What is MIS? Characteristics, Objectives, Role, Component

What is MIS?

MIS is an organized integration of hardware and software technologies, data, processes, and human elements. It is a software system that focuses on the management of information technology to provide efficient and effective strategic decision making.

What is MIS? MIS is the acronym for Management Information Systems. MIS is a set of procedures which, when executed, provides information to support decision making.

A Management Information System is

• An integrated user-machine system
• For providing information
• To support the operations, management, analysis, and decision-making functions
• In an organization

The system utilizes

• Computer hardware & software
• Manual procedures
• Models for analysis, planning, control, and decision making, and
• A database

MIS Definition

MIS Meaning

MIS Meaning: A management information system is an acronym of three words, viz., Management, information, system. In order to fully understand the term MIS, let us try to understand these three words.

1. Management: Management is the art of getting things done through and with the people in formally organised groups.
   
   
2. Information: Information is data that is processed and is presented in a form which assists decision-making. It may contain an element of surprise, reduce uncertainty or provoke a manager to initiate an action.
   
   
3. System: A system is an orderly grouping of interdependent components linked together according to a plan to achieve a specific goal. The term system is the most loosely held term in management literature because of its use in different contexts.

Components of MIS

The major components of MIS are:

• People Resources: People are required for the operation of all information system.
• Data Resources: Database holds processed and organized data.
• Software Resources: It includes all sets of information processing instruction.
• Hardware Resources: Include all physical devices and materials used in information processing.
• Process: is a step undertaken to achieve a goal.

As, We have covered the basic concept of management information system which includes what is MIS, MIS definition, MIS meaning, MIS components.

Now, let us move further and try to understand MIS objectives, MIS characteristics, MIS advantages, MIS role, MIS challenges, MIS limitations etc.

Objectives of MIS

What is MIS objective: MIS has five major objectives which include:

1. Data Capturing
2. Processing of Data
3. Storage
4. Retrieval
5. Dissemination

These MIS objective are discussed below in detail.

Data Capturing

MIS capture data from various internal and external sources of the organization. Data capturing may be manual or through computer terminals.

Processing of Data

The captured data is processed to convert into the required information. Processing of data is done by such activities as calculating, sorting, classifying, and summarizing.

Storage of Information

MIS stores the processed or unprocessed data for future use. If any information is not immediately required, it is saved as an organization record, for later use.

Retrieval of Information

MIS retrieves information from its stores as and when required by various users.

Dissemination of Information

Information, which is a finished product of MIS, is disseminated to the users in the organization. It is periodic or online through a computer terminal.

Characteristics of MIS

What is MIS Characteristic? MIS plays a very important role in every aspect of an organization. These characteristics are generic in nature. 

Following are the characteristics of MIS:

1. System Approach
2. Management Oriented
3. Need-Based
4. Exception Based
5. Future Oriented
6. Integrated
7. Long Term Planning
8. Sub-System Concept
9. Central Database

System Approach

The information system follows a System’s approach. The system’s approach implies a holistic approach to the study of system and its performance in the light for the objective for which it has been constituted.

Management Oriented

The top-down approach must be followed while designing the MIS. The top-down approach suggests that the system development starts from the determination of management needs and overall business objectives.

The MIS development plan should be derived from the overall business plan. Management oriented characteristic of MIS also implies that the management actively directs the system development efforts.

Need-Based

MIS design and development should be as per the information needs of managers at different levels, strategic planning level, management control level and operational control level. In other words, MIS should cater to the specific needs of managers in an organization’s hierarchy.

Exception Based

MIS should be developed on the exception-based reporting principle, which means an abnormal situation, i.e. the maximum; minimum or expected values vary beyond tolerance limits. In such situations, there should BE exception reporting to the decision-maker at the required level.

Future Oriented

Besides exception-based reporting, MIS should also look at the future. In other words, MIS should not merely provide past or historical information; rather it should provide information, on the basis of projections based on which actions may be initiated.

Integrated

Integration is a necessary characteristic of a management information system. Integration is significant because of its ability to produce more meaningful information.

For example, in order to develop an effective production scheduling system, it is necessary to balance such factors as setup costs, Workforce, Overtime rates, Production capacity, Inventory level, Capital requirements and Customer services.

Long Term Planning

MIS is developed over relatively long periods. Such a system does not develop overnight. A heavy element of planning is involved. The MIS designer must have the future objectives and needs of the company in mind.

Sub-System Concept

The process of MIS development is quite complex and one is likely to lose insight frequently. Thus, the system, though viewed as a single entity, must be broken down into digestible sub-systems which are more meaningful at the planning stage.

Central Database

A central database is a mortar that holds the functional systems together. Each system requires access to the master file of data covering inventory, personnel, vendors, customers, etc. It seems logical to gather data once, validate it properly and place it on a central storage medium, which can be accessed by any other subsystem.

Functions of MIS

The broad functions of MIS are as follows:

• To Improve Decision-Making
  
• To Improve Efficiency
  
• To Provide Connectivity
  
• Data Processing
  
• Prediction
  
• Planning
  
• Control
  
• Assistance

To Improve Decision-Making

The Management Information System (MIS) furnishes relevant information on diverse matters, thereby enhancing the decision-making prowess of the management. By utilizing the speedy and precise data provided by the MIS, managers can make prompt and informed decisions, which ultimately enhances the quality of decision-making and contributes to the company’s value.

To Improve Efficiency

The Management Information System (MIS) facilitates managers in executing their duties with enhanced ease and efficiency, resulting in improved productivity.

To Provide Connectivity

The MIS provides managers with better connectivity with the rest of the organization.

The Management Information System (MIS) is commonly utilized in decision-making processes within a system. One such application of MIS is to identify issues that require prompt attention, offer timely feedback, and inform senior management of the current progress and areas for improvement.

Therefore, the main functions of MIS may vary depending on the specific tasks performed by an organization.

Data Processing

Data processing involves collecting, transmitting, storing, and processing data to generate an output. Prediction involves analyzing data using modern mathematics, statistics, or simulation to anticipate future scenarios.

Prediction

By utilizing methods of modern mathematics, statistics, or simulation, data analysis is conducted to predict potential future scenarios.

Planning

The analysis of data of a regular nature may give many indications on likely future events or situations and this can be utilized in planning or reviewing the plan already made earlier.

Control

By examining records of daily, monthly, quarterly, or annual activities, certain factors that require management and control can be identified. If these factors are identified in a timely manner, they can be managed relatively easily. However, some factors may require the attention of senior management to remain under control. It is essential to note that ignoring smaller factors at the beginning may have the potential to disrupt other factors as well.

Assistance

One of the principal functions of MIS is to support senior management by analyzing regular records and drawing inferences about various factors related to the company’s operational performance, such as human resources, financial resources, material resources, and more.

Advantage of MIS

• Generate Competitive Advantages
• Implementation of Management by Objectives Techniques
• Fast Reaction to Market Changes
• MIS as Strategic Resource
• Change in Industry Structure
• Functional Use
• External and Internal Change
• Availability of Customer Data

Generate Competitive Advantages

Business houses succeed or fail based on how they face competitive challenges. MIS if implemented properly, provides a wealth of information to allow management to construct and develop effective plans to meet, and beat, their competition.

Implementation of Management by Objectives Techniques

MIS allow all participants, both management and staff, to view, analyse and interpret useful data to set goals and objectives.

Fast Reaction to Market Changes

MIS can deliver facts, data and trends to business with lighting speed. Having this information allows business houses to react quickly to market changes, regardless of the type (positive or negative) or volatility.

MIS as Strategic Resource

• MIS helps in taking strategic, tactical and operational decisions. It is one of the critical and important resource.
  
• It helps the management to understand cost, quality, price, technology, productivity and product.
  
• It helps to smoothen the business process and thereby facilitate managing of business operations.
  
• It helps to maintain the business standards like ISO, QS, CMMI, six sigma etc.
  
• It helps to be a head in the competition.
  
• It helps company in analysing their own SWOT.
  
• It also helps in maintaining its own profitability.
  
• It will help in taking new business decisions like new plans, new product, new business line etc.
  
• It protects company from business cycles.
  
• It provides future direction to the organisations.
  
• It also provides the competitive edge.

Change in Industry Structure

MIS helps in changes in industry structure includes five forces:

• Customers’ bargaining power
  
• Suppliers’ bargaining power
  
• Threats of new entrant in market
  
• Pressure from substitute products and services and u Existing industry competitors
  
• Birth of new business/ New business initiatives. u New way of doing business.

Functional Use

Functional use of MIS includes:

• Lower the cost
  
• Information and information system facilitate value chain. e.g. product delivery quality. It increases the speed, accuracy and timeliness of the organisation. It helps in simplifying the business processes. It helps organisation in meeting the standards and benchmarks.

External and Internal Change

MIS creating knowledge is an asset. It helps to achieve change in work life style for better results. MIS has made the world smaller. Worldwide reorganisation environment and attempt to control the calamity. Health conscious among the group lead to less sufferings.

MIS helps in Internal Change: MIS will change the business process, MIS will change the old standards and set new standards. MIS is a key for continuous improvement process. MIS will reduce the hierarchy and hence less operation cost. MIS focuses on “shared information”. MIS also measures the result and performance.

Availability of Customer Data

MIS giving an overall picture of the company and acting as a communication and planning tool. The availability of the customer data and feedback can help the business houses to align their business process according to the need of the customers.

The effective management of customer data can help the company to perform direct marketing and promotion activities. Therefore, information is considered to be an important asset for any company in the modern competitive world.

Role of MIS

A management information system (MIS) plays an important role in business organizations.

What is MIS role: There are many roles of MIS and some of the important MIS role are discussed below:

1. Decision making
2. Coordination among the department
3. Finding out Problems
4. Comparison of Business Performance
5. Strategies for an Organization

Decision making

Management Information System (MIS) plays a significant role in the decision-making process of any organization. In any organization, a decision is made on the basis of relevant information which can be retrieved from the MIS.

Coordination among the department

Management Information System satisfy multiple need of an organization across the different functional department.

Finding out Problems

As we know that MIS provides relevant information about every aspect of activities. Hence, if any mistake is made by the management then MIS, information will help in finding out the solution to that problem.

Comparison of Business Performance

MIS store all past data and information in its Database. That why the management information system is very useful to compare business organization performance.

Strategies for an Organization

Today each business is running in a competitive market. An MIS supports the organization to evolve appropriate strategies for the business to assent in a competitive environment.

Challenges of MIS

What is MIS Challenges: There are three major challenges of MIS: high cost, training of employees and maintenance cost. These are briefly discussed below:

1. High Cost
2. Training of Employee
3. Maintenance Cost

High Cost

Development of new computerized based information system is a problem for the organization due to the cost factor and it creates problems because with the change of time there is need of up-to-date of the information system.

Training of Employee

Employees should have the capacity of learning of the information system with the changing competitive and business environment; otherwise it will be difficult for the organization to stay in the market.

Maintenance Cost

Sometimes a problem arises due to server crash and website crash. Sometimes it leads to the loss of information. So, maintenance cost is needed to tackle the above problem.

Limitations of MIS

Even though MIS has many benefits but it also has its limitations. Limitations of MIS are discussed below:

• While MIS may solve some critical problems but it is not a solution to all problems of an organization.
  
  
• It cannot meet the special demands of each person.
  
  
• MIS if designed in an improper manner does not serve the management and hence is of little relevance.
  
  
• The MIS is not good if the basic data is obsolete and outdated.
  
  
• Mostly information provided by the MIS is in quantitive form. Hence, it ignores the qualitative information like the attitude of an employee.

MIS at Different Levels

The needs of managers at various levels in the organization are different. Some need information that is real-time and detailed while others need information that is aggregated and covers a long period.

Those at the highest level of any organization, such as Managing Directors and Chief Executives, usually need information that is aggregated, enables drilling down, summarises all activities, and provides details about the industry at large. MIS that provide reports for executives at this level is often called executive support systems (ESS).

An example of a typical screen of an ESS is shown Some examples of information provided by such systems are:

• A report on sales forecasts for all products, plotted against the forecasts for the entire industry.
  
  
• A summary of cash balances for all divisions for the year, the month, and the week, with the ability to drill down to details for all divisions.
  
  
• A summary of completion of all projects, with details of work remaining, estimated overruns on time, and cost with comparison figures of projects in the past.

Executive support systems are usually highly visual with graphs, charts, and diagrams used to convey most of the information. While designing these systems, the designers must understand the style of functioning of the executive. ESS is usually linked to other MIS and transaction processing systems and databases that provide industry data.

Managers in the organization, who report to the executives, use MIS and require reports, examples of which have been provided above. The systems used by managers are usually categorized as either MIS or Decision Support Systems. The latter use scientific models of decision-making to help managers in the specific tasks of making decisions based on available data.

Another class of employees, similar to managers but not directly involved with decision-making, are the specialized knowledge workers such as designers, planners, and analysts. They use transaction data and other data related to the industry and economy to make strategic-level plans and do analyses for the organization. They too use sophisticated models of analysis and produce reports that assist executives and managers with their decision-making.

For example, strategic planners may consult the industry and economy data and compare this with internal sales data to predict which products of the organization will have a better chance of success in the competitive environment. Models such as time series analysis and forecasting may be used to arrive at such analysis.

Requirements of Management Information System

Following are the requirements of a management information system:

1. Database
2. Qualified System and Management Staff
3. Top Management Support
4. Active Participation of Operating Management
5. Control and Maintenance of Management Information System
6. Evaluation of Management Information System

Read Complete: Requirements of Management Information System

Summary

Management Information Systems (MIS), referred to as Information Management and Systems, is the discipline covering the application of people, technologies, and procedures collectively called information systems, to solving business problems.

Got to Topic: 1. What is MIS? 2. MIS Definition 3. MIS Meaning 4. MIS Components 5. MIS Objectives 6. MIS Characteristics 7. MIS Advantage 8. MIS Role 9. MIS Challenges 10. MIS Limitations 11. Requirements of Management Information System

Next steps

Explore whether a career in MIS might be a good fit by trying a course like  Information Sytems  from the University of Minnesota. Enroll for free to start building in-demand skills in project management, critical thinking, business analysis, and IT.

FAQ

Reference

1. Sadagopan, Management Information System, 2007, Prentice Hall of India.
2. McLeod, R. and George P Schell (2008). Management information systems (10th ed.). Pearson Education India
3. C. W. Frenzel and J. C. Frenzel, 2004. “Management of Information Technology”, 4th edition Thomson course technology, Cengage Learning.
4. Laudon, K. C. & Laudon, J. P. Management Information Systems: Managing the Digital Firm. 10th ed. Prentice-Hall and Pearson Education, 2006.
5. http://ocw.mit.edu

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