Management Information System
Management Information System
Management information system (MIS) is a planned system for collecting, storing, and disseminating data in the form information needed to carry out the functions of the management. It provides information that organization requires to manage itself efficiently and effectively.
MIS deals with information related to technologies, processes, operation, personnel, areas, and other things, within an organization and in the environment surrounding the organization. Information means data that have been shaped into a form that is meaningful and useful to the management and employees of the organization. Data, in contrast, are streams of raw facts representing technologies, processes, operation, personnel, areas, and other things occurring in organizations or the physical environment before they have been organized and arranged into a form that management and employees can understand and use. Typical features of an MIS is shown in Fig 1
Fig 1 Typical features of an MIS
Management information system can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making, coordination and control in an organization. In addition to supporting decision making, coordination, and control, MIS may also help management and employees to analyze problems, to visualize complex subjects, and to bring forward new solutions.
Management information system is also defined as an information system that evaluates, analyzes and processes an organization’s data to produce meaningful and useful information on which the management takes right decision to ensure success and future growth of the organization.
As per another definition MIS is an information system that provides information in the form of standardized reports and displays for the management. MIS is a broad class of information systems designed to provide information needed for effective decision making.
The three components in MIS gives a more complete and focused definition, where system suggests integration and holistic view, information stands for processed data and management refers to the ultimate user and the decision makers. These three components are described below.
- Management in MIS covers the planning, control, and operations in an organization. For management of an organization several decisions are required to be taken at different levels of the management on a regular basis.
- Information, in MIS, means the processed data that helps the management in planning, controlling and operations. Data means all the facts arising out of the operations of the organization. Data is processed i.e. recorded, summarized, analyzed, compared and finally presented in the form which facilitates decision making. The presentation of the analyzed data is known as MIS report. Information is also called interpreted data which is created from organized, structured and processed data in a particular context.
- Data is processed into information with the help of a system. A system is made up of inputs, processing, output and feedback or control.
Thus MIS means a system for processing data in order to give proper information to the management for performing its functions. It is an organized approach to the study of the information needs of an organization’s management at every level in making operational, tactical and strategic decisions. Its objective is to design and implement procedures, processes, and routines that provide suitably detailed reports in an accurate, consistent, and timely manner. In a management information system, modern, computerized systems continuously gather relevant data, both from inside and outside of the organization. The data is then processed, integrated, and stored in a centralized database where it is continuously updated and made available to all who have the authority to access it, in the form of a report that suit their purpose.
MIS is of vital importance to any organization, because of the following.
- MIS emphasizes on the management decision making, not only processing of data generated by operations of the organization.
- MIS emphasizes on the systems framework that should be used for organizing information systems applications.
Main purpose of an MIS is to implement the structure and dynamics of the organization in order to manage the organization in a better way and capture the potential of the information system for competitive advantage. Following are the basic objectives of an MIS.
- Capturing data- Capturing of contextual data, or operational information from various internal and external sources of organization that will contribute in decision making.
- Processing data – The captured data is processed into information needed for planning, organizing, coordinating, directing and controlling functionalities at strategic, tactical and operational level. Processing data includes making calculations with the data, sorting data, classifying data, and summarizing data.
- Information storage – information or processed data need to be stored for future use.
- Information retrieval – The system should be able to retrieve this information from the storage as and when required by various users.
- Propagation – Information which is the product of the MIS should be circulated to its users periodically using the organizational network.
There are some time tested concepts. There is distinction between data and information. Data is raw facts, figures, objects, etc. Information is used to make decisions. To transform data into information, processing is needed and it must be done while considering the context of a decision. We are often awash in data but lacking good information. However, the success achieved in supplying information to decision makers is highly variable.
In the hierarchical concept there are inference, knowledge and wisdom. Wisdom is at the highest level and data is at the lowest level. As one move up the hierarchy, the value is increased and volume decreased. Thus, as one acquires knowledge and wisdom the decision making process is refined. Management information systems attempt to address all levels of this hierarchical concept while converting data into information for the decision maker. Just supplying more data and information may actually be making the decision making process more difficult. Emphasis should be placed on increasing the value of information by moving up in the hierarchical concept.
Another important concept the value if information. In general, the value of information is the value of the change in decision behavior caused by the information, less the cost of the information.
In another approach information is described as one of four types and all these types are important component of a management information system. Furthermore, the various types build upon and interact with each other.
- Descriptive information -A common starting level is Descriptive information. This information portrays the ‘what is’ condition of the organization, and it describes the state of the state of the organization at a specified point in time. Descriptive information is very important to the business manager, because without it, many problems would not be identified. Descriptive information includes a variety of types of information including financial results, Operating parameters, production records, test results, product marketing, and maintenance records etc. Descriptive information can also be used as inputs to secure other needed types of information. It can also be used to identify problems other than the ‘what is’ condition. Descriptive information is necessary but not completely sufficient in identifying and addressing all the management problems.
- Diagnostic information – This information portrays this ‘what is wrong’ condition, where ‘what is wrong’ is measured as the disparity between ‘what is’ and ‘what ought to be’. This assessment of how things are versus how they should be (a fact-value conflict) is probably the most common management problem. Diagnostic information has two major uses. It can first be used to define problems that develop in the organization. This information reveals areas of concern. Once a problem has been identified, management can choose an appropriate course of action for dealing with the problem. Several pitfalls are involved for management in obtaining diagnostic information. Adequate, reliable, descriptive information must be available along with appropriate norms or standards for particular situations. Information is inadequate for problem solving if it does not fully describe both ‘what is’ and ‘what ought to be’.
- Predictive information – Predictive information is generated from an analysis of possible future events and is exceedingly valuable with ‘desirable’ outcomes. With predictive information, one either defines problems or avoids problems in advance. Prediction also assists in analysis. After the problem is a recognized, the situation is analyzed to find possible solutions to deal with it. Predictive information is needed by management to reduce the risk and uncertainty concerning technology, prices, climate, institutions, and human relationships affecting the organization. Such information is vital in formulating production plans and examining related financial impacts. Predictive information takes many forms. Some of them are (i) the expected prices of the products next year, (ii) the anticipated yields, and (iii) the capital needed to upgrade production technologies etc. Management has long used various budgeting techniques, simulation models, and other tools to evaluate expected changes in the organization.
- Prescriptive information – The crux of management tasks is decision making. For every problem management faces, there is a ‘right’ course of action. However, the rightness of a decision can seldom, if ever, be measured in absolute terms. The choice is conditionally right, depending upon the management’s knowledge, assumptions, and conditions it wishes to impose on the decision. Prescriptive information is directed toward answering the ‘what should be done’. Provision of this information requires the utilization of the predictive information. Predictive information by itself is not adequate for decision making. An evaluation of the predicted outcomes together with the goals and values of the organization provides that basis for making a decision.
The following is the list of the most essential characteristic features for information quality.
- Reliability – The information is to be verifiable and dependable.
- Timely –The information must be current and must reach the users well in time, so that important decisions can be made in time.
- Relevant – The information is to be current and valid and it should reduce uncertainties.
- Accurate – The information should be free of errors and mistakes, true and not deceptive.
- Sufficient – The information must be enough and adequate and sufficient in quantity, so that decisions can be made on the basis of it.
- Unambiguous – The information should be expressed in clear terms. In other words it should be comprehensive.
- Complete – The information must meet all the needs in current context.
- Unbiased – The information should be impartial, free from any bias. In other words it should have integrity.
- Explicit – The information not need any further explanation.
- Comparable – The information is to be of uniform collection, analysis, content, and format.
- Reproducible – The information could be used by documented methods on the same data set to achieve a consistent result.
A good and effective MIS has the following features.
- It should be based on a long term planning.
- It should provide a holistic view of the dynamics and structure of the organization.
- It should work as a complete and comprehensive system covering all interconnecting sub-systems within the organization.
- It should be planned in a top down way, as the decision makers or the management should actively take part and provide clear direction at the development stage of the MIS.
- It should be based on need of strategic, operational and tactical information of management and employees of the organization.
- It should also take care of exceptional situations by reporting such situations.
- It should be able to make forecasts and estimates, and generate advanced information, thus providing a competitive advantage. Decision makers can take actions on the basis of such predictions.
- It should create linkage between all sub-systems within the organization, so that the decision makers can take the right decision based on integrated view.
- It should allow easy flow of information through various sub-systems, thus avoiding redundancy and duplicity of data. It should simplify the operations with as much practicability as possible.
- Although the MIS is an integrated, complete system, it should be made in such a flexible way that it could be easily split into smaller sub-systems as and when required.
- A central database is the backbone of a well built MIS.
Access to information and correct processing of information helps in the achievement of greater efficiency of various processes in an organization. An efficient and complete management information system, accomplishes the following functionalities.
- Collection and storage of data
- Transform these data into effective information useful for decision making
- Provide controls to safeguard data
- Streamline reporting
The following list summarizes the five main uses of management information system by an organization.
- Planning – at the planning stage information is the most important ingredient in decision making. Information at planning stage includes that of organization resources, assets, liabilities, plants and machineries, properties, suppliers, customers, competitors, market and market dynamics, fiscal policy changes of the Government, emerging technologies etc.
- Recording – Effective processing involve recording information about each organizational process or event. This is information collected, stored and updated regularly at the operational level.
- Controlling – An organization need to set up an information filter, so that only relevant data is presented to the middle and top management. This ensures efficiency at the operational level and effectiveness at the tactical and strategic level.
- Measuring – An organization measures its performance metrics by collecting and analyzing various data which include production and sales data, cost of manufacturing and profit earned.
- Decision making – MIS is primarily concerned with managerial decision making, theory of organizational behavior and underlying human behavior in organizational context. Decision making information includes the technological factor, socio-economic issues, impact of competition, globalization, democratization and effects of all these factors on organizational structure.