NEED OF MANAGEMENT INFORMATION SYSTEM

Management and organizations facing constantly changing problems, diverse managerial styles,
and ever present information needs offer a challenging context for developing computer based
information systems. MIS uses computer technology to provide information and decision support
to managers, helping them becomes more effective. Developments in the young computer
industry are changing corporate management style. Managers at all levels use similar data.
Operating managers require data which is timely, precise, detailed, internal and historical. Upper
level managers need data which is aggregated, external as well as internal, future oriented as well
as historical and covering a longer span time. An effective MIS cannot be built without viable
data management tools. Such tools were not generally available previously. Moreover, most
organizations did not effectively use DBMS technology until two decades before. An important
key to a successful MIS is the effective management of an organization's data resources.

Role of the Database in an Organization:

An organization is traditionally viewed as a three level pyramid-operational activities at the
bottom, management planning and control activities in the middle and strategic planning and
policy making in top management. The corporate database contains data relating to the
organization, its operations, its plan and its environment.

Need Of MIS In Organizations

In today's scenario MIS plays a pivotal role in Organizations. Organizations worldwide makes
extensive use of MIS. Its designed by the top management of an organization, is a tool to
assembling & accumulating facts & figures of all the important business processes.
MIS is a very vast topic , its very difficult to cover the whole in one article. Thus here are some
of the major importance / advantages Need of MIS in organizations:

 The organization that uses MIS is able to record ,process, route & tabulate all important
business transactions. As & when need arises the organization is able to incorporate the
needed changes & improvements in the area of concern.
 MIS facilitates informed DECISION MAKING.It usually represents a number of options
from which one can choose the best.
 The top management ANALYSES whether its resources are being utilized optimally.
 A TWO WAY COMMUNICATION FLOW is greatly enhanced by the MIS. The
management freely tells the job responsibilities to its employees. The employees in return
discuss their doubts & grievances.
 MIS supports the planning & controlling function of managers in the organization.
Managers use past/historical data as well as the current data to analyze the performance &
hence apply controlling measures.
 MIS encourages DECENTRALISATION in the organisation.Decentralisationis possible
when there's a system to measure operations at the lower levels.
 It brings COORDINATION. It facilitates integration of specialized activities by keeping
each department aware of the problems & requirements of other departments.
EXPLANATION
Management information system is an integrated set of component or entities that interact to achieve
a particulars function, objective or goal. Therefore it is a computer based system that provides
 information for decisions making on planning, organizing and controlling the operation of the sub-
system of the firm and provides a synergistic organization in the process.

The component of an information system includes. a hardware which is used for input/output process
and storage of data, software used to process data and also to instruct the hand-ware component,
data bases which is the location in the system where all the organization data will be automated and
procedures which is a set of documents that explain the structure of that management information
system.
There are various driving factors of management information system for example:-
Technological revolutions in all sectors make modern managers to need to have access to large
amount of selective information for the complex tasks and decisions.
The lifespan of most product has continued getting shorter and shorter and therefore the challenge to
the manager is to design product that will take a longer shelf life and in order to do this, the manager
must be able to keep abreast of the factors that influences the organization product and services
thus, management information system come in hardy in supporting the process.
There are huge amount of information available to today’s manager and this had therefore meant that
managers are increasingly relying on management information system to access the exploding
information. Management information services helps manager to access relevant, accurate, up-to-
date information which is the more sure way of making accurate decisions. It also helps in automation
and incorporation of research and management science techniques into the overall management
information system for example probability theory.
The management information services are capable of taking advantage of the computational ability of
the company like processing, storage capacity among others.
Based on this relevancy, management information system should be installed and upgraded in
various organizations since today’s managers need them to access information for managerial
decision making and also management functions.
Why Businesses Need an Efficient Management Information System?
We are living in a time of great change and working in an Information Age. Managers have to assimilate
masses of data, convert that data into information, form conclusions about that information and make
decisions leading to the achievement of business objectives. For an organization, information is as
important resource as money, machinery and manpower. It is essential for the survival of the enterprise.

Before the widespread use of computers, many organizations found difficulties in gathering, storing,
organizing and distributing large amounts of data and information. Developments in computer technology
made possible for managers to select the information they require, in the form best suited for their needs
and in time they want. This information must be current and in many cases is needed by many people at
the same time. So it has to be accurate, concise, timely, complete, well presented and storable. Most
firms nowadays depend on IT.

The term management information system (MIS) made its first appearance in U.S. navy report on the use
of computers to construct a single integrated system to manage all navy resources.

A management information system (MIS) is a subset of the overall internal controls of a business covering
the application of people, documents, technologies, and procedures by management accountants to solve
business problems such as costing a product, service or a business-wide strategy. Management
information systems are distinct from regular information systems in that they are used to analyze other
information systems applied in operational activities in the organization. Academically, the term is
commonly used to refer to the group of information management methods tied to the automation or
support of human decision making, e.g. Decision Support Systems, Expert systems, and Executive
information systems.
MIS combines tech with business to get people the information they need to do their jobs
better/faster/smarter. MIS professionals work as systems analysts, project managers, systems
administrators, etc., communicating directly with staff and management across the organization.” “A
system to convert data from internal and external sources into information and communicate that
information in an appropriate form, to managers at all levels in all functions to enable them to make timely
and effective decisions for planning, directing and controlling the activities for which they are
responsible.”(Bee and Bee, 1999)

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 those 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.”

Management information systems are those systems that allow managers to make decisions for the
successful operation of businesses. Management information systems consist of computer resources,
people, and procedures used in the modern business enterprise. MIS also refers to the organization that
develops and maintains most or all of the computer systems in the enterprise so that managers can make
decisions. The goal of the MIS organization is to deliver information systems to the various levels of
corporate managers. MIS professionals create and support the computer system throughout the
company. Trained and educated to work with corporate computer systems, these professionals are
responsible in some way for nearly all of the computers, from the largest mainframe to the desktop and
portable PCs.

Its purpose is to help managers to solve structured problems. But it should also fulfill a number of
other purposes:

It should provide a basis to analyze warning signals that can originate both externally and internally;
this is the main function of data base;
It should automate routine operations thus avoiding human work in the processing tasks;
It should assist management in making routine decisions;
It should provide the information necessary to make non-routine decisions;
It should serve as a strategic weapon to gain competitive advantages.

Computer-based or manual system transforms data into information useful in the support of
decision making. MIS can be classified as performing three functions:

To generate reports-for example, financial statements, inventory status reports, or performance reports
needed for routine or non-routine purposes.
To answer what-if questions asked by management. For example, questions such as “What would
happen to cash flow if the company changes its credit term for its customers?” can be answered by MIS.
This type of MIS can be called Simulation.
To support decision making. This type of MIS is appropriately called Decision Support System (DSS).
DSS attempts to integrate the decision maker, the data base, and the quantitative models being used.

When information systems are designed to provide information needed for effective decision making by
managers, they are called management information systems. MIS is a formal system for providing
management with accurate and timely information necessary for decision making.

The system provides information on the past, present and project future and on relevant events inside
and outside the organization. It may be defined as a planned and integrated system for gathering relevant
data, converting it in to right information and supplying the same to the concerned executives. The main
purpose of MIS is to provide the right information to the right people at the right time.

A management information system is an integrated man – machine systems that provides information to
support the planning and control function of manager in an organization. For example, an organization
often processes a lot of data which it is required by law to furnish to various government regulatory
agencies. Such a system, while it may have interfaces with an MIS, would not be a part of it, instances of
such systems is salary disclosures and excise duty statements.
Generally, MIS deals with information that is systematically and routinely collected in accordance with a
well-defined set of rules. Thus, and MIS is a part of the formal information network in an organization.
Normally, the information provided by an MIS helps the managers to make planning and control
decisions. Now, we will see, what is planning and control. Every organization in order to function must
perform certain operations. For Example, a car manufacturer has to perform certain manufacturing
activities; a wholesaler has to provide water to its area of jurisdiction. All these are operations that need to
be done. Besides these operations, an organization must make plans for them that it must decide on how
many and what type of cars to make next month or what commissions to offer retailers or what pumping
stations to install in the next five years.

Also an organization must control the operations in the light of the plans and targets developed in the
planning process. The car manufacturer must know if manufacturing operations are in line with the targets
and if not, he must make decisions to correct the deviation or revise his plans. Similarly the wholesaler
will want to know the impacts that his commissions have had on sales and make decisions to correct
adverse trends.

Effective management information systems are needed by all business organization because of the
increased complexity and rate of change of today’s business environment. For Example, Marketing
manager need information about sales performance and trends, financial manger returns, production
managers needs information analyzing resources requirement and worker productivity and personnel
manager require information concerning employee compensation and professional development? Thus,
effective management information systems must be developed to provide modern managers with the
specific marketing, financial, production and personnel information products they required to support their
decision making responsibilities.

An MIS provides the following advantages.

It facilitates planning: MIS improves the quality of plants by providing relevant information for sound
decision making. Due to increase in the size and complexity of organizations, managers have lost
personal contact with the scene of operations.
In Minimizes information overload: MIS change the larger amount of data in to summarize form and
there by avoids the confusion which may arise when managers are flooded with detailed facts.
MIS Encourages Decentralization: Decentralization of authority is possibly when there is a system for
monitoring operations at lower levels. MIS is successfully used for measuring performance and making
necessary change in the organizational plans and procedures.
It brings Coordination: MIS facilities integration of specialized activities by keeping each department
aware of the problem and requirements of other departments. It connects all decision centers in the
organization.
It makes control easier: MIS serves as a link between managerial planning and control. It improves the
ability of management to evaluate and improve performance. The used computers has increased the data
processing and storage capabilities and reduced the cost.
MIS assembles, process, stores, retrieves, evaluates and disseminates the information.

To function effectively as an interacting, interrelated, and interdependent feedback tool for management
and staff, MIS must be “useable.” The five elements of a useable MIS system are: timeliness, accuracy,
consistency, completeness, and relevance. The usefulness of MIS is hindered whenever one or more of
these elements are compromised.

Timeliness: To simplify prompt decision making, an institution’s MIS should be capable of providing
and distributing current information to appropriate users. Information systems should be designed to
expedite reporting of information. The system should be able to quickly collect and edit data, summarize
results, and be able to adjust and correct errors promptly.
Accuracy: A sound system of automated and manual internal controls must exist throughout all
information systems processing activities. Information should receive appropriate editing, balancing, and
internal control checks. A comprehensive internal and external audit program should be employed to
ensure the adequacy of internal controls.
Consistency: To be reliable, data should be processed and compiled consistently and uniformly.
Variations in how data is collected and reported can distort information and trend analysis. In addition,
because data collection and reporting processes will change over time, management must establish
sound procedures to allow for systems changes. These procedures should be well defined and
documented, clearly communicated to appropriate employees, and should include an effective monitoring
system.
Completeness: Decision makers need complete and pertinent information in a summarized form.
Reports should be designed to eliminate clutter and voluminous detail, thereby avoiding “information
overload.”
Relevance: Information provided to management must be relevant. Information that is inappropriate,
unnecessary, or too detailed for effective decision making has no value. MIS must be appropriate to
support the management level using it. The relevance and level of detail provided through MIS systems
directly correlate to what is needed by the board of directors, executive management, departmental or
area mid-level managers, etc. are in the performance of their jobs.

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:

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.

MIS which meets the five elements of use ability is a critical ingredient to an institution’s short- and long-
range planning efforts. To achieve sound MIS, the organization’s planning process should include
consideration of MIS needs at both the tactical and strategic levels. For example, at a tactical level MIS
systems and report output should support the annual operating plan and budgetary processes. They
should also be used in support of the long term strategic MIS and business planning initiatives. Without
the development of an effective MIS, it is more difficult for management to measure and monitor the
success of new initiatives and the progress of ongoing projects. Two common examples of this would be
the management of mergers and acquisitions or the continuing development and the introduction of new
products and services.

Management needs to ensure that MIS systems are developed according to a sound methodology
that encompasses the following phases:

Appropriate analysis of system alternatives, approval points as the system is developed or acquired,
and task organization.
Program development and negotiation of contracts with equipment and software vendors.
Development of user instructions, training, and testing of the system.
Installation and maintenance of the system.
Depending on the size and complexity of its MIS system, an institution may need to use different manuals
for different users such as first-level users, unit managers, and programmers.
NEED FOR MANAGEMENT INFORMATION SYSTEM

This is a universally accepted fact that all managerial functions are performed through decision making.
For taking rational decisions, timely and reliable information is essential and is procured through a logical
method of information collecting, processing and disseminating to decision makers.

In today’s world of ever increasing complexities of carrying out business, every organization, in order to
survive and grow, must have a properly planned, analyzed, designed and maintained MIS. This need is
even more increased because organizations now have to compete not only locally but also globally.
MIS assist decision makers, by providing the required information at various stages of decision making
and thus greatly help the organization to achieve its goals and objectives. On the other hand, if an MIS is
poorly planned and constructed, it may provide inaccurate, irrelevant or obsolete information, which may
even prove fatal for the organization.