics:
• It should be closely directed by management.
• It should integrate various subsystems of the management and should avoid
duplication and redundancy of data.
• It should make the effective dissemination of information.
• It should be capable of meeting the information requirement of managers in
different functions.
Taking into consideration the above characteristics, the suitable structure of a
comprehensive MIS may be a federation of information subsystems for different
functions, viz. production, material management, marketing, finance and engineering
personnel. Each subsystem of information system is supposed to provide information
support to executives for operational control, management control and strategic
planning.
(i) Conceptual Structure
It is defined as a federation of functional units. Each of the subsystem of the
information system has some unique data files, which are used only by that subsystem.
There are files that need to be accessed by more than one application. These files are
organized in the form of a database, which is managed by the data base management
system. In addition to application programs written especially for each subsystem, there
are common applications, which serve multiple functions. Each subsystem has linkages
to these common applications. The information requirement of executives for
operational control, management control and strategic planning itself depend upon-
operational function, and type of decision-making.
Different operational functions have different information requirements. Their
information requirements vary in content and characteristics. The content of
information depends upon the activities to be performed under an operational function.
Operational function also influences the characteristics which a particular information
must posses. The level of management activity too influences the characteristics of
information. Management control requires more accurate and repetitive information.
Operational level requires information in detailed form about the performance.
Information requirements also differ as per the types of decisions. The content of
information for programmed decisions can be completely pre-specified. In the case of
non-programmed decisions, it is difficult to specify complete information requirements.
The information or data requirements of each sub-system can be met by developing two
types of data files, viz., unique and common.
Unique data files may meet the specific information requirements and common
data file stores data meant for general use in the decision-making.
ROLE OF MIS
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 MIS
plays exactly the same role in the organization.
The system ensures that an appropriate data is collected from various sources,
processed, and sent 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 the top management.
The MIS satisfies the diverse needs through a variety of systems such as Query
Systems, Analysis Systems, Modeling Systems and Decision Support Systems. The MIS
helps in Strategic Planning, Management Control, Operational Control and Transaction
Processing.
The MIS helps the clerical personnel in the transaction processing and answers
their queries on the data pertaining to the transaction, the status of a particular record
and references on a variety of documents. 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 operations level to correct an out of control
situation. The MIS helps the middle management in short them planning, target setting
and controlling the business functions. It is supported by the use of the management
tools of planning and control. The MIS helps the top management in goal setting,
strategic planning and evolving the business plans and their implementation.
The MIS facilitates 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 operations of an organization.
MIS APPLICATIONS
Management Information System is used by the organizations to provide them with
a competitive edge. The system must support the objectives of the organization.
Generally, organizations are structured along functional lines like HR, Marketing,
Production, Finance etc. In these departments, the MIS is applied in many ways. Some
of the applications are given below:
1. Accounting Management Information System: It is basically a part of
financial management information system. All the accounting reports are generally
showed by all level of accounting managers. These reports are prepared by taking the
inputs from various departments through an effective MIS. It thus, helps in preparing
general ledger, trial balance and other accounts of the organizational purpose.
2. Financial Management Information System: This system helps in meeting
the primary objectives of finance by providing various tool and techniques like:
• Break Even Analysis
• Financial Modeling
• Capital Budgeting
• Cost analysis
• Cash flow and fund flow projections
• Management Accounting
• Expense Analysis
• Auditing and Control.
With the help of these tools the finance manager analyzes past and current
financial activities, projects, future financial needs, audit and control and the use of
funds using the information which is developed by MIS department. The FMIS also helps
to:
• Provide timely, accurate, and consistent data for management and budget
decision-making;
• Support organization-wide policy decisions;
• Integrate budget and budget execution data, allowing greater financial
control and reducing opportunities for discretion in the use of organizational
funds;
• Provide information for budget planning, analysis and organization -wide
reporting;
• Facilitate financial statement preparation; and
• Provide a complete audit trail to facilitate audits.
3. Production Management Information System: A production MIS supports
the information related to various subsystems of production like manufacturing or
assembling, planning and control, industrial engineering, maintenance and quality
control. It also has a strong interface with materials management function.
Production MIS accounts for a number of entities in a systematic manner to fulfill
the needs of the production management functions in various tasks. These entities are
as follows:
• Quantity of production at a specified time period
• Material Requirement
• Rejection Quantity
• Breakdown Incidence
• Labour Requirement
• Use of Raw Materials
• Machine Utilization
• Labour Laws.
All these entities support the production at every stage i.e. raw materials, work in
process and finished goods etc. The area of production has been impacted most by the
advancements in information technology as a result of which manufacturing operations
have changed up to a great extent.
4. Marketing Management Information Systems: They support the managers
in the area of product planning and development, distribution, logistics, pricing
decisions, promotional effectiveness, sales forecasting and control etc.
Marketing function draws and relies heavily on the data from external sources
like market survey, market research, product journals/competitor's reports and
industrial association publications. Therefore, an effective MIS is of a great help to the
marketing management system.
5. Personnel Management Information System: The primary objective of
personnel management function is to acquire and maintain suitable manpower with
requisite abilities, skills and knowledge. MIS helps it in controlling personnel cost
through continuous increase in manpower productivity by the help of following
techniques:
• Human Resource Development
• Motivation through leadership
• Promotion and Rewards
• Grievance handling
• Performance Appraisal
• Designing the organization structure.
To perform all such activities some of the documents generally used are as
follows:
• Personnel application forms
• Appointment letter
• Attendance and leave record
• Bio-data
• Wage and salary agreement etc.
6. Inventory Management Information Systems: It is very important to
allocate and mobilize resources in inventory critically on right time. Accumulative
inventory management information system reduces the cost to minimum and results in
Just in Time (JIT).
7. Corporate Review: MIS keeps the top management informed through various
kinds of reports, notes, inter-office memos, minutes of meetings, etc. It relates all the
departments and generates overall corporate reports by taking the inputs from every
department. MIS provides a real time data at the corporate level.
8. Transaction-Processing Systems: Transaction-processing systems are
designed to handle a large volume of routine, recurring transactions. Transaction-
processing systems are used widely today. Banks use them to record deposits and
payments into accounts. Supermarkets use them to record sales and track inventory.
Managers often use these systems to deal with such tasks as payroll, customer billing
and payments to suppliers. As soon as a transaction is processed, the information of
transaction processing is generated in real time.
9. Operations Information Systems: An operations information system gathers
comprehensive data, organizes it and summarizes it in a form that is useful for
managers. These types of systems access data from a transaction-processing system
and organize it into a usable form. Managers use operations information systems to
obtain sales, inventory, accounting and other performance-related information.
MIS major application areas include business, industrial sector, service sector,
hotels, NGOs and non-profit organizations, airline reservations (seat reservation,
payment, schedules, boarding list, special needs, etc.), train reservation and bank
operations (deposit, transfer, withdrawal and other transactions). MIS principal concerns
comprise facilitating decision making by supplying the information needed in an up-to-
date and accurate form to the people who need it, on time, in a usable form.
With computers being as pervasive as they are today, there is hardly any large
business that does not rely extensively on their IT systems.
However, there are several specific fields in which MIS has become invaluable.
Strategy Support
While computers cannot create business strategies by themselves they can
assist management in understanding the effects of their strategies, and help enable
effective decision-making.
MIS can be used to transform data into information useful for decision making.
Computers can provide financial statements and performance reports to assist in the
planning, monitoring and implementation of strategy.
MIS provides a valuable function in that they can collate into coherent reports
unmanageable volumes of data that would otherwise be broadly useless to decision
makers. By studying these reports decision-makers can identify patterns and trends
that would have remained unseen if the raw data were consulted manually.
Management information systems can also use these raw data to run simulations
– hypothetical scenarios that answer a range of ‘what if’ questions regarding alterations
in strategy. For instance, MIS can provide predictions about the effect on sales that an
alteration in price would have on a product. These Decision Support Systems (DSS)
enable more informed decision making within an enterprise than would be possible
without management information systems.
Data Processing
Not only do management information systems allow for the collation of vast
amounts of business data, but they also provide a valuable time saving benefit to the
workforce. Where in the past business information had to be manually processed for
filing and analysis it can now be entered quickly and easily onto a computer by a data
processor, allowing for faster decision making and quicker reflexes for the enterprise as
a whole.
Management by Objectives
While management information systems are extremely useful in generating
statistical reports and data analysis they can also be of use as a Management by
Objectives (MBO) tool.
MBO is a management process by which managers and subordinates agree upon
a series of objectives for the subordinate to attempt to achieve within a set time frame.
Objectives are set using the SMART ratio: that is, objectives should be Specific,
Measurable, Agreed, Realistic and Time-Specific.
The aim of these objectives is to provide a set of key performance indicators by
which an enterprise can judge the performance of an employee or project. The success
of any MBO objective depends upon the continuous tracking of progress.
In tracking this performance it can be extremely useful to make use of an MIS.
Since all SMART objectives are by definition measurable they can be tracked through
the generation of management reports to be analysed by decision-makers.
BENEFITS OF MIS
The field of MIS can deliver a great many benefits to enterprises in every
industry. Expert organisations and MIS professionals continue to find and report new
ways to use MIS to achieve business objectives.
Facilitates Planning
MIS improves the quality of planning by providing relevant information for sound
decision–making. Due to increase in the size and complexity of organizations, managers
have lost personal contact with the scene of operations.
Minimizes Information Overload
MIS change the larger amount of data in to summarize form and there by avoids
the confusion which may arise when managers are flooded with detailed facts.
Encourages Decentralization
Decentralization of authority is possibly when there is a system for monitoring
operations at lower levels. MIS is successfully used for measuring performance and
making necessary change in the organizational plans and procedures.
Brings Coordination
MIS facilities integration of specialized activities by keeping each department
aware of the problem and requirements of other departments. It connects all decision
centers in the organization.
Makes Control Easier
MIS serves as a link between managerial planning and control. It improves the
ability of management to evaluate and improve performance. The use of computers has
increased the execution of data processing and storage capabilities reducing the overall
information processing cost.
Information Flow Channel
MIS assembles, processes, stores, retrieves, evaluates and disseminates
information.
Core Competencies
Every market leading enterprise will have at least one core competency, that is,
a function they perform better than their competitors. By building an exceptional
management information system into the enterprise it is possible to push out ahead of
the competition. MIS systems provide the tools necessary to gain a better
understanding of the market as well as a better understanding of the enterprise itself.
Enhances Supply Chain Management
Improved reporting of business processes leads inevitably to a more streamlined
production process. With better information on the production process comes the ability
to improve the management of the supply chain, including everything from the sourcing
of materials to the manufacturing and distribution of the finished product.
Quick Reflexes
As a result of improved supply chain management comes an improved ability to
react to changes in the market. Better MIS systems enable an enterprise to react more
quickly to their environment, enabling them to push out ahead of the competition and
produce a better service and a larger piece of the pie.
LIMITATIONS OF MIS
MIS has the following limitations:
(i) The quality of the MIS outputs is based on the quality of inputs and processes.
(ii) MIS is not a substitute for effective management. It is a tool that helps in
making decisions in different functional areas and problem solving.
(iii) Static MIS system may not have adaptability with the fast changing and
complex environment.
(iv) MIS cannot provide information suitable for every type of decisions made by
executives.
(v) MIS has focus on quantitative factors; thus it ignores qualitative factors like
morale, attitudes of members in the organization.
(vi) MIS is not so useful for making non-programmed decisions.
(vii) MIS effectiveness is linked with changes in top management and
organizational structure.
If Management Information Systems are flexible, and relate to the needs of
organisation, and the stakeholders, then they work well and effectively. MIS systems
used, should suit your purposes.
MIS AND IT
(i) Increase in Speed of Processing
Modern business organizations work in complex and competitive environment. It
requires availability of relevant information for decision-making. Computer with fast
computational capability and storage of information has helped in this challenge faced
by management. This has proved as a major factor in MIS development.
(ii) Widened Scope of Analysis
The use of computer can provide multiple type of information accurately to
decision-makers. With the help of these information managers can carry out a thorough
analysis of the problem and take the final decision. Computers are capable of providing
various types of reports instantly. These reports are useful in analyzing the working and
to ascertain the performance gaps to take adequate measures.
(iii) Complexity of System Design
Presently we are living in the era of fast changing systems and sub-systems. The
information systems have become quite complex due to convergence of IT and
communication technology. Due to this experts faced problems in designing systems.
(iv) Integration of the Information Subsystems
Information systems in organizations are a federation of information sub-system,
viz., production, material, marketing, finance, engineering and personnel. These sub-
systems are required to provide information to support operational control,
management control and strategic planning. Computer technology is useful for
integrating the day-to-day working of different information sub-systems.
(v) Effectiveness of Information Systems
Effectiveness denotes the availability of quality information. With the use of
computer technology it is quite easy to provide timely, accurate and desired information
for the purpose of decision-making at all the levels of management.
(vi) Comprehensive Information
The use of computer for MIS, enabled system experts to provide more
comprehensive information to managers on business matters. It covers internal as well
as external information. Intranets and extranets are also used by the organizations.