Management information systems (MIS) are information systems, typically computer-based, that are used within an organization. WordNet describes an information system as "a system consisting of the network of all communication channels used within an organization". A management information system may also be defined as "a system that collects and processes data (information) and provides it to managers at all levels who use it for decision making, planning, program implementation, and control". An information system is comprised of all the components that collect, manipulate, and disseminate data or information. It usually includes hardware, software, people, communications systems such as telephone lines, and the data itself. The activities involved include inputting data, processing of data into information, storage of data and information, and the production of outputs such as management reports.
As an area of study it is commonly referred to as information technology management. The study of information systems is usually a commerce and business administration discipline, and frequently involves software engineering, but also distinguishes itself by concentrating on the integration of computer systems with the aims of the organization. The area of study should not be confused with computer science which is more theoretical in nature and deals mainly with software creation, or computer engineering, which focuses more on the design of computer hardware.
In business, information systems support business processes and operations, decision-making, and competitive strategies.
The functional support role
Business processes and operations support function is the most basic. It involves collecting, recording, storing, and basic processing of data. Information systems support business processes and operations by:
- recording and storing sales data, purchase data, investment data, payroll data and other accounting records
- processing these accounting records into income statements, balance sheets, ledgers, management reports, and other forms of financial information
- recording and storing inventory data, work in process data, equipment repair and maintenance data, supply chain data, and other production/operations records
- processing these operations records into production schedules, production controllers, inventory systems, and production monitoring systems
- recording and storing personnel data, salary data, employment histories, and other human resources records
- processing these human resources records into employee expense reports, and performance based reports
- recording and storing market data, customer profiles, customer purchase histories, marketing research data, advertising data, and other marketing records
- processing these marketing records into advertising elasticity reports, marketing plans, and sales activity reports
- recording and storing business intelligence data, competitor analysis data, industry data, corporate objectives, and other strategic management records
- processing these strategic management records into industry trends reports, market share reports, mission statements, and portfolio models
- use of all the above to implement, control, and monitor plans, strategies, tactics, new products, new business models or new business ventures.
The decision support role
The business decision making support function goes one step further. It is an integral part of making decisions. It allows users to ask "What if…?" questions: What if we increase the price by 5%? What if we increase price by 10%? What if we decrease price by 5%? What if we increase price by 10% now, then decrease it by 5% in three months? It also allows users to deal with contingencies: If inflation increases by 5% (instead of 2% as we are assuming), then what do we do? What do we do if we are faced with a strike or a new competitive threat?
The most basic and most versatile business decision making tool is the spreadsheet, but spreadsheets are not user friendly. More sophisticated programs often seamlessly incorporate statistical decision making tools like sensitivity analysis, Monte Carlo analysis, risk analysis, break even analysis and Bayesian analysis. If, for example, you are using the information system to decide about a new product introduction, the program should incorporate tools like logit analysis, B.C.G. Analysis, conjoint analysis, contribution margin analysis, multi dimensional scaling, G.E. Multi Factoral analysis, factor analysis, cluster analysis, discriminant analysis, Quality Function Deployment, preference regressions, and preference-rank translations.
The communication decision support system role
Information systems can support a company's competitive positioning. Here are three levels of analysis:
1. The supports for help in piloting the chain of internal value. They are the most recent and the most pragmatic systems within the reach of the manager. They are the solutions to reductions of costs and management of performance. They are typically named "Business Workflow Analysis" (BWA) or of "Business Management Systems p2p". Tool networks, they ensure control over piloting the set functions of a company. The real-time mastery in the costs of dysfunctions cause distances from accounts, evaluation and accounting that are presented in the evaluation and qualitative reports.
2. All successful companies have one (or two) business functions that they do better than the competition. These are called core competencies. If a company's core competency gives it a long term advantage in the marketplace, it is referred to as a sustainable competitive advantage. For a core competency to become a sustainable competitive advantage it must be difficult to mimic, unique, sustainable, superior to the competition, and applicable to multiple situations. For a small or medium business a nice alternative is a MSP or a Managed Service Provider such as Virtual IT Solution, LLC http://www.virtualitsolution.com .This is a cost effective solution compared to paying for a IT staff or local technicians. Other examples of company characteristics that could constitute a sustainable competitive advantage include: superior product quality, extensive distribution contracts, accumulated brand equity and positive company reputation, low cost production techniques, patents and copyrights, government protected monopoly, and superior employees and management team. The list of potential sustainable competitive advantage characteristics is very long. However, some experts hold that in today's changing and competitive world, no advantage can be sustained in the long run. They argue that the only truly sustainable competitive advantage is to build an organization that is so alert and so agile that it will always be able to find an advantage, no matter what changes occur.
3. Information systems often support and occasionally constitute these competitive advantages. The rapid change has made access to timely and current information critical in a competitive environment. Information systems, like business environmental scanning systems, support almost all sustainable competitive advantages. Occasionally, the information system itself is the competitive advantage. One example is Wal-Mart. They used an extranet to integrate their whole supply chain. This use of information systems gave Sam Walton a competitive advantage for two decades. Another example is Dell Computer. They used the internet to market custom assembled PC's. Michael Dell is still benefitting from this low-cost promotion and distribution technique. Other examples are eBay, Amazon.com, Federal Express, and Business Workflow Analysis Oberon-bwa.
The performance monitoring role
MIS are not just statistics and data analysis. They have to be used as an MBO (Management by Objectives) tool. They help:
- to establish relevant and measurable objectives
- to monitor results and performances (reach ratios)
- to send alerts, in some cases daily, to managers at each level of the organisation, on all deviations between results and pre-established objectives and budgets.
from :http://en.wikipedia.org
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