Management information system is a set of systems which helps management at different levels to take better decisions by providing the necessary information to managers. Management information system is not a monolithic entity but a collection of systems which provide the user with a monolithic feel as far as information delivery, transmission and storage is concerned.
The different subsystems working at the background have different objectives but work in concert with each other to satisfy the overall requirement of managers for good quality information. Management information systems can be installed by either procuring off the self systems or by commissioning a completely customized solution. Sometimes, management information systems can be a mix of both, i.e., an ‘off the self system but customized as per the need of the organization.
However, before we precede any further we must have a clear understanding of what managers do in an organization and why they need management information systems. The former issue has already been dealt with at length in the previous sections. Only a brief overview is given here.
Managers are the key people in an organization who ultimately determine the destiny of the organization. They set the agenda and goals of the organization, plan for achieving the goals, implement those plans and monitor the situation regularly to ensure that deviations from the laid down plan is controlled. This set of activity ensures the smooth functioning of the organization and helps it attain its objectives. Hence, these managers are vital for a successful organization. The managers in turn conduct these activities collectively management functions. They decide on all such issues that have relevance to the goals and objectives of the organization. The decisions range from routine decisions taken regularly to strategic decisions, which are sometimes taken once in the lifetime of an organization. The decisions differ in the following degrees,
- Information requirement for taking the decision
- Effect on the organization
- Degree of structured behavior of the decision-making process.
The different types of decisions require different type of information as without information one cannot decide.
They have common characteristics and even though their actual implementation in an organization may differ according to the needs of the organization, their basic characteristics remain the same. The information technology platform on which management information system is based may also vary in terms of complexity and scale but the technology component does not change the broad characteristics of management information system. Technology is only the medium through which the solution is delivered. Management information systems may consist of a set of information systems working towards the common goal of achieving greater efficiency in management decision-making for each level of management. Typically, management information systems deal with information that is generated internally. The in-house data is processed (summarized/aggregated) to create reports, which helps the management at different levels in taking decisions. Today’s management information systems have a data repository at the core, which is mostly in the form of a relational database management system. All in-house data (mostly transaction related) are saved in this database, which is itself designed on the basis of set rules. Over this data repository lies several tiers of logic and/or business rules which helps in creating an interface and the various reports for use of managers at different levels. The management information system is normally designed in order to achieve an information flow that is based on a ‘need to know’ principle. This means that any manager would be given only that type and kind of information for which he is entitled and for which he has any use. This means, that a shop floor supervisor may get the personal details of all people working under him but will not get to view the salary details of the CEO as he/she is not entitled to know such information. The floor supervisor will not get to see the personnel details of all employees working in the human resource department as he has no use for such information. This hierarchical rule-based information delivery to the different levels of management is put in place to avoid both information overload and to enable information security.
Many modern systems have come up in recent times to help the manager in their tasks, like enterprise-wide resource planning systems that is, basically, transaction processing/ support systems but comes inbuilt with a lot of best practices of the industry and helps in generating integrated scenarios for the managers at different levels. Customer relationship management systems help in the management of customers by creating profiles and making available complex analytical tools for processing customer data to the managers. Similarly, there are systems to help managers deal with supply chain data called supply chain management systems. All these modern systems help in achieving greater efficiency by making the job of management decision-making better and therefore, fall under the category of management information system.
Conceptually, management information systems and information technology are two very different things. Management information system is an information management concept. Indeed technologies will change and have changed in the past but management information system and its requirement and characteristics will broadly remain the same. Only MIS with changing time and technology regimes will have different technology platforms. In the early seventies MIS was mostly run on mainframe computers with COBOL programs. In the eighties and nineties that changed to a personal computer based solution using networking and with databases and 4GL tools. Today MIS runs on advanced computer networks with wireless connectivity with hugely advanced software tools but the broad characteristics of MIS have remained the same. In the sixties and seventies it was instrumental in providing information which helped in management decision-making just like it provides today. Only the degree and quality of information has improved. However, the character of MIS has not changed with changing technology. Technology has always been and will be a platform for MIS, However, the technology intervention to provide the platform for MIS has increasingly grown over time and some confuse MIS with the technology on which it runs. Technology has become an integral part of MIS but one must appreciate that MIS is a much larger concept, critical to management decision-making.
The nature of MIS is passive it only supplies information to managers. It does not actively lead the managers to a decision. The managers take decisions with the support of the management information system. The system only supplies the background information on which such decisions are based. The system does not provide active decision support. It does not have models to mimic the real life scenarios as a proactive system like the one the decision support system has. Even though this role of providing information is very important it is only an enabler for better decisions.
Managers take decisions based on several triggers and in several ways. Some managers are optimists and take an optimistic view of any situation, be it a problem or an opportunity. While others take a completely different view in the sense that they are pessimists at all times. They look at only the negative side of decisions. Some managers take decisions based on instinctive reaction. Some take decisions based on analysis of data. These data driven managers rely wholly on information systems to provide them with the necessary data and information in the form of reports. Nowadays, the prevailing view is that the data driven, analytics driven way of taking decisions delivers greater value to the organization than the instinctive feeling based decisions. In the instinctive feeling based decision-making approach, the judgment and experience of the manager plays the most important role in his choosing an alternative. This factis often misunderstood by the proponents of ‘gut feeling’ based decision-making supporters and has been beautifully described in a book written by Malcolm Gladwell titled ‘Blink’.
Hence, the contemporary wisdom suggests that managerial decisions must be taken on the basis of solid rationale and information. If the manager has complete information about a problem or opportunity, then he can take an appropriate decision. On the other hand, his decision will be based on gut feeling or judgment which is prone to personal bias and hence, is likely to be inaccurate. Therefore, managers in today’s world are more and more data driven rather than instinct driven.
We’ll be covering the following topics in this tutorial:
The broad functions of MIS are as given below:
- To improve decision-making: MIS helps management by providing background information on a variety of issues and helps to improve the decision-making quality of management. The fast and accurate information supplied by MIS is leveraged by the managers to take quicker and better decisions thereby improving the decision-making quality and adding to the bottom line of the company.
- To improve efficiency: MIS helps managers to conduct their tasks with greater ease and with better efficiency. This reflects in better productivity for the company.
- To provide connectivity: MIS provides managers with better connectivity with the rest of the organization.
Characteristics of MIS
Management information being a specialized information system conforms to certain characteristics. These characteristics are generic in nature. These characteristics remain more or less the same even when the technology around such management information system changes:
One important feature of MIS is that MIS is designed top-down. This means that the system is designed around the need felt by the management at different levels for information. The focus of the system is to satisfy the information needs of management.
Since MIS is ‘for the’ management it is imperative that it also should have a very strong ‘by the’ management initiative. Management is involved in the designing process of MIS and also in its continuous review and up gradation to develop a good qualitative system. The system is structured as per directions factored by management. This helps in minimizing the gap between expectations of management form the system and the actual system.
MIS is an integrated system. It is integrated with all operational and functional activities of management. This is an important characteristic and- requirement for a system to qualify as MIS. The reason for having an integrated system is that information in the managerial context for decision-making may be required from different areas from within the organization. If MIS remains a collection of isolated systems and each satisfying a small objective, then the integrated information need of managers will not be fulfiller. In order to provide a complete picture of the scenario, complete information is needed which only an integrated system can provide.
Common data flows
Through MIS the data being stored into the system, retrieved from the system, disseminated within the system or processed by the system can be handled in an integrated manner. The integrated approach towards data management will result in avoiding duplication of data, data redundancy and will help to simplify operations.
MIS cannot be designed overnight. It requires very high degree of planning which goes into creating an effective organization. The reason for this kind of planning is to ensure that the MIS being built not only satisfies the information need of the managers today but can also serve the organization for the next five to ten years with modifications. Sometimes when the planning part is done away with, systems tend to perform well in the present but they tend to become obsolete with time. Planning helps to avoid this problem.
Bias towards centralization
MIS is required to give ‘one version of the truth’, i.e., it must supply the correct version of the latest information. There is a requirement for the data repository to be centralized. Centralized data management helps MIS to exercise version control as well as provide an integrated common view of data to the managers. In a non-centralized system, data will get entered, updated and deleted from the system from different locations. In such a case it becomes difficult to provide correct information to managers. For example, in a decentralized System if a person superannuates from an organization and his superannuating is only recorded in the human resource system but not communicated to the finance department system, then it is quite likely that his salary may be generated by the finance system for the next month. A centralized system where data in entered, updated and deleted from only one location does not suffer from such problems. In a centralized system, the superannuating employee’s details are deleted from the master file from which all departments’ access data, thereby eliminating the risk of generating his salary for the next month.