Management Information Systems and Its Importance
What you think Management of Information Systems is and why it is important in today’s business environment? Management Information Systems (MIS) is the term given to the discipline focused on the integration of computer systems with the aims and objectives on an organization.Modern businesses have been leveraging on MIS to manage, order, organize and manipulate the gigabytes and masses of information generated for various purposes.MIS helps businesses optimize business processes, address information needs of employees and various stakeholders and take informed strategic decisions.The development and management of information technology tools assists executives and the general workforce in performing any tasks related to the processing of information.
MIS and business systems are especially useful in the collation of business data and the production of reports to be used as tools for decision making.
With computers being as ubiquitous as they are today, there’s hardly any large business that does not rely extensively on their IT systems (Kenneth C. Laudon).However, there are several specific fields in which MIS has become invaluable like in decision support systems, resource and people management applications, Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Customer Relationship Management (CRM), project management and database retrieval applications. 1) Support Strategy: While computers cannot create business strategies by themselves they can assist management in understanding the effects of their strategies, and help enable effective decision-making. MIS systems can be used to transform data into information useful for decision making.Computers can provide financial statements and performance reports to assist in the planning, monitoring and implementation of strategy. MIS systems provide a valuable function in that they can collate into coherent reports unmanageable volumes of data that would otherwise be broadly useless to decision makers.
By studying these reports decision-makers can identify patterns and trends that would have remained unseen if the raw data were consulted manually. MIS systems can also use these raw data to run simulations – hypothetical scenarios that answer a range of ‘what if’ questions regarding alterations in strategy.For instance, MIS systems can provide predictions about the effect on sales that an alteration in price would have on a product. These Decision Support Systems (DSS) enable more informed decision making within an enterprise than would be possible without MIS systems (Obrien). The other area which MIs support is data processing. 2) Data Processing: Not only do MIS systems allow for the collation of vast amounts of business data, but they also provide a valuable time saving benefit to the workforce.Where in the past business information had to be manually processed for filing and analysis it can now be entered quickly and easily onto a computer by a data processor, allowing for faster decision making and quicker reflexes for the enterprise as a whole.
3) Management by Objectives: While MIS systems are extremely useful in generating statistical reports and data analysis they can also be of use as a Management by Objectives (MBO) tool. MBO is a management process by which managers and subordinates agree upon a series of objectives for the subordinate to attempt to achieve within a set time frame.Objectives are set using the SMART ratio: that is, objectives should be Specific, Measurable, Agreed, Realistic and Time-Specific. The aim of these objectives is to provide a set of key performance indicators by which an enterprise can judge the performance of an employee or project. The success of any MBO objective depends upon the continuous tracking of progress. In tracking this performance it can be extremely useful to make use of an MIS system. Since all SMART objectives are by definition measurable they can be tracked through the generation of management reports to be analyzed by decision-makers.
Advantages of MIS: The field of MIS can deliver a great many benefits to enterprises in every industry. Expert organizations such as the Institute of MIS along with peer reviewed journals such as MIS Quarterly continue to find and report new ways to use MIS to achieve business objectives. Better Planning and Control: MIS has to be designed and managed in such way that it aggregates information, monitors the company’s activities and operations and enhances communication and collaboration among employees (Obrien). This ensures etter planning for all activities and better ways to measure performance, manage resources and facilitate compliance with industry and government regulations. Control helps in forecasting, preparing accurate budgets and providing the tools and vital information to employees, top management and business partners. 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. Disadvantages of MIS:Depending on organization deployment, usage and extraneous factors, some disadvantages related to Management Information Systems can come to the fore. Allocation of budgets for MIS upgrades, modifications and other revisions can be quite tricky at times. If budgets are not allocated uniformly or as per immediate requirements, key functionalities might get affected and benefits might not be realized consistently. Integration issues with legacy systems can affect the quality of output and vital business intelligence reports (Kenneth C.
Laudon). Risks Associated With MIS:Risk reflects the potential, the likelihood, or the expectation of events that could adversely affect earnings or capital. Management uses MIS to help in the assessment of risk within an institution. Management decisions based upon ineffective, inaccurate, or incomplete MIS may increase risk in a number of areas such as credit quality, liquidity, market/pricing, interest rate, or foreign currency. A flawed MIS causes operational risks and can adversely affect an organization’s monitoring of its fiduciary, consumer, fair lending, Bank Secrecy Act, or other compliance-related activities.Since management requires information to assess and monitor performance at all levels of the organization, MIS risk can extend to all levels of the operations. Additionally, poorly programmed or non-secure systems in which data can be manipulated and/or systems requiring ongoing repairs can easily disrupt routine work flow and can lead to incorrect decisions or impaired planning (Obrien).
Constant Monitoring Issues: Change in management, exits or departures of department managers and other senior executives have a broad effect on the working and monitoring of certain organization practices including MIS systems.Since MIS is a critical component of an organization’s risk management strategy and allied systems, constant monitoring is necessary to ensure its effectiveness (Obrien). Quality of inputs into MIS needs to be monitored; otherwise consistency in the quality of data and information generated gets affected. Managers are not able to direct business, operational and decision-making activities with the requisite flexibility.Bibliography Kenneth C. Laudon, J. P.
(n. d. ). Management Information Systems. Obrien, J. A. (n.
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