Information
Information is data that have been put into a meaningful and useful context and communicated to a recipient who uses it to make decisions. Information involves the communication and reception of intelligence or knowledge. It appraises and notifies, surprises and stimulates, reduces uncertainty, reveals additional alternatives or helps eliminate irrelevant or poor ones, and influences individuals and stimulates them to action. An element of data may constitute information in a specific context; for example, when you want to contact your friend, his or her telephone number is a piece of information; otherwise, it is just one element of data in the telephone directory. Computers have made the processing function much easier. Large quantities of data can be processed quickly through computers aiding in the conversion of data to information. Raw data enter the system and are transformed into the system's output, that is, information to support managers in their decision making.
Information is the key to successful control and operation of any organization. In many organization, the firm’s information resources are stored in the memory of a computer system. It makes sense to allow an organization’s management access to this information resources. This is accomplisher in many organizations by using a management information system (MIS). A computer system that aids the management process is often called a computer based management information system (CBMIS).
Definition of Management Information System
A management information system (MIS) is a system or process that provides the information necessary to manage an organization effectively. MIS and the information it generates are generally considered essential components of prudent and reasonable business decisions. The importance of maintaining a consistent approach to the development, use, and review of MIS systems within the institution must be an ongoing concern of both bank management and OCC examiners. MIS should have a clearly defined framework of guidelines, policies or practices, standards, and procedures for the organization. These should be followed throughout the institution in the development, maintenance, and use of all MIS. MIS is viewed and used at many levels by management. It should be supportive of the institution's longer term strategic goals and objectives.
At the start, works in businesses and other organizations, internal reporting was made manually and only periodically, as a by-product of the accounting system and with some additional statistic(s), and gave limited and delayed information on management performance. Previously, data had to be separated individually by the people as per the requirement and necessity of the organization. Later, data was distinguished from information, and instead of the collection of mass of data, important, and to the point data that is needed by the organization was stored.
Early on, business computers were mostly used for relatively simple operations such as tracking sales or payroll data, often without much detail. Over time these applications became more complex and began to store increasing amounts of information while also interlinking with previously separate information systems. As more and more data was stored and linked man began to analyze this information into further detail, creating entire management reports from the raw, stored data. The term "MIS" arose to describe these kinds of applications, which were developed to provide managers with information about sales, inventories, and other data that would help in managing the enterprise. Today, the term is used broadly in a number of contexts and includes (but is not limited to): decision support systems, resource and people management applications, ERP, SCM, CRM, project management and database retrieval application.
An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management. In a way it is a documented report of the activities that were planned and executed. According to Philip Kotler "A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers." [3]
The terms MIS and information system are often confused. Information systems include systems that are not intended for decision making. The area of study called MIS is sometimes referred to, in a restrictive sense, as information technology management. That area of study should not be confused with computer science. IT service management is a practitioner-focused discipline. MIS has also some differences with Enterprise Resource Planning (ERP) as ERP incorporates elements that are not necessarily focused on decision support.
Any successful MIS must support a businesses Five Year Plan or its equivalent. It must provide for reports based up performance analysis in areas critical to that plan, with feedback loops that allow for titivation of every aspect of the business, including recruitment and training regimens. In effect, MIS must not only indicate how things are going, but why they are not going as well as planned where that is the case. These reports would include performance relative to cost centers and projects that drive profit or loss, and do so in such a way that indentifies individual accountability, and in virtual real-time.
Classification of Management Information Systems
There are various types of management information systems. Mason and Swanson (1981) describe four categories of management information systems: (1) databank information system, (2) predictive information system, (3) decision-making information system, and (4) decision-taking information system. The classification is based on the level of support that the information system provides in the process of decision making. Conceptually, an MIS is an on-line, real time information system consisting of the following resources:
· Centralized data base consisting of an organization’s information resources
· Comprehensive set of data on the organization, its operating structure, and the competitive environment
· Capability for updating and retrieving information from the data base
· Plan or model to be used for decision making, using the information in the data base
· Plan or model to be used in organizational planning activities
· Checklist to be used to monitor the performance of the organization
Management can use an MIS for many purposes. However, planning (operational, long-range, and tactical) is the most widely developed area where MISs are used. The information necessary for planning is derived from market research, internal statistics, competitive analysis, and known operational characteristics of organization.
Applications of MIS
With computers being as ubiquitous as they are today, there's hardly any large business that does not rely extensively on their IT systems. However, there are several specific fields in which MIS has become invaluable. While computers cannot create business strategies by themselves they can assist management in understanding the effects of their strategies, and help enable effective decision-making.
MIS systems can be used to transform data into information useful for decision making. Computers can provide financial statements and performance reports to assist in the planning, monitoring and implementation of strategy.
MIS systems provide a valuable function in that they can collate into coherent reports unmanageable volumes of data that would otherwise be broadly useless to decision makers. By studying these reports decision-makers can identify patterns and trends that would have remained unseen if the raw data were consulted manually.
MIS systems can also use these raw data to run simulations – hypothetical scenarios that answer a range of ‘what if’ questions regarding alterations in strategy. For instance, MIS systems can provide predictions about the effect on sales that an alteration in price would have on a product. These Decision Support Systems (DSS) enable more informed decision making within an enterprise than would be possible without MIS systems.
Not only do MIS systems allow for the collation of vast amounts of business data, but they also provide a valuable time saving benefit to the workforce. Where in the past business information had to be manually processed for filing and analysis it can now be entered quickly and easily onto a computer by a data processor, allowing for faster decision making and quicker reflexes for the enterprise as a whole.
Management by Objectives
While MIS systems are extremely useful in generating statistical reports and data analysis they can also be of use as a Management by Objectives (MBO) tool. MBO is a management process by which managers and subordinates agree upon a series of objectives for the subordinate to attempt to achieve within a set time frame. Objectives are set using the SMART ratio: that is, objectives should be Specific, Measurable, Agreed, Realistic and Time-Specific.
The aim of these objectives is to provide a set of key performance indicators by which an enterprise can judge the performance of an employee or project. The success of any MBO objective depends upon the continuous tracking of progress. In tracking this performance it can be extremely useful to make use of an MIS system. Since all SMART objectives are by definition measurable they can be tracked through the generation of management reports to be analysed by decision-makers.
Benefits of MIS
The field of MIS can deliver a great many benefits to enterprises in every industry. Expert organisations such as the Institute of MIS along with peer reviewed journals such as MIS Quarterly continue to find and report new ways to use MIS to achieve business objectives.
Core Competencies
Core Competencies
Every market leading enterprise will have at least one core competency – that is, a function they perform better than their competition. By building an exceptional management information system into the enterprise it is possible to push out ahead of the competition. MIS systems provide the tools necessary to gain a better understanding of the market as well as a better understanding of the enterprise itself.
Enhance Supply Chain Management
Improved reporting of business processes leads inevitably to a more streamlined production process. With better information on the production process comes the ability to improve the management of the supply chain, including everything from the sourcing of materials to the manufacturing and distribution of the finished product.
Quick Reflexes
Quick Reflexes
As a corollary to improved supply chain management comes an improved ability to react to changes in the market. Better MIS systems enable an enterprise to react more quickly to their environment, enabling them to push out ahead of the competition and produce a better service and a larger piece of the pie. Further information about MIS can be found at the Bentley College Journal of MIS and the US Treasury’s MIS handbook, and an example of an organisational MIS division can be found at the Department of Social Services for the state of Connecticut.
Risk reflects the potential, the likelihood, or the expectation of events that could adversely affect earnings or capital. Management uses MIS to help in the assessment of risk within an institution. Management decisions based upon ineffective, inaccurate, or incomplete MIS may increase risk in a number of areas such as credit quality, liquidity, market/pricing, interest rate, or foreign currency. A flawed MIS causes operational risks and can adversely affect an organization's monitoring of its fiduciary, consumer, fair lending, Bank Secrecy Act, or other compliance-related activities. Since management requires information to assess and monitor performance at all levels of the organization, MIS risk can extend to all levels of the Management Information Systems 4 Comptroller's Handbook operations. Additionally, poorly programmed or non-secure systems in which data can be manipulated and/or systems requiring ongoing repairs can easily disrupt routine work flow and can lead to incorrect decisions or impaired planning.
Illustrative computer-based MIS
National agricultural extension systems, especially in developing countries, tend to be very large. For example, in India, the national agricultural extension system employs about 125,000 people. Extension managers at various levels need relevant information in order to make effective decisions. In the absence of such information, they act only on the basis of their intuition and past experience. Data that have been processed, stored, and presented properly will aid them in analysing situations and to make effective decisions.
As suggested above, at every phase of the management process, managers need information in order to make effective decisions. This we call management information. It does not include purely functional information or technical information, such as packages of practices for rice or wheat cultivation. Management information is the information required by managers as they make their decisions, such as the number of extension personnel employed by category, their training requirements, career development plans, job descriptions, budgets, forecasts, benchmark surveys, reports on socioeconomic conditions of people served, and existing facilities
A national agricultural extension system is a nationwide system managed by the national government. In India, agriculture is a state subject under the division of powers between the national and the state levels. Nevertheless, the national government supplements the financial resources of the states and provides coordination at the national level. The state's administrative machinery is divided into districts, districts into subdivisions, subdivisions into blocks. A block is a group of villages and the basic unit for the administration of an agricultural extension programs. Data collected at the block level need to be integrated at higher administrative levels to provide an integrated view at the district and state levels to support planning, monitoring, and decision making.
However, the actual design may vary with the size of the state and other considerations. An integrated database for the entire state may be supported by a mainframe/minicomputer at the state headquarters. Suitable programs for the analysis of data may be designed to provide an interactive decision support system at the state level. Each district and subdivision may be provided with a mini/micro computer, depending on the volume of data to be handled. The computers in the districts and subdivisions may be networked with the state computer. The local data may be stored and processed in the district/subdivision, and the shared data with appropriate level of aggregation may be transmitted to the state headquarters to update the integrated database. The districts and subdivisions would have direct access to the integrated database with proper authorizations assigned to them through their passwords. The blocks may have only the input-output terminals connected to the subdivision computer to feed data to the subdivision and make on-line inquiries as and when necessary.
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