Management Information Systems

In order to make decisions, managers need the right information to serve a wider
range of needs. A systems approach to managing this demand can be met through
management information systems (MIS). It has been said that MIS are what the
nervous system is to the human body.
Definitions of MIS
We live in an information age The original definitions of information were
associated with knowledge. Now, instead of thinking about the information itself,
knowing that we have got so much of it, we have to become much more aware of what
we are going to do with it. As the organisation grows, the management function is
performed by people who are more specialised and may be removed from day-to-day
activities. It is usually at this time that management information systems (MIS)
are required.
Definitions of MIS - history The emergence of MIS goes back to the 1950s. The
first electronic computer developed for business purposes in 1951 must have posed
many interesting questions as to what to do with it. In fact, early business
applications centred on routine clerical and accounting operations such as payroll
and billing. These were mainly transaction applications, named simply because they
involved processing accounting transactions. The machines were prone to failure,
difficult to operate and painstakingly slow
Definitions of MIS - history
Advances in disk technology made it possible to access data more quickly and in
different ways. New programming systems helped to develop and refine operating
systems. Each development contributed to the rise of MIS. As systems developed,
though the transaction processing part of the system provided the operational data
necessary to run an organisation more efficiently on a day-to-day basis, the
management component became more important. Systems started to provide reports and
information that enabled managers to make more effective decisions.
Definitions of MIS - history
The increasing appearance of computer and communication technologies in offices
during the 1970s and 1980s gave rise to links with MIS and created the potential
for convergence, based upon the needs of users around each organisation. Some
organisations used accounting information systems (AIS) and office information
systems (OIS) for local information and decision-making needs of various
departments and subsets of an organisation. In many instances such user-led
developments led to disparate islands of technology within the organisation. In
contrast, the aim today is for integration of such technologies across the
organisation.
Definitions of MIS The more recent role for information technologies is to think
about them as a strategic weapon. For example, information technology (IT) has the
power to: •change industry structures and alter the rules of competition •create
opportunities for competitive advantage with the provision of new ways to
outperform rivals •spawn new businesses and opportunities, often from within an
organisation's existing operations.
Definitions of MIS Deconstructing the term MIS enables us to define each word in a
business context: Management - being managed or people managing a business. Over
recent years management has become more scientific and system-oriented.
Information - knowledge made available to people within an organisation. Systems -
sets of connected things or parts within an organisation which tie the planning
and control by managers to the various operations.
Definitions of MIS
There are a number of definitions of MIS, each with a slightly different emphasis
or focus. Lucey (1995) emphasises the decision focus of his definition: 'a system
to convert data from internal and external sources into information and to
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.'
Definitions of MIS
MIS are different from data-processing systems because the key element is
management involvement, so the emphasis is upon the use of information through
user processes and not how it is provided through MIS processes
Definitions of MIS
Parker and Case (1993) consider: 'a management information system (MIS) to be any
system that provides people with either data or information relating to an
organisation's operations.' They then describe who the system is focused upon.
'Management information systems support the activities of employees, owners,
customers, and other key people in the organisation's environment - either by
efficiently processing data to assist with the transaction work load or by
effectively supplying information to authorised people in a timely manner.'
Definitions of MIS
MIS include a number of subsystems, such as the following. •Transaction processing
systems (TPS) comprise routine day-to-day accounting operations. •Management
reporting systems (MRS) generate reports for decision-making processes. •Decision
support systems (DSS) provide a set of easy-touse modelling, retrieving and
reporting requirements and are used by people making decisions. •Office
information systems (OIS) involve the use of computer-based office technologies
such as desktop software applications, including e-mail, teleconferencing and
desktop publishing.
Definitions of MIS It could be argued that managers have always sought and
utilised information, but in the past many were forced to rely upon haphazard
sources. A modern management information system raises the process of managing
from the level of guesswork and piecemeal information to the development of a
system of information with sophisticated data process which enables managers to
solve complex problems and make informed decisions.
Definitions of MIS As can be seen in Figure, MIS tie together the three components
of management, information and systems.
Definitions of MIS According to Murdick and Munson (1986), the management
information system: 'not only provides information to assist managers in making
decisions, but it may also be designed to provide decisions for repetitive classes
of problems. The MIS, by providing a common set of data and information available
to all managers, integrates the management of the company. Thus the company as a
whole may be truly operated as a system, with all elements working towards common
objectives.'
Definitions of MIS Information extracted from a management information system
might therefore be at a variety of levels for a range of users. For example: •
Strategic planning. The strategic planning process uses both internal and external
sources of information. In a dynamic and changing business environment information
is geared towards helping an organisation to use strategic planning to adapt.
Definitions of MIS
• Management control. This is the process by which managers ensure that resources
are obtained and used effectively and efficiently in the accomplishment of the
organisation's objectives. Control involves planning. For example, are sales ahead
of budget, does cost data support costing estimates, are policies in line with
predictions? Most of the information for management control is generated
internally. Operational control. This ensures that tasks are carried out
efficiently. At this level, tasks have been specified and methods determined.
Information for operations involves providing those involved with the
responsibility of executing tasks with the minimum of expenditure on resources.

•
Definitions of MIS As so many parts of an organisation's operations and
information processes depend upon information, it is considered to be a key
resource within every organisation. Skilfully handling information has become an
important business objective. Though the terms data and information are used by
some to mean the same thing, there are a number of differences. For example:
Definitions of MIS • data refer to stored facts - as data become filtered and
disseminated, they take on meaning, and so become information • data are inactive
and just exist, whereas information is active and relevant and provides a basis
for things to be done • data are technology-based, whereas information is
business-based and facilitates business decision-making
Definitions of MIS • though data may be gathered from various sources, it is the
process of customising them for the needs of various users that transforms them
into information
Definitions of MIS
As managers are frequently presented with statements containing information and
data, they need to ascertain their quality. Information must be pertinent. This
means that it must relate to the organisation and to matters of importance for the
people dealing with that information to enable them to deal with an issue.
Information must also be timely and available when required. Clearly, users do not
want to be confused by misleading information, so it must also be accurate. Good
information should therefore make a difference and reduce uncertainty. CASE STUDY:
Comparing different systems
Definitions of MIS There are many different sources of information for effective
decision-making. Information sources exist from many different potential sources.
A clear division can be made between internal and external data. Internal data are
generated and made available within an organisation. Such data may come from a
variety of sources such as cost accounting information. Other data may be more
informal, for example word-of-mouth, facts, gossip and from personal observations.
Definitions of MIS External data are those extracted from the organisation's
external environment. For example, it could include news of the launch of a new
product by a competitor, changes in exchanges rates or new technological
developments by other organisations in an industry. Informal external data would
include personal contacts within the external environment. Given the broader
nature of external data, they are particularly useful for making decisions about
the direction of the organisation in the future such as those for strategic
planning.
Definitions of MIS
Examples of formal data might include: Internal External Management reports
Information services Management audits Trade publications Meetings Industry
consultants Forecasts Forums Examples of informal data might include: Internal
External Conversations Networking Grapevine Trade shows Observation Personal
contacts
Definitions of MIS
Internal and external data may also vary according to the nature and type of
business
USE way in which an organisation is structured is called The OF INFORMATION
its organisational structure, and often this will determine how information is
used. For example, an organisation may be structured in the following ways: By
function - departmentalising by work function such as marketing, operations or
personnel might mean that organisations using this approach have a separate MIS
department. One of the advantages of this is that all of the specialists are
grouped together where they will have specific information needs and requirements.
By product - where organisations such as Unilever or Procter & Gamble have diverse
product ranges, they may structure along product lines. Organisations structuring
in this way may have a separate MIS unit within each of
USE OF INFORMATION
By customer - publishers of books typically structure their divisions by customer
type. For example, this book has been developed by an educational publisher based
upon the needs of people in the institution you attend. As a result, this
influences the company's information requirements, both for the division and the
organisation as a whole. By geography - where organisations are physically
dispersed, the local operation will require an information system which not only
integrates it into head office but also provides it with the flexibility it
requires to be competitive.
USE OF INFORMATION Within large organisations, a combination of structural
approaches is usually found. For example, at corporate level strategic activities
usually have a functional orientation such as marketing or group personnel. The
next level of structuring may be by product group, area or customer group. The way
an organisation is structured will have a significant effect upon how an
organisation's information system evolves.
USE OF INFORMATION Traditional systems were centred upon different departmental
functions and processes. As a result, data were treated as a separate component of
functional analysis and process design. Traditional systems therefore replicated
existing processes and applications to produce uncoordinated and incompatible
files in each department or associated with each process. The notion of
integration mechanisms and systems had simply not been addressed.
USE OF INFORMATION Integration of data processing involves rearranging systems
development through organisation-wide planning of information requirements. The
focus then shifts from a process or departmental application through to a data
orientation. This new data-centred approach is often termed information
engineering as it views data as the foundation for the design of an information
system.
USE OF INFORMATION
Where integration takes place MIS can be accessed and shared by multiple processes
and users. The focus point of the stable data model is integrated information
available across the organisation, with individual applications seen as
peripheral. An example of an integrated data-centred approach is shown in the
figure
USE OF INFORMATION The formal organisation has a pattern of relationships defined
by official rules, policies and systems. It is usually the one depicted on
organisation charts with diagrams showing official relationships, departments and
levels of management. Within the formal organisation there is: • a unity of
objectives and effort • well-defined relationships, duties and responsibilities •
stability and predictability • clear hierarchy of control and command.
USE OF INFORMATION
Informal organisation focuses more upon people. Information arises from social
relationships between teams of individuals who develop informal ways of getting
things done. Informal organisation exists within every organisation to some
extent. Social groups develop their own beliefs and ways of getting things done
which are sometimes not the same as that of the formal organisation. For example,
informal organisation may: • use unofficial methods which are more efficient •
provide more satisfaction for employees • coordinate activities more efficiently •
be more flexible and improve communication.
USE OF INFORMATION
According to Lucey (1995), 'Organisations choose structures which are thought to
be most efficient for their particular circumstances and operating conditions'.
This means that in order to be flexible they tend to combine the best features of
functional, product and geographical organisational structures. Such organisations
are often viewed as organic because they adapt to changing conditions and develop
features such as network control structures, motivating management styles,
flexible working practices and flatter organisational structures, all of which
help to empower employees through the use of information and technologies.
USE OF INFORMATION
One particular concept that has developed from high technology industries is that
of the matrix structure. Within a matrix structure, project teams are combined
with a conventional functional structure. The matrix is thus a combination of
structures which enables employees to contribute to a number of activities or
teams. In information terms it enables team members to use information to focus
upon a number of aims at the same time, while also providing the flexibility to
respond to new markets and opportunities as and when they arise.
USE OF INFORMATION

The terms centralised and decentralised are important management concepts that are
inextricably linked to the use and distribution of information. They are often
used to describe the distribution of authority and decisionmaking within an
organisation.
USE OF INFORMATION Centralised organisations are organisations with a clear-cut
hierarchical structure in which decisions are made at the top of the hierarchy.
Within such organisations there are likely to be different information
requirements at the top of the hierarchy which are distinct from those further
down. By contrast, within decentralised organisations decision-making is
distributed as far down the management hierarchy as possible. This provides lower-
level managers with considerable practice in making decisions and prepares them
for moving up the hierarchy.
USE OF INFORMATION

Issues of confidentiality
Though it is often said that no system can be 100% secure, confidentiality,
security and privacy are key issues when dealing with information. One of the main
elements in developing an information system is to ensure that databases and
systems are secure. There are a number of reasons that these issues are of
fundamental importance. For example, accidental, negligent or intentional
disclosure of information to unauthorised people may enable them to use that
information in a way that is neither intended nor legal. Similarly, information
may be destroyed, modified or used incorrectly if it gets into the wrong hands.
USE OF INFORMATION
Confidentiality refers to the limits on the use of information collected from
individuals. This means that personal information should only be distributed to
those who have a need to know and use that information, and should not be
disseminated outside the organisation. In order for information to be confidential
it must be secure. Security is a technical condition for achieving privacy and
confidentiality. It refers to the policies, procedures and technical measures used
to prevent unauthorised theft, access or alteration to record systems. It can be
promoted with a range of tools designed to protect access to software, hardware
and communications networks.
USE OF INFORMATION Privacy is a broader term often used to encompass security and
confidentiality. Three elements to privacy are: • limits on the collection of
information • specific rights of individuals to access, review and challenge
information kept about them • management responsibility for record systems.
USE OF INFORMATION

Data Protection Act

The Data Protection Act 1984 was passed to regulate the use of information for
processing systems which relate to 'individuals and the provision of services in
respect of such information'. The Act covers only the holding of computer records
and not manual records. The Act requires those using personal data to register
with the Data Protection Register. Registered data users must then follow the
eight principles of the Act.
USE OF INFORMATION
• • • •

Data must be obtained and processed fairly and lawfully. Data must be held only
for specific lawful purposes which are described in the entry into the register.
Data should not be used in any other way than those related to such purposes. Data
should be adequate, relevant and not excessive for those purposes. Personal data
should be accurate and kept up to date. Data should be held no longer than is
required. Individuals should be entitled to access their data and, if necessary,
have it corrected or erased. Data must be protected with appropriate security

• • •

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USE OF INFORMATION There are a number of exemptions to the Act, including
information kept by government departments for reasons of national security,
information the law requires to be made public, mailing lists (as long as the
subjects are asked if they object to data being held for this purpose), payrolls
and pensions information, clubs and personal data held by individuals in
connection with recreational or family purposes. To ensure that data is held only
for legitimate purposes, many organisations appoint a data protection officer.
CASE STUDY: Code of Fair Information Practice