Management Information System
MIS stands for Management Information Systems. A management information system (MIS) is an information system that is used in an organization for decision-making as well as the coordination, control, analysis, and visualization of information.
People, processes, and technology are all involved in the study of management information systems in an organizational context. The primary objective in an organizational environment is to increase business value and profits by the use of the management information system. This actually took place through the providing of timely and relevant data to managers to make effective decisions in a shorter time period.
MIS utilizes data collection, storage, and processing technology, people, and business processes to provide information for decision-makers to use to make everyday decisions. MIS's goal is to extract data from various sources and derive insights that drive business growth.
In every organization, regardless of size, data collection, processing, and dissemination of documentations take up a significant amount of time. So this kind of unproductive work in the organization is a large proportion of the overheads. So every individual in an organization is always looking for information that is required to accomplish its task. As a result, the information is people-oriented and depends entirely on the existence of the organization's people.
When it comes to information, it should be timely and readily accessible. Following are some characters of good information:
- Accuracy –information must be free of errors and omissions. This is accomplished in accordance with the set standards for converting data into information. Adding $6 + 10 will can give us incorrect information. The accurate figure can be multiplying $6 by 10.
- Complete – all the required information must be available for a good decision. Nothing should have been missing. While TAX is a request to compute the total amount to be paid by the customer, it should be included. If it is left out, the customer can mislead him into thinking he should only pay $60 when they actually have to pay tax.
- Cost-effective – the cost of collecting information does not exceed the monetary value of the information.
- User-focused – the information should be designed in such a manner that it must address the information requirements of a specific user. For example, operational managers needed very detailed information and should be considered while presenting information to operational managers. Senior managers would not be able to use the same details because they would have to process it again. It would be data to them, not information.
- Relevant – the information must be appropriate for the recipient. The information must be relevant to the subject that the intended recipient is dealing with. If the ICT department wishes to purchase a new server, information referring to a 35% discount on laptops would be irrelevant.
- Authoritative – the information must be obtained from a reliable source. Assume you have a bank account and want to transfer funds to another bank account that uses a different currency than yours. When compared to getting the exchange rate directly from your bank, using the exchange rate from an agency sent over is not considered authoritative.
- Timely – Information much be available when it is required. Assume your company wishes to merge with another. Before the merger, you must provide information evaluating the other company with which you wish to merge, and you must have quite enough time to verify the information.
Component of MIS:
Management information systems consist of five main components: people, business processes, data, hardware, and software. All these components have to work together to achieve Organization goals.
- People: People are the users who use the information system to keep track of day-to-day business transactions. Users are often skilled professionals like accountants, managers of human resources, etc. In general, the ICT department has the support staff to make sure the system runs correctly.
- Business Procedures – these are able to agree on best practices that direct the users and other components on how to function effectively. Business processes are developed by individuals such as users, consultants and so on.
- Data – the daily business transactions that have been recorded. Data from activities such as deposits, withdrawals, etc. are collected for a bank.
- Hardware – computer, printers, networking systems, etc. is known as Hardware. The computing power for data processing is provided by the hardware. It also has the ability to network and print. Data processing in information is boosted by hardware.
- Software: these are consist of programs that run on hardware. The software is divided into two major types, system software and software applications. System software refers to the OS i.e. Windows, Mac OS & Ubuntu. Software applications refer to special software for carrying out business tasks such as payroll programs, banking systems, sales point systems, etc.
Advantages of Management Information System (MIS):
- It assists with planning: MIS improves plant performance by increasing relevant information for sound decision-making. As organizations have grown in size and in complexity, managers may have lost personal contact with the business scene.
- Minimizes knowledge overload: MIS converts a vast volume of data into a summarized form, avoiding the complexity that may emerge when managers are flooded with precise details.
- MIS Encourages Decentralization: When there is a mechanism for controlling activities at lower levels, decentralization of authority is possible. MIS is used successfully to measure performance and to customize overall organizational plans and procedures.
- Coordination: the MIS facility integrates specialized activities by making each department aware that other departments are having problems and requirements. It integrates the organization's decision-making centers.
- It helps to simplify control: MIS acts as a connection between management planning and control. It enhances management's capacity to assess and improve performance. The computers used increased the capabilities of data processing and storage and cut costs.
- MIS assembling, processing, collecting, evaluating, and distributing information.
Disadvantages of MIS:
- Costly: It is costly to set up and install since the company must purchase hardware and software to operate the information system. Additionally, company processes must be updated, and employees must be trained on how to use the computerized information system.
- Heavy reliance on technology – if anything ever occurs to the hardware or software that tends to cause to stop working, the information cannot be accessed until the necessary hardware or software is replaced.
- Fraud risk – if proper controls and verifications are not in place, an intruder can publish unauthorized transactions, such as an invoice for goods that have never been delivered, and so on.
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