Management Information Systems: The Engine of Business Operations
Management information systems (MIS) supply businesses and organizations with technologies that create an improved flow of information and better communications, helping to find solutions to problems and providing an organization a competitive advantage.
A MIS typically is a computer system consisting of hardware and software that forms the spine of a company’s operations. It gathers data from various online systems, analyzes the information and creates reports that help management make decisions.
MIS is different from information technology (IT) in that it refers to a large infrastructure used by a company or organization. IT is one component of that infrastructure used for collecting and transmitting data.
The Role of Management Information Systems
MIS is a changing and challenging field. Modern businesses need MIS to analyze and interpret data, which often comes in enormous quantities. However, the definition of MIS is no longer restricted to large computing systems, as a definition in Inc. magazine pointed out in 2020.
"The term used to be restricted to large systems running on mainframes, but that dated concept is no longer meaningful," that post said. "A medical practice with a single doctor running software for billing customers, scheduling appointments, connected by the Internet to a network of insurance companies, cross-linked to accounting software capable of cutting checks is de facto a MIS."
"In the same vein a small manufacturer's rep organization with three principals on the road and an administrative manager at the home office has a MIS system, that system becomes the link between all the parts. It can link to the inventory systems, handle accounting, and serve as the base of communications with each rep, each one carrying a laptop."
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The Development of MIS
Analog methods comprised the first type of management information system. Businesses and other organizations recorded all critical information by hand in bound ledgers. Automation emerged in the 1880s in the form of punch cards which could be sorted and counted. Each card was the equivalent of what today would be called a database record, with different areas on the card treated as fields.
IBM, then called the Computing-Tabulating-Recording Company, started in 1911. When the first computers emerged after World War II, punch-card systems were used both as their front end, supplying data and programs, and as their output, supplying information and records.
Punch cards remained in use until the 1970s. Magnetic storage media (tape and disks) ultimately replaced them. Computers using this storage media speeded up tallying; MIS developed as the most crucial accounting functions became computerized.
Today memory is stored as flash memory (or solid state). In the next decade, the development of quantum computers will enable the storage of even more data than we can imagine today.
MIS, like any discipline that involves computers and software, is constantly changing. As storage and retrieval methods have developed, so have the MIS that store and analyze data. Companies moved from handwritten ledgers to spreadsheets to early computer programs like VisiCalc. Microsoft Excel then became the go-to program for many years.
In the 2020s, MIS computer programs have developed to the point where they can analyze data and create results in real time, produce reports on the fly and drill down to find the minutest details instantly.
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How Is MIS Different Than Computer Science?
Computer science focuses on the technology itself and less on its business application. MIS refers to a large infrastructure used by a business. Information technology (IT) is a component of that infrastructure used for collecting and transmitting data. MIS professionals apply technology to business needs.
Management Information Systems Categories
Many businesses and organizations use management information systems to assist them. Some of these MIS include:
Marketing Information System
Marketing managers and their teams can use these information systems to create reports that show the effectiveness of advertising campaigns. Previously, an MIS only allowed marketing teams to compare past campaigns. New technology provides up-to-the-minute reports, enabling marketing teams to tweak campaigns on the fly, like location or demographics.
Business Intelligence Systems
Businesses use data collected on their systems or purchased from third parties. A MIS analyzes this data and produces reports that help companies make better decisions about services, products, or internal operations.
Customer Relationship Management System
A CRM is one of the most important MIS for any company. CRM software allows businesses to store crucial information about individual customers or entire businesses. Information includes sales records, contact information, comments on what sales tactics worked best in the past, and other crucial data. Sales reps or phone agents can call this information up in real time to use when contacting the client.
Sales Automation System
A MIS lets a sales team automate many necessary sales tasks, such as sending out new emails to clients who haven’t opened an initial contact email or adding online forms to a client’s file in a CRM.
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Financial Accounting System
A financial accounting MIS contains a database of financial information. It produces regular financial reports for every manager and department. The main purpose of the MIS is to give managers feedback about their own performance; top management can monitor the company as a whole. The information displayed by the MIS usually shows "actual" data over "planned" results; thus, it measures progress against goals.
Human Resource Management System
This MIS provides HR personnel with the ability to control the flow of important information to all departments. HR software records essential financial information such as payroll, benefits, bonuses and time until retirement. It will also store data about legal compliance, schedule mandatory training events, record employee time cards and track sick leave and vacation time. A HR MIS collects and evaluates resumes from potential employees.
Supply Chain Management System
Modern supply chain management systems have five essential functions — plan, source, make, deliver and return. Businesses can use this MIS to replenish grocery stores or retail outlets in real-time, which means less stored inventory and increased revenue.
Executive Information System
Executives frequently need access to high-level data. A MIS provides these executives with data not always available to other individuals in the organization. It allows these executives to make important decisions about future goals, executor hiring decisions, budget forecasts and other essential tasks. Executives can use this information as needed to make long-term decisions or urgent decisions based on current situations.
School Information Management System
A MIS provides individual schools with a way to efficiently operate daily activities. School districts can use this management information system to track activity across the entire district, including teachers, students and parents.
Advantages of Management Information Systems
If you try to run a business or organization, even a small one, without a management information system, you're asking for many headaches. Some of the advantages of using a MIS include:
- Obtaining a complete picture of the organization or business, including the ability to look at details and the big picture.
- MIS reports can help motivate innovation, correct errors in product development and make more timely, informed decisions.
- Provide you with a better understanding of your employees’ performance, how they are an asset or a liability for your company, and the steps you need to take to encourage or improve performance.
- Improve communications between departments.
- Create more effective marketing and advertising campaigns.
- Find the best ways to approach customers and how to help them complete the customer’s journey to make a sale.
- Plan long-term growth.
Management Information System Reports
All of the above systems share one crucial task — create reports that organizations can analyze and use to make decisions. MIS produces three basic kinds of reports:
Reports allow businesses to analyze information like sales reports or production schedules regularly. Executives want to see how stores in a particular location perform over time. Hotels can judge occupancy over a long period, helping them to make staffing decisions.
Imagine a boss runs into the office before a big business meeting with a new client and asks for the sales figures from a particular store in a specific location. Ad hoc reports usually answer specific questions or are generated to assist with a specific task.
A modern supply chain MIS allows the creation of real-time reports that sales or marketing teams can use to tweak advertising campaigns. Nonprofits can use real-time reports to check if their latest fundraising pitch works.
Future of MIS Personnel
MIS is a field of study focused on integrating computer-based IT solutions and business processes to meet a company's or an organization's information needs. You can think of MIS professionals as the "communication bridge" between business and technology needs. MIS majors have one of the highest starting salaries of college undergraduate degree programs. The average starting salaries of MIS graduates in 2020 was $63,445. The US Bureau of Labor Statistics projected employment of computer and information occupations to add 667,600 new jobs between 2020 and 2030.
The management of information systems is a crucial challenge for every company. Management information systems, like any discipline that involves computers and software, changes constantly. Some recent developments in the field include the following:
- Artificial intelligence: AI promises some extraordinary results in the way we search, find, analyze and use information.
- Narrow AI and machine learning: Applications are being used in a variety of fields for a range of tasks such as instantaneous translation, 3D printing and increasingly smarter homes.
- Quantum computing: MIS is used to solve problems that classical computers find too complex. We'll see a staggering increase in computing speeds with quantum computing.
Management information systems have always been the engine of business. That engine will become even more critical in the coming years.