Management Information System

Management Information System

Organizations need Information Systems, custom designed computer and networking systems to meet the information needs of its employees. A business information system is increasingly becoming important than yesterday?s data processing systems. Information System, for many businesses, provides an opportunity to do business in a new way and thus gain huge profits and market shares. Sometimes a single computer can meet all of the business?s information needs, but if the organization is large, it requires minicomputers, mainframe computers, local area networks (LAN?s), and wide area networks (WAN?s).

A Management Information System is a computer-based system that supports the information needs of an organization. Such a system is designed to help management at different levels make informed decisions and augment their basic decision making and communication skills with computer usage, to increase their productivity and performance. Most Management Information System?s are designed to work with transaction processing systems, which produce reports that tell the middle managers how they are meeting goals. Thus Management Information System can be defined as an integrated man/ machine system providing information to support the operations, management and decision-making functions in an organization.

Structure

Management Information System can have sub parts depending upon the various functions performed in an organization such as marketing, production, operations, purchase, technical, sales, human resource, finance, accounting, etc. Each of these functional areas can have their own information system catering to their respective need for information. These information systems within an organization are interfaced with each other to share the information. Such a structure is known as functional form of Management Information System. The structure of Information System within an organization can be based upon the need and importance of relevant information at different managerial levels. Top management formulates the long term objectives, strategies, major policies and programs, hence requires information about external environment, economy, production, marketing and technological development. The strategic information tier meets information requirements of top management by arranging information from internal and external sources. Middle management level requires information to elaborate, clarify, operationalize organizational goals; and translates strategies and policies into action programs. Tactical information tier meets information requirements of middle management. Operational level requires information for implementing and regulating operational plans for the purpose of converting the input into output. The tactical information tier serves as a bridge between the strategic and operational tiers of information.

The structure of Management Information System is comprehensive if it is closely directed by management, integrating various sub-systems of management. Such a structure avoids duplication and redundancy of data making the dissemination of effective information, capable of meeting the information requirement of managers at different functions. Depending upon the need of the organization, suitable structure for Management Information System can be customized and practiced.

Pre-requisites

The main pre-requisite of an effective Management Information System is the database. It is defined as a superfile that consolidates data records in such a way that accesses to the data is improved and redundancy is reduced. The database is generally sub-divided into major information sub-set files- customer and sale, vendor, personnel, inventory and general ledger accounting. Each sub-system utilizes the same data and information kept in the same file to satisfy its information needs.

The second pre-requisite is that qualified personals at all levels should manage it. Systems and computer experts in addition to their expertise in their respective subject areas should be able to understand management concepts to facilitate the understanding of problems. The resources involved in computer based information system are large and growing larger and larger with the enhancing technology. To get these resources for implementing the Management Information System, the support of the top management is essential.

Sometimes, users develop their own procedures or easier methods to operate the system, which reduces its effectiveness. The management at each level in the organization should incorporate checks at regular intervals to avoid such instances. Also, formal methods for enhancing and maintaining the system should be documented and released amongst the users.

Usage of computer technology

The use of computer technology for Information System has led to processing of data in relevant form and design; and retrieval of the same when needed in considerably lesser time. Systems experts in business organizations have developed areas and functions where computerized Management Information System can be used to improve the working. The need for highly processed and sophisticated information based on multitude of variables has made the designing of the system quite complex. The scope of analysis has widened leading to information accuracy and no-time decision making. A financial model can now be developed using simulation techniques, which facilitates testing the impact of ideas and strategies formulated on future profitability and in determining the needs for funds and physical resources. By carrying out sensitivity analysis with the support of computers, its has become possible to study and measure the effect of variation of individual factor to determine the final results. Thus the use of computer technology has completely revolutionized the working in all departments in an organization.

Constraints

Although Management Information Systems continue to play an important role in organizations, they have drawbacks. They generate predefined reports that may not contain the information manager wants. The information may not be available when it?s needed, and it might also be buried in reams of printouts. The quality of the outputs of Management Information Systems is basically governed by the quality of inputs and processes. Moreover, it is not a substitute for effective management. It can not replace managerial judgement in making decisions in all functional areas. It is merely a tool in the hands of the executives, which aid in decision making and problem solving. It may not have the flexibility to quickly update itself with the changing needs of time, especially in today?s fast changing and complex environment. There are no tailor made information packages available suitable for the purpose of every type of decision made at various levels in an organization.

Management Information System mainly takes into account the quantitative factors, thus ignoring the non- quantitative elements like morale, ethics, attitudes of members of the organization, which have a great impact on the decision making process of executives. Certain decisions in an organization that are not routine type require information, which may not be available with the existing Information System.

Even with limitations and constraints, Management Information Systems are being comprehensively adopted by organizations. The major advantage is that it encompasses processing in support of a wider range of organizational functions and management processes. It is a concept and an orientation towards which an information system design moves rather than an absolute state. Furthermore, it makes sure that the information resources are utilized so as to improve decision-making and achieve improved organizational effectiveness.