What is Management Information System and IS?

While undertaking any business decisions, data is the most important aspect. An information system (IS) is a set of data, computing devices and management methods that support routine company operations. A management information system (MIS) is a specific subset of IS.

Where is Management Information System used?

A management information system, as used by a company or institution, might be a computerized system consisting of hardware and software technology that serves as the backbone of information for the company.  The organization’s computerized database may house all the financial information and catalogue it in such a way that it can be accessed to generate MIS-related reports on operations at different levels of the company.

Management Information System analysis

The utilization of the internal and external data can be better analyzed using an up-to-date MIS data system. This would be an advantage for an organization to implement a new social media strategy or better organize employee benefits. It might instead highlight that a company's use of Information Technology is outdated or technology poorly applied

Much like Information Technology professionals, MIS specialists tend to spend a lot of time troubleshooting, adjusting software, upgrading database or supporting less technologically savvy associates.

 Academically, the term is used to refer to the group of information management methods tied to the automation or support of human decision making like Decision Support Systems, Expert Systems and Executive Information Systems

• Management: The process of getting things done through and with people in formally organized groups comes under the umbrella of the management. The basic functions performed by a manager in an organization are planning, controlling staffing, organizing and directing
• Information: Information is considered as valuable component of an organization. Information is the data that is processed and is presented in a form which assists decision making
• System: A set of elements which are joined together to achieve a common objective is how we can define system. The elements are interrelated and interdependent.  All systems are further divided into subsystems. A system has one or more multiple inputs, these inputs are processed through a transformation process to convert these inputs to outputs.

Objectives of Management Information System

• Data Capturing: MIS capture data from various internal and external sources of organization. Capturing of date is either through  manual method or through computer terminals
• Processing of Data: The captured data is processed to convert into required information. Processing of data is done nu such activities as calculating, analytics, sorting, classifying and summarizing
• Storage of information: Computer systems store the processed or unprocessed data for future use. Depending on the timeline of information that is required, it is saved as an organization record, for later use.
• Retrieval of Information: Database is retrieved from its source as and when required by the users
• Dissemination of the information: Information which is a finished product, is disseminated to the users in the organization. It is periodic or online through computer terminal

What is an Accounting Information System (AIS)?

Businesses share the AIS reports with details of collection, storing, managing,  process, retrieve, and report its financial data so it can be used by accountants, consultants, business analysts, managers, chief financial officers (CFOs), auditors, regulators, and tax agencies.

To ensure that the highest level of accuracy is maintained, specifically trained accountants work in-depth with AIS to ensure the highest level of accuracy. In a company's financial transactions and record-keeping, as well as make financial data easily available to those who legitimately need access to it—all while keeping database intact and secure.

Decision support system

Decision support system is a computer technology program application that analyzes business data and presents it so that users can make business decisions more easily. There are a lot of different ways managers can use decision support software to their advantage if they are open to exploring decision support systems (DSS) applications and uses. Typically, business planners will build a DSS system according to their needs and use it to evaluate specific operations, including:

• Provide managers with information regularly
• Routine operational control
• Organize and plan better

Organizational Management Information System  

Management Oriented

For designing of Management Information System top-down approach should be followed. Among the various approaches, top-down approach suggests that the system development starts from the determination of the management needs and overall business objectives. As the characteristics of MIS is more oriented towards management, it implies that the management actively directs the system development efforts.

Management directed

 Since Management Information System is 'for the' management it is imperative that it also should have a very strong 'by the' management initiative. The designing process of the MIS is worked on by the management and also in its continuous review and up gradation to develop a good qualitative system. The management factor in the structures of the design as per its need. Thus, this approach helps in minimizing the gap between expectations of management form the system and the actual system.

 Organizational Integration 

When a more meaningful information approach is needed, integration plays a very crucial role. . One of the examples of the same is when, in order to develop an effective production scheduling system, it is necessary to balance such factors as: set-up costs, work force, overtime rates, production capacity, inventory level, accounting, capital requirements and customer services. Technology integration means taking a comprehensive view of the subsystems that operate within the company.

Common data flows 

The functionality of the integration concept of MIS, helps to avoid duplication and redundancy in data gathering, storage and dissemination. Information system designers are aware that a few key source documents account for much of the information flow. For example, customer’s orders are the basis for billing the customer for the goods ordered, setting up accounts’ receivables, initiating production activity, sales analysis, sales forecasting etc.

Heavy planning element 

MIS cannot be designed overnight. Very high degree of planning and detail oriented process  goes into creating an effective organization. The quality and in-depth planning is to ensure that the management information system that is built not only satisfies the information need of the managers today but can also serve the organization for the next five to ten years with modifications. Many a times, when the planning part is done away with, systems tend to perform well in the present but they tend to become obsolete with time. Planning helps to avoid this problem.

Distributed System

Most organization have their independent multiple offices, sales outlets, spread over a wide area, but information has to be routinely exchanged between them, so most of the organization develop computer based distributed systems to solve this problem

Work of Management Information System in Different Levels

Operational information

The day-to-day operations information of the organization is useful in exercising control over the operations that are repetitive in nature. These activities are controlled at lower levels of management hence the operational information is needed by the lower management. For example, the information regarding the cash position on day-to-day basis is monitored and controlled at the lower levels of management. Similarly, in marketing function, daily and weekly sales information is used by lower-level manager to monitor the performance of the sales force.

Tactical information

Tactical information helps middle level managers allocating resources and establishing controls to implement the top-level plans of the organization. For example, information regarding the alternative sources of funds and their uses in the short run, opportunities for deployment of surplus funds in short- term securities, etc. may be required at the middle levels of management.

Strategic information

While the operational information is needed to find out how the given activity can be performed better, strategic and analytics information is needed for making choices among the business options. The strategic information helps in identifying and evaluating these options so that a manager makes informed choices which are different from the competitors and the limitations of what the rivals are doing or planning to do. Such choices are made by leaders only.

Common Mistakes

• Method of Selection of Factor Model
• Believing the Results without validation
• Errors in Formulas & application
• Partial Understanding of the portfolio and risk attached

 Context and Applications 

Factor models are mainly useful in Finance & Econometrics study;  courses like CFA (Chartered Financial Analyst), portfolio management of companies, stock markets, etc.

Related Concepts

• Project Management
• Database Management Systems
• Business Analytics
• Big Data
• Business Intelligence