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What Is a Management Information System?

Small Business

Managing Employees

Management Systems

By

David Ingram

Updated February 12, 2019

What Is a Management Information System?

A management information system (MIS) is a set of systems and procedures that gather data from a
range of sources, compile it and present it in a readable format. Managers use an MIS to create reports
that provide them with a comprehensive overview of all the information they need to make decisions
ranging from daily minutiae to top-level strategy. Today's management information systems rely largely
on technology to compile and present data, but the concept is older than modern computing
technologies.

Making Business Decisions

The main purpose of a management information system is to make managers' decision-making more
efficient and productive. By pooling information from a range of sources into a single database and
presenting the information in a logical format, an MIS can provide managers with everything they need
to make highly informed decisions and perform in-depth analysis of operational issues.

Collecting Business Information

An MIS can be developed to collect nearly any type of information managers require. They can view
financial data such as daily revenues and expenses at a glance and attribute them to specific
departments or groups. Performance indicators such as the timeliness of projects or the quality of
products coming off an assembly line can help managers pinpoint areas of needed improvement. Staff
can manage schedules for work shifts, incoming deliveries and outgoing shipments from any place linked
to the MIS.

Facilitating Collaboration and Communication

A management information system can facilitate collaboration and communication as well. Employees
can edit and share documents and communicate relevant information on anticipated developments and
warnings across the organization.

Compiling Business Reports

One of the most valuable features of a management information system is its ability to pull in internal
and external data from a variety of sources and present it in an easy to analyze format. Internal reports
present information in a way that managers can understand, by including all relevant data and grouping
data in a logical manner. For example, a report viewed by a corporate manager for a restaurant chain
may show revenue, expenses, labor-hours and volume of each outlet, allowing him to see which store
makes the most money per employee on the floor and which stores have higher expenses compared to
revenue and volume--an indicator of waste or theft.

Generating Government Reports

Non-profit organizations can use an MIS to automatically generate reports required by the federal
government. This allows employees and volunteers to focus their time on more productive activities and
can reduce errors and the costs associated with resubmitting federal reports.
Front-Line Benefts

Front-line employees can use an MIS to perform their jobs more effectively as well. For example,
employees at all levels can consult an MIS to check on the status of inventory items, view stats related
to their specific department or group and request internal transfers of materials.

Training Employees to Use the System

A management information system can be a costly investment. In addition to purchasing an MIS

software package, customizing the system and hiring extra IT personnel to oversee and maintain the
system, a company must train all employees to use the system. Front-line employees often perform the
first two steps in an MIS, data collection and input, leaving them with less time to focus on productive
activities; this can increase overall salary expenses. Weigh the costs of an MIS against the potential
benefits before implementing this tool in your small business.

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Types of Information Systems in a Business Organization

By

Billie Nordmeyer MBA, MA

Updated March 05, 2019

Types of Information Systems in a Business Organization

Small businesses are chiefly concerned with getting and keeping customers by producing quality goods
or services. Business owners are also faced with the considerable challenge of turning mountains of data
into actionable information. Information on sales, client lists, inventory, finances and other aspects of
your business needs to be carefully managed. Your information systems can also be important sources
of insight for growing your business by containing costs and achieving a competitive advantage.
To best leverage data as a company asset, adopt a formal information strategy for your business.

Transaction Processing System

A small business processes transactions that result from day-to-day business operations, such as the
creation of paychecks and purchase orders, using a transaction processing system, or TPS. The TPS,
unlike a batch system, requires that users interact with the system in real time to direct the system to
collect, store, retrieve and modify data. A user enters transaction data by means of a terminal, and the
system immediately stores the data in a database and produces any required output.

For example, a small-business owner may direct a bank system to debit a savings account for $500 and
credit the company's checking account for $500. Because of constant system updates, a user can access
current TPS data, such as an account balance, at any point.

Management Information System

Small-business managers and owners rely on an industry-specific management information system, or

MIS, to get current and historical operational performance data, such as sales and inventories data.
Periodically, the MIS can create prescheduled reports, which company management can use in strategic,
tactical and operational planning and operations. For example, an MIS report may be a pie chart that
illustrates product sales volume by territory or a graph that illustrates the percentage increase or
decrease in a product's sales over time.

Small-business managers and owners also rely on the MIS to conduct “what-if” ad hoc analyses. For
example, a manager might use the system to determine the potential effect on shipping schedules if
monthly sales doubled.

Decision Support System

A decision-support system, or DSS, allows small-business managers and owners to use predefined or ad
hoc reports to support operations planning and problem-resolution decisions. With DSS, users find
answers to specific questions as a means to evaluate the possible impact of a decision before it is
implemented. The answers to queries may take the form of a data summary report, such as a product
revenue by quarter sales report.
To conduct an analysis, business owners and managers use an interface – a dashboard – to select a
particular graphic representation of a key performance indicator that measures the progress toward
meeting a specific goal. For example, a manufacturing dashboard might display a graphic representing
the number of products manufactured on a particular line.

Executive Support System

The executive support system, or ESS, contains predefined reports that help small-business owners and
managers identify long-term trends in support of strategic planning and nonroutine decision making.
System users click on any icon displayed on the ESS screen and enter report criteria to view individual
predefined reports and graphs, which are based on companywide and functional department data, such
as sales, scheduling and cost accounting.

The ESS reports brief the business manager or owner on an issue, such as market trends and buyer
preferences.The ESS system also offers analysis tools used to predict outcomes, assess performance and
calculate statistics based on existing data.

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