Management Information System
The term management information system (MIS) is probably the most common term in the business community. All business establishments, irrespective of their size or type, are required to have an efficient management information system. The concept has been gaining popularity over the past few years because of the increasing growth of business operations.
This article will be your guide to successfully selecting, implementing, and utilising an MIS solution to gather and report information for management. It’ll also help avoid pitfalls associated with common mistakes made when selecting, implementing, and utilising such systems.
What Is Management Information System
A management information system is the broader concept of business intelligence (BI). It is multidimensional in nature. It is all about gathering data from various types of sources, analysing, cleaning, processing and presenting that data in an understandable format for decision-making purposes.
A management information system is a system that contains information related to the managerial operations of an organisation. Generally, a management information system integrates multiple kinds of information, from both inside and outside the organisation. It involves human resources, accounting, production systems and logistics.
Origin And Evolution
The groundwork of the germ of today's management information system was laid in the late 19th century by Frederick Winslow Taylor. Taylor laid the foundation for the present-day concept of scientific management, in which accounting data can be used for planning, controlling and improving decision-making in line with the needs of the organisation.
Although information systems in a formal sense existed a long time before the invention of computers, the history of information systems has been invariably intertwined with the history of computer technology.
Early computer technology was used for keeping track of financial transactions and compiling statistical data for presentation to business managers. Banks and insurance companies pioneered large-scale use of computers in their operations. So, it is no surprise that both have been at the forefront of developing applications of computing to information systems.
Long before MIS became a widespread concept in business, they were known among accountants and information system staff as 'management accounting' and 'management information', respectively.
What are the Main Types of Management Information Systems (MIS)
Below are the main types of MIS:
1. Process control
Process control is a root cluster of Management Information Systems. It stores the information about all the existing operations of any systems, whether manual, semi-automatic or automatic. It includes strategies by which the system controls the operations.
2. Inventory control
An inventory control system is a kind of management information system which tracks all inventory from the moment it enters production till it leaves the warehouse. It enables you to reduce the excess inventory and improve the efficiency of your business.
3. Decision support
Decision Support Systems (DSS) play a crucial role in helping managers to make decisions. It is capable of supporting complex processes for problem solving, risk analysis, forecasting and strategic planning. This system not only consolidates data from various sources but also performs analysis and synthesis to generate information about complex problems. Although the military initially developed DSS, it has been widely used in various private enterprises as well.
4. Planning Systems
The planning system is an information system that can be used for planning the project management process. Planning is a very broad subject, encompassing the company's operations, strategies, and future plans. It involves matching the business' skills to business opportunities, setting goals and plans to realise them, and monitoring actual performance to adjust priorities.
5. Sales and marketing system
In the management of a business, a sales and marketing system refers to a formal procedure for producing new customers or clients, or retaining existing ones by managing their interactions with the business. A sales and marketing system is an important instrument in marketing a company’s merchandise.
6. Human resource
Human resource management is the practice of running human resources more efficiently. It accomplishes this by having clear goals of the organisation, making sure that these goals are relayed to employees, and measuring them against productivity.
7. Accounting and finance systems
An accounting and finance system encompasses a set of accounting, financial and management reporting systems that are required to keep track of the movements of every single unit of every item/commodity/service you have in your inventory. It's a fact that an industrial enterprise can't survive without a proper accounting and finance system.
8. Management reporting system
When we talk about Management reporting systems, we mean some software application that acts as the connecting bridge between the management and the financial control either as an integral part of ERP (Enterprise resource planning).
9. Enterprise Resource Planning
One of the most foundational and important management information systems is Enterprise Resource Planning (ERP). This is typically used to control and manage all the areas of an organisation. ERP systems are frequently used in all types of industries, such as retail, manufacturing, healthcare, aerospace, education, banking, insurance and government.
Importance Of Management Information System
It shows the management the actual performance of a business process
It provides data concerning market patterns
It records data so that it is available at the time of decision making
It ensures smooth flow of information in an organised manner
Management Information System Vs Information Technology (IT)
Information technology, commonly referred to as IT, administers the computer systems of an enterprise. These are the hardware, software, networking components and all related electronic data that facilitate the operation of an organisation. IT provides organisations with a competitive advantage through improved productivity, efficiency and quality while minimising costs.
Management information systems, on the other hand is responsible for gathering business data and reporting it effectively to various stakeholders inside an organisation. MIS helps in supporting management in executing operational activities more efficiently.
MIS and Small Business
It’s already a cliche to say that small businesses are the backbone of the economy. What most people don’t know, however, is that these small businesses are dependent on the Internet more than any other part of society. As we move further into the Information Age, however, it has become clear that technology is going to play a bigger and bigger role in small businesses. This means that the growth of small businesses will grow along with their dependence on technology. For those who like trends, this is excellent news. People like to be on the cutting edge, and small business owners with their backs against the wall will always do what they can to stand out from their competition.
Nowadays, more and more small business owners are being informed of the importance of having a good information systems and technology department. MIS is responsible for providing information systems help to businesses of all sizes. With that in mind, let's take a look at the purposes of MIS.
What is the purpose of a management information system?
A management information system is a crucial element of any modern organisation. It provides information about the performance of different areas, processes and events in an organisation to those who need it. It is beneficial for those people who are responsible for taking organisational-level decisions and monitoring organisational performance.
The primary purpose of a management information system is to deliver high-quality information as efficiently as possible. Ideally, the system has the ability to provide timely and meaningful information for users throughout the enterprise, including executive-level decision-makers, so they can operate on comprehensive and accurate data analysis. Summarily, MIS helps;
Making Business Decisions
Automatically generating reports
It is used to gain better understanding of the business
Provides information support to management
Is ERP A Management Information System?
ERP is an acronym that stands for Enterprise Resource Planning. The primary difference between an ERP system and a management information system is that the former offers integrated functionality, while the latter tend to be more specialised in its functionality. As both are closely interrelated, they are often considered synonyms. However, the time has come to look at them to understand what these terms mean.
ERP is a part of the larger management information system environment. It helps contribute to simplifying routine operations and helps provide analytical information to business managers.
An ERP as a Management Information System is a software package that integrates all the company’s activities, from production to accounting and from marketing to human resources.
Getting Started
One of the basic Management Information Systems that should be used to ensure that a company can survive today is an ERP system. This kind of software is a full package that will give a business solution to its fundamental accounting needs, as well as those related to other functional areas.
There are many ERP systems in the market today, but there is one that stands out from the rest – Odoo.
By implementing the Odoo ERP system, you can shift into high gear and gain a competitive edge over other businesses that don’t have a single-source view of their customer data.
Start your integration journey with us by clicking here.
Key Takeaways
1. MIS is an organized collection of transaction-processing information from sources throughout the organization
2. Management information systems is different from decision support systems
3. Management information systems helps in making better and timely decisions by providing an early warning system about management activities and performance
4. The needs of different managers have to be satisfied at different levels of management and through different types of information
5. Information technology (IT) plays a crucial role in the development, implementation, management and effectiveness evaluation of MIS