management information system

This article is written like a personal reflection or essay rather than an encyclopedic description of the subject. Please help improve it by rewriting it in an encyclopedic style. (January 2011)

This article may require copy editing for grammar, style, cohesion, tone, or spelling. You can assist by editing it. (August 2011)

A management information system (MIS) provides information which is needed to manage organizations efficiently and effectively.^[1] Management information systems involve three primary resources: people, technology, and information or decision making. Management information systems are distinct from other information systems in that they are used to analyze operational activities in the organization.^[2] Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. decision support systems, expert systems, and executive information systems.^[2]

Overview

Initially in businesses and other organizations, internal reporting was produced manually and only periodically, as a by-product of the accounting system and with some additional statistic(s), and gave limited and delayed information on management performance. Data was organized manually according to the requirements and necessity of the organization. As computational technology developed, information began to be distinguished from data and systems were developed to produce and organize abstractions, summaries, relationships and generalizations based on the data.

Early business computers were used for simple operations such as tracking sales or payroll data, with little detail or structure. Over time, these computer applications became more complex, hardware storage capacities grew, and technologies improved for connecting previously isolated applications. As more and more data was stored and linked, managers sought greater detail as well as greater abstraction with the aim of creating entire management reports from the raw, stored data. The term "MIS" arose to describe such applications providing managers with information about sales, inventories, and other data that would help in managing the enterprise. Today, the term is used broadly in a number of contexts and includes (but is not limited to): decision support systems, resource and people management applications, enterprise resource planning (ERP), enterprise performance management (EPM), supply chain management (SCM), customer relationship management (CRM), project management and database retrieval applications.

The successful MIS supports a business's long range plans, providing reports based upon performance analysis in areas critical to those plans, with feedback loops that allow for titivation of every aspect of the enterprise, including recruitment and training regimens. MIS not only indicate how things are going, but why and where performance is failing to meet the plan. These reports include near-real-time performance of cost centers and projects with detail sufficient for individual accountability.

History

Kenneth and Jane Laudon identify five eras of MIS evolution corresponding to five phases in the development of computing technology: 1) mainframe and minicomputer computing, 2) personal computers, 3) client/server networks, 4) enterprise computing, and 5) cloud computing.^[3]

The first (mainframe and minicomputer) era was ruled by IBM and their mainframe computers, these computers would often take up whole rooms and require teams to run them, IBM supplied the hardware and the software. As technology advanced these computers were able to handle greater capacities and therefore reduce their cost. Smaller, more affordable minicomputers allowed larger businesses to run their own computing centers in-house.

The second (personal computer) era began in 1965 as microprocessors started to compete with mainframes and minicomputers and accelerated the process of decentralizing computing power from large data centers to smaller offices. In the late 1970s minicomputer technology gave way to personal computers and relatively low cost computers were becoming mass market commodities, allowing businesses to provide their employees access to computing power that ten years before would have cost tens of thousands of dollars. This proliferation of computers created a ready market for interconnecting networks and the popularization of the Internet.

As the complexity of the technology increased and the costs decreased, the need to share information within an enterprise also grew, giving rise to the third (client/server) era in which computers on a common network were able to access shared information on a server. This allowed for large amounts of data to be accessed by thousands and even millions of people simultaneously.

The fourth (enterprise) era enabled by high speed networks, tied all aspects of the business enterprise together offering rich information access encompassing the complete management structure.

The fifth and latest (cloud computing) era of information systems employs networking technology to deliver applications as well as data storage independent of the configuration, location or nature of the hardware. This, along with high speed cellphone and wifi networks, led to new levels of mobility in which managers access the MIS remotely with laptops, tablet pcs, and smartphones.

Terminology

The terms MIS, information system, ERP and, information technology management are often confused. Information systems and MIS are broader categories that include ERP. Information technology management concerns the operation and organization of information technology resources independent of their purpose.

Types

Most management information systems specialize in particular commercial and industrial sectors, aspects of the enterprise, or management substructure.

• Management information systems (MIS), per se, produce fixed, regularly scheduled reports based on data extracted and summarized from the firm’s underlying transaction processing systems^[4] to middle and operational level managers to identify and inform structured and semi-structured decision problems.
• Decision support systems (DSS) are computer program applications used by middle management to compile information from a wide range of sources to support problem solving and decision making.
• Executive information systems (EIS) is a reporting tool that provides quick access to summarized reports coming from all company levels and departments such as accounting, human resources and operations.
• Marketing information systems are MIS designed specifically for managing the marketing aspects of the business.
• Office automation systems (OAS) support communication and productivity in the enterprise by automating work flow and eliminating bottlenecks. OAS may be implemented at any and all levels of management.

Advantages

The following are some of the benefits that can be attained for different types of management information systems.^[5]

• Companies are able to highlight their strengths and weaknesses due to the presence of revenue reports, employees' performance record etc. The identification of these aspects can help the company improve their business processes and operations.
• Giving an overall picture of the company and acting as a communication and planning tool.
• The availability of the customer data and feedback can help the company to align their business processes according to the needs of the customers. The effective management of customer data can help the company to perform direct marketing and promotion activities.
• Information is considered to be an important asset for any company in the modern competitive world. The consumer buying trends and behaviours can be predicted by the analysis of sales and revenue reports from each operating region of the company.

Enterprise applications

• Enterprise systems, also known as enterprise resource planning (ERP) systems provide an organization with integrated software modules and a unified database which enable efficient planning, managing, and controlling of all core business processes across multiple locations. Modules of ERP systems may include finance, accounting, marketing, human resources, production, inventory management and distribution.

• Supply chain management (SCM) systems enable more efficient management of the supply chain by integrating the links in a supply chain. This may include suppliers, manufacturer, wholesalers, retailers and final customers.

• Customer relationship management (CRM) systems help businesses manage relationships with potential and current customers and business partners across marketing, sales, and service.

• Knowledge management system (KMS) helps organizations facilitate the collection, recording, organization, retrieval, and dissemination of knowledge. This may include documents, accounting records, and unrecorded procedures, practices and skills.

Developing Information Systems

MIS is not just about implementing a system but it is all about providing the right information to the recipient either it is derived from a system or otherwise.

"The actions that are taken to create an information system that solves an organizational problem are called system development (Laudon & Laudon, 2010)". These include system analysis, system design, programming, testing, conversion, production and finally maintenance. These actions usually take place in that specified order but some may need to repeat or be accomplished concurrently.

System analysis is accomplished on the problem the company is facing and is trying to solve with the information system. Whoever accomplishes this step will identify the problem areas and outlines a solution through achievable objectives. This analysis will include a feasibility study, which determines the solutions feasibility based on money, time and technology. Essentially the feasibility study determines whether this solution is a good investment. This process also lays out what the information requirement will be for the new system.

System design shows how the system will fulfill the requirements and objectives laid out in the system analysis phase. The designer will address all the managerial, organizational and technological components the system will address and need. It is important to note that user information requirements drive the building effort. The user of the system must be involved in the design process to ensure the system meets the users need and operations.

Programming entails taking the design stage and translating that into software code. This is usually out sourced to another company to write the required software or companies buy existing software that meets the systems needs. The key is to make sure the software is user friendly and compatible with current systems.

Testing can take on many different forms but is essential to the successful implementation of the new system. You can conduct unit testing, which tests each program in the system separately or system testing which tests the system as a whole. Either way there should also be acceptance testing, which provides a certification that the system is ready to use. Also, regardless of the test a comprehensive test plan should be developed that identifies what is to be tested and what the expected outcome should be.

Conversion is the process of changing or converting the old system into the new. This can be done in four ways:

Parallel strategy – Both old and new systems are run together until the new one functions correctly (this is the safest approach since you do not lose the old system until the new one is “bug” free).

Direct cutover – The new system replaces the old at an appointed time.

Pilot study – Introducing the new system to a small portion of the operation to see how it fares. If good then the new system expands to the rest of the company.

Phased approach – New system is introduced in stages.

Anyway you implement the conversion you must document the good and bad during the process to identify benchmarks and fix problems. Conversion also includes the training of all personnel that are required to use the system to perform their job.

Production is when the new system is officially the system of record for the operation and maintenance is just that. Maintain the system as it performs the function it was intended to meet.

See also

• Enterprise Information System
• Bachelor of Computer Information Systems
• Computing
• Management
• Business intelligence
• Business performance management
• Business rules
• Data mining
  • Predictive analytics
  • Purchase order request
• Enterprise Architecture
• Enterprise planning systems
• Information technology governance
• Knowledge management
• Management by objectives
• Online analytical processing
• Online office suite
• Information Technology
• Real-time Marketing

References

(Management Information Systems: Managing the Digital Firm, 11th Edition. Prentice Hall/CourseSmart, 12/30/2008.) Laudon, K., & Laudon, J. (2010). Management information systems: Managing the digital firm. (11th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

External links

• Computer and Information Systems Managers (U.S. Department of Labor)
• Index of Information Systems Journals
• MIS Web sites (Bournemouth University)
• MIS Links (University of York)
• Executive Information Systems: Minimising the risk of development