Table of Contents:-
- What is Management Information System?
- Management Information System Definition
- Characteristics of Management Information System
- Components of Management Information System
What is Management Information System?
The term MIS is not new; only its computerisation is a recent development. Earlier, managers used the MIS (Management Information System) as a resource of information. This information enables them to plan and control various operations used within an organization. Since the MIS is computerised, it has increased its accuracy and speed, allowing more alternatives while solving the problem and in decision making.
MIS provides the following types of information to the companies:
- Descriptive or “what is” information,
- Diagnostic or “what is wrong” information,
- Predictive or “what if” information, and
- 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.
The three components of MIS are as follows in the image:
1) Management: Management can be defined as the procedure of planning and regulating the operations of the organisation. Framing of policies, its execution and staffing of employees are its key tasks.
The management procedure can be analysed with the help of the manager’s actions. These are as follows:
- Planning
- Organising
- Staffing
- Directing
- Coordination
- Controlling
2) Information:Â The word information is derived from the Latin term ‘Informare’, which means give form. Information is data processed and retrieved to be meaningful to the individual who receives it.
3) System: A group of elements is called a system. These elements are called sub-systems. All sub-systems are grouped to serve a common purpose.
Management Information System Definition
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 organisation. The system utilises computer hardware and software, manual procedures, models for analysis, planning, control and decision making and a database”.
Kenneth Hamlett states, “Information system refers to the practice of integrating computer systems, hardware and software used to meet an organisation’s strategic goals”.
According to 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 organisation that assists users with automatic processes related to orders.
2) Processing transactions through the website of an organisation.
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 Management Information System
The main characteristics of MIS are as follows:
1) Integrative System
An MIS is a logically integrated system comprising sub-systems, where the activities of each are interrelated. This integration is possible by rotation of data among these sub-systems.
2) Sub-System Concept
Although a system is considered a single entity, a big system is divided into sub-systems, so that one sub-system 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 reduce confusion and solve problems.
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 contract as and when required.
5) Enhances Productivity
MIS as a whole improves the efficiency of an organisation. It helps in efficient document preparation, provides a high level of services to individuals and external organisations, helps in early detection of warnings about internal and external problems, and also in identifying opportunities. It assists in the overall management of the organisation and improves the manager’s ability to deal with unexpected problems.
6) Coordinated System
MIS is centrally synchronised 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 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 does not necessarily start fries 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
Management must dynamically direct the development of the system because MIS is management-oriented. Management should decide what information is required and help design the MIS.
10) Common Database
As MIS is an integrative system, it has the opportunity to prevent duplication and redundancy in storage, data collection, 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 that 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 integral part of MIS.
12) Computerised System
Even though the MIS is possible without a computer 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.
Components of Management Information System
The image below shows an MIS model that expresses a fundamental conceptual framework for the major components and activities of information systems.
The basic MIS model shows that an information system consists of five major resources:
1) People Resources
People play a crucial role in the effective operation of all information systems. The different types of people resources are as follows:
i) End Users (Users or Clients): Those users who use an information system or its produced information are known as ‘end users’. For example, customers, salespersons, engineers, clerks accountants or managers. Almost all the individuals are end users.
ii) IS Specialists: Those people who develop and operate information systems are known as ‘IS specialists’. They may be systems analysts, software developers, system operators and other managerial, technical or clerical IS personnel.
2) Hardware Resources
Hardware resources refer to all physical devices that are used in the processing of information. It not only includes computers and other equipment but also any tangible object on which data can be, stored which ranges from a simple sheet of paper to magnetic or optical disks. A few hardware resources are as follows:
i) Computer Systems: This comprises a central processing unit containing microprocessors and numerous interconnected peripheral devices. For example, handheld devices, laptop or desktop microcomputer systems, and mid-range and large mainframe computer systems.
Computer Peripherals: These devices are used in computers to:
- Input the data,
- Provide the output and
- Store data
For example, a keyboard is used for data input, a printer for output information and magnetic tapes for storing information.
3) Software Resources
The collection of instructions is known as ‘software’. The instructions which are used to direct and control the computer hardware are known as programs and the instructions which are used to process data are known as procedures. Software is of two types:
i) System Software: This software controls and directs the operations of the computer system, e.g., the operating system.
ii) Application Software: This software directs and supports the particular tasks of computers, as required by end users, e.g., MS Word, MS Excel, library management system, etc.
4) Data Resources
The concept of data resources has been widened by managers and information system professionals to include much more than the raw material of information systems. Since it is a valuable organisational resource, it must be managed effectively to benefit all end users within an organisation. Data resources are organised, stored and accessed by data resource management technologies in the form of:
i) Database that contains organised and processed data.
ii) Knowledge base that comprises knowledge in various forms such as facts, rules and case examples of successful business practices.
For example, sales transaction data is gathered, processed and stored in a web-enabled sales database which is used for sales analysis reports by managers or marketing professionals. The knowledge base is used by knowledge management systems and expert systems for sharing knowledge or giving expert advice on a particular domain.
5) Network Resources
E-business and e-commerce operations of all types of organisations and their information systems will succeed if telecommunication technologies and networks like the Internet, intranet and extranet are in place. Telecommunication network comprises computers, communication processors and other devices interconnected by communication media and controlled by its software. The essential resource components of all information systems are communication networks and technologies. The primary network resources are as follows:
i) Communication Media:Â These are utilized for delivering and receiving information or data. Examples include coaxial and fibre-optic cables, twisted-pair wire, and microwave, cellular, and satellite wireless technologies.
ii) Network Infrastructure: It refers to the hardware, software and data technologies used to support and control the operations of communication networks, e.g., modems, internetwork processors and communication control software (network operating system and internet browser packages).