Concept of Management Information System
A management information system (MIS) is an information system used for decision-making, and for the coordination, control, analysis, and visualization of information in an organization.
The study of the management information systems testing people, processes and technology in an organizational context.
MIS is the use of information technology, people, and business processes to record, store and process data to produce information that decision makers can use to make day to day decisions. The full form of MIS is Management Information Systems. The purpose of MIS is to extract data from varied sources and derive insights that drive business growth.
The need for Management Information Systems (MIS)
The following are some of the justifications for having an MIS system
Decision makers need information to make effective decisions. Management Information Systems (MIS) make this possible.
MIS systems facilitate communication within and outside the organization employees within the organization are able to easily access the required information for the day to day operations. Facilitates such as Short Message Service (SMS) & Email make it possible to communicate with customers and suppliers from within the MIS system that an organization is using.
Record keeping: Management information systems record all business transactions of an organization and provide a reference point for the transactions.
Components of Management Information System
The major components of a typical MIS long-form (Management Information System) are:
- People: People who use the information system
- Data: The data that the information system records
- Business Procedures: Procedures put in place on how to record, store and analyze data
- Hardware: These include servers, workstations, networking equipment, printers, etc.
- Software: These are programs used to handle the data. These include programs such as spreadsheet programs, database software, etc.
Types of Information Systems
The type of information system that a user uses depends on their level in an organization. The following diagram shows the three major levels of users in an organization and the type of information system that they use.
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Transaction Processing Systems (TPS)
This type of information system is used to record the day to day transactions of a business. An example of a Transaction Processing System is a Point of Sale (POS) system. A POS system is used to record the daily sales.
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Management Information Systems (MIS)
Management Information Systems abbreviated as MIS, are used to guide tactic managers to make semi-structured decisions. The output from the transaction processing system is used as input to the MIS system.
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Decision Support Systems (DSS)
Decision support systems are used by top level managers to make semi-structured decisions. The output from the Management Information System is used as input to the decision support system. DSS systems also get data input from external sources such as current market forces, competition, etc.
ROLE of Management Information System
Management Information System is the abbreviation for Management Information System. We may break Management Information System (MIS) into three words and understand each component separately.
“Management is the function of doing the correct task at the right time, by the right person, for the right job,” says one expert.
“Information is the collection of organised facts that plays a critical role in decision-making,” says the dictionary.
“A system consists of a collection of pieces that provide a framework for converting unorganised (data) into ordered information,” says the author.
Function of Management Information System
Due to the increasing complexity of business organisations, management information systems (MIS) have become quite important. It is common knowledge that without information, no organisation can take even a single step in the decision-making process correctly. Because it is a truth that decisions are critical to an organization’s success in achieving its goals, and we all know that every choice is based on data. If the information acquired is irrelevant, the choice will be erroneous, and the organisation will suffer significant losses and have a difficult time surviving.
- Assists in making decisions
Any organization’s management information system (MIS) plays a critical role in its decision-making process. Because relevant information can only be retrieved from the MIS in any organisation, decisions are made on the basis of relevant information.
- Assists with departmental coordination
Through the correct exchange of information, the management information system also aids in the establishment of solid relationships between all members of a department.
- It aids in the discovery of issues.
As we all know, MIS gives essential information on all aspects of activity. As a result, if management makes a mistake, Management Information Systems (MIS) data may assist in determining the problem’s solution.
- Aids in the evaluation of business performance
In its database, MIS stores all previous data and information. That is why a management information system is highly valuable for comparing the performance of business organisations. Organizations may use management information systems (MIS) to examine their performance, which includes what they did last year or in previous years, as well as their current business performance, and to track their development and growth.
- MIS components and their interrelationship
People, business processes, data, hardware, and software are the five primary components of a management information system. To reach corporate objectives, all of these components must operate together.
- People
These are the people who utilise the computer system to keep track of their daily business transactions. Accountants, human resource managers, and other skilled professionals are common users. The support team in the ICT department normally ensures that the system is up and functioning.
- Procedures in Business
These are industry-accepted best practises that instruct users and other components on how to perform more effectively. People, such as users, consultants, and others, create business processes.
- Data
The commercial transactions that are documented on a daily basis. Data is gathered for a bank through actions such as deposits, withdrawals, and so on.
- Hardware
Computers, printers, networking devices, and other hardware are examples of hardware. The computer power for data processing is provided by the hardware. It also has networking and printing functions. The hardware facilitates the transformation of data into information.
- Software
These are applications that run on the computer’s hardware. The software is separated into two categories: system software and application software. The operating system, such as Windows, Mac OS, and Ubuntu, is referred to as system software. Specialized software for completing business functions, such as a payroll programme, banking system, point of sale system, and so on, is referred to as applications software.
Objective of Management Information System
An MIS is a system that provides management with the decision-oriented information they need to plan, control, and analyse the company’s actions. It’s built on a structure that prioritises profit forecasting, performance forecasting, and control at all levels.
A systematic process for gathering timely information in a presentable manner in order to assist efficient decision making and execution in order to carry out organisational activities in order to achieve the organisational objective.
Without a question, information processing is the main industry of the twenty-first century. The following are a few frequent characteristics that influence the demands and goals of information processing:
- The importance of information processing in corporate decision-making is growing.
- Information is essential to the services industry, which includes banking, financial services, health care, entertainment, tourism and travel, education, and many more.
- The global employment landscape is transforming, with manual agricultural labour giving way to machine-based manufacturing and other industry-related vocations.
- The Information Revolution and the Development Scenario as a Whole
- The IT industry’s growth and strategic relevance
- Increased competition and a shorter product life cycle have fueled the rapid expansion of information services.
- The need for long-term development and a good quality of life.
- The use of information processing has improved communication and transportation.
- Information processing may be used to reduce energy consumption, pollution, and achieve a better ecological balance in the future.
- Land record management, legal delivery systems, educational institutions, natural resource planning, customer relationship management, and so on all make use of information processing.
- Management information systems (MIS) are very beneficial for efficient and effective planning and control tasks. The art of management is getting things done with the help of others. By providing management with timely and accurate information, MIS will aid in getting things done.
- Reports offer a sense of how well men, materials, machines, money, and management performed. Reports provide insight on how the organization’s resources are being used.
- By providing information on idle time, labour turnover, wastages and losses, and excess capacity, MIS aids in cost management.
- MIS brings discrepancies to the attention of management by comparing actual performance to the standard and planned performance. These differences may be addressed by taking corrective actions.
- The management strength (i.e., strong spots) of the organisation is brought to the attention of MIS in order to take use of the chances available.
- MIS reports on production data such as rejection, defect, and spoilage, as well as their impact on costs and product quality.