by Dinesh Thakur
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,
- Complexity
- Information requirement for taking the decision
- Relevance
- 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.
MIS Functions
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:
Management oriented
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.
Management directed
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.
Integrated
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.
Strategic planning
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.
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