MIS:
The meanings of the terms management information system (MIS) and information system (IS) are identical and interchangeable in an organizational context. They refer to the system providing technology-based information and communication services in an organization. They also refer to the organizational function that manages the system. The concept of a management information system enlarges the scope of information processing to encompass not only applications for transactions and operations, but also applications that support administrative and management functions, support organizational communications and coordination, and add value to products and services.
Historical Development of Management
Information Systems
When computers were first used in organizations in the mid-1950s, the applications were primarily the simple processing of transaction records and preparation of business documents and standard reports. This use was termed data processing (DP) or electronic data processing (EDP). The business function for developing and managing the processing systems was also termed data processing.
By the mid-1960s, many users and builders of information processing systems developed a more comprehensive vision of what computers could do for organizations. This vision was termed a management information system (MIS). It enlarged the scope of data processing to add systems for supporting management and administrative activities including planning, scheduling, analysis, and decision making. The business function to build and manage the management information system was often termed MIS.
In the 1980s and 1990s, there was a merging of computer and communications technologies. The organizational use of information technology was extended to internal networks (intranets), local area networks (q.v.), external networks that connect an organization to its suppliers and customers (see NETWORKS, COMPUTER), and communications systems that enable employees to work alone or in groups with greater effectiveness and efficiency. Many organizations were able to achieve competitive advantage by the use of information and information technology in products, services, and business processes. Innovative applications of information technology created value by providing customized services at any time and at any location, and information systems began to prompt changes in organizational structures and processes.
Although the scope of systems providing information technology services has increased dramatically, the broad concept of MIS as a system that combines transaction and operational requirements with administrative and management support remains valid. The term MIS is still in common use despite a recent tendency to use the simpler term information system. The function that builds and manages the system is variously called information systems, information services or information management.
The information system (management information system) of an organization consists of the information technology infrastructure, application systems, and personnel that employ information technology to deliver information and communications services for transaction processing, operations, administration, and management of an organization. The system uses a blend of computer and communications hardware and software, automation (q.v.), human-machine interaction, and internal and external repositories of data.
Although one can have an information system without use of a computer and associated electronic communication, the modern concept of a management information system assumes the use of such technology. An automated information system allows tasks to be done faster and more efficiently, removes many of the constraints of manual methods, and promotes new ways of doing things.
The Purposes of an Organizational
Information System
An organizational information system exists because an organization exists. To achieve its purpose, an organization must (1) define the characteristics of goods and services to be provided, (2) deliver those goods and services to customers, and (3) manage, direct, coordinate, and control the organization and its resources. Information technology is pervasive in and vital to these three organizational objectives. The objectives for an information system follow naturally from the organizational purposes:
1. Add functionality and information value to products and sewices. Information and information processing are important to the products and services provided by an organization, either incorporated in their functionality or as value added through information processing. Examples are information and communication functions designed into products such as automobiles or cellular phones (see EMBEDDED SYSTEMS) and additional information provided to customers through online banking or investment services (see PERSONAL FINANCE).
2. Support transaction and operational processes. Information, information processing, and communications are integral parts of the processes by which goods and services are provided by an organization. Information technology is vital in achieving quality, short cycle time, and efficiency in transaction processing and operational processes.
3. Support administrative and management activities. Information, communications, and information processing are essential to administrative and management activities of coordination and control. They are also fundamental to management analysis, decision making, and strategy formulation.
In addition to its role in achieving organization purposes, information and information processing are significant factors in the design of organizational structures for both operations and management. Information technologies enable improvements and innovations in organization design.
The Structure of an Organizational
Information System
The structure of a management information system consists of a technical infrastructure, databases and other repositories, and a portfolio of application systems. The technical infrastructure provides information technology, databases and other repositories provide the data needed by the organization, and the application systems provide specific processing procedures and routines. The application systems can be classified logically (and sometimes physically) into transaction processing (q.v.), operations, and administrative and management support. The elements (technical infrastructure, repositories, transaction processing systems, operations systems, and administrative and management support systems) will be defined in this section; the administrative and management support systems will be described in more detail later in the article.
1. Technical infrastructure. This consists of computer and communications hardware, system software, and the repository management software. It provides processing, communications, and storage capabilities required by application software systems. It includes transaction networks, fax, telephony, and so forth. The infrastructure may contain a variety of technology configurations such as a centralized system, systems serving single locations or departments, and systems serving workgroups or single individuals.
2. Databases and other repositories. The repositories store data required for transactions, operations, analysis, decision making, explanations and justifications, and government/legal requirements. Repositories have varying scopes such as the entire enterprise, parts of the organization (divisions, offices, departments, etc.), groups, and individuals. The stores include data about entities relevant to the organization: text and multimedia (q.v.) stores of analyses, reports, documents, data search results, email, faxes, conversations, etc.; and stores of procedures and directions for performing organizational activities including models for analysis and decision making. The repositories are also termed databases, files, knowledge bases, and model bases.
3. Transaction processing systems. Transaction processing systems record and process business transactions such as accepting a customer order, placing an order with a vendor, making a payment, and so forth.
4. Operations systems. These applications schedule and direct the operations of the organization as products are produced and distributed and services are scheduled and performed.
5. Administrative and management support systems. These applications support knowledge workers (including managers) in performing tasks individually and collaboratively. They support management requirements for data, analysis, reports, and feedback for operational control, management control, and strategic planning. They support team work and other collaboration in analysis and management activities.
The MIS Related to the Functions
of an Organization
An organization is typically organized with specialized functions. Examples are marketing, production, logistics, human resources, finance and accounting, and information systems. These functions exist because of the efficiency and effectiveness of specialization. To illustrate, accounting reports and budgets may be widely used throughout the organization, but the preparation of reports to investors, governments, regulators, and so forth requires specialized knowledge and specialized systems. The charts of account must be developed and maintained by specialists to meet the needs of the entire organization; it would be chaos for each person to develop a chart of accounts. Similar logic applies to the other functions in an organization.
The application portfolio may be planned and organized around core transaction processes that yield databases of transactions plus specialized applications for the different functions. There is a set of applications supporting the marketing function, a set for human resources, etc. Many of the functional applications are used by only one function, but many are interrelated. For example, the production plans and production results are inputs to the budgeting and accounting system (for financial planning) and the human resources systems (for staffing, training, etc.).
Most organizations employ a similar set of basic applications for business functions. Planning and implementing a comprehensive set of basic applications is frequently termed ERP (Enterprise Resources Planning). Vendors of enterprise software provide these basic applications as packages. The enterprise package has facilities for tailoring them to individual organizations. Organizations can extend these basic enterprise systems with applications that provide improved functionality or unique capabilities. In other words, enterprise systems provide the basic application building blocks for the information system of an organization, but innovative organizations have applications for different functions and administrative and management support that extend beyond these core functions, analyses, and reports.
MIS Applications to Support Levels of
Management Activities
The use of information technology for administrative and management support extends the nature of the information system from a transaction and simple reporting system to one that supports the higher-level administrative and managerial activities of the organization. The administrative and management support can be classified both according to support for levels of management activities and also in terms of support for knowledge work.
The levels of management activity define the three control objectives to be achieved and the time horizons for each. Operational management achieves short-term operational control in delivering goods and services, mid-term management control is directed at meeting market and financial objectives, and long-term strategic direction seeks to adapt to changing conditions and new opportunities. As illustrated in Fig. 1, the information system support for management activities is often defined as a pyramid with more structure and programmed decisions at the lower levels and less structure and nonprogrammed decisions at the higher levels.
OPERATIONAL CONTROL
Operational control is the management process of insuring that operational activities associated with delivery of goods and services and internal administrative procedures are carried out effectively and efficiently. Operational control makes use of fairly stable pre-established procedures, communication, and decision rules. The decisions, communications, and actions cover relatively short time periods (a day, a week, or a month depending on the cycle of activities being controlled). The information system support for operational control consists of access to transaction records, operational reports, communications, and inquiry processing in support of operational analysis and decision making. Data used in reports and analyses is primarily from internal transactions. Some examples of information processing in support of operational decision making are the following:
♦ When an item is withdrawn from inventory for sale or use in production, the information system application not only records the transaction and produces a transaction document if required, but also, using pre-established algorithms, examines the balance on hand to evaluate the need for replenishment. If replenishment is indicated, an action document is produced for review by an analyst before an order is placed. The system can reduce the order placement time by communicating with the vendor's scheduling system and placing the order using organization-to-organization communications and order document protocols.
♦ An analysis of replenishment orders not received within the standard times for the items ordered is produced for administrative follow-up. When an analyst reviews an order, the system allows a lookup of all current orders with that vendor, a lookup of where the items are used (to evaluate the impact of the delay), and similar information useful in deciding how to deal with the delay.
MANAGEMENT CONTROL
Management control information is needed by managers of organizational units such as divisions, factories, departments, profit centers, etc. The information is needed to measure performance, decide on control actions, formulate new decision rules, and allocate resources. Management actions based on control information have a time horizon longer than operational control: a month, quarter, or year. Management control reports typically compare results to some standard of performance in order to calculate variances from expected results and to analyze the causes. Analyses and reports use transaction data and plans/ budgets from the organization and also some external data relative to the environment, competitive products and services, competitor costs and pricing, and so forth. Management control applications support planning and budgeting, variance analysis, problem analysis, inquiry capabilities to "drill down" from high-level reports to detailed analyses and explore alternative explanations and solutions, and current market and competitor information. Decisions about pricing, promotion, product mix, and so forth depend on both reports applying traditional costing techniques and analyses exploring cost behaviors (fixed costs, joint costs, marginal costs) with different decision scenarios. Fig. 2 illustrates a typical management control report for a sales manager.
STRATEGIC PLANNING
Strategic planning develops the strategy an organization will follow to achieve its objectives of profitability, quality, and service. Strategic planning assists decisions about fundamental issues of what business to be in and how to conduct it. Examples are adding, changing, or dropping products, product lines, and channels of distribution. It may include sales, mergers, or acquisitions that change where and how business is conducted. The time horizon for decision making is several years. Data requirements include internal data and significant external data. Projections of competition, technology, capital requirements, regulations, and shifts in demand are critical. Strategic planning is part of the responsibility of the management of the business functions as well as top management, and often involves specialists who organize and interpret competitive intelligence and market trends. The information system provides certain structured strategic planning applications and access to internal and external data for analysis, projection, simulations, etc. Fig. 3 illustrates a strategic planning report showing comparison of company sales and market share with those of major competitors.
MIS Support for Knowledge Work
Early concepts of a management information system incorporated support for analysis and decision making, applications called decision support systems. Such support was originally intended for individual decision making but was later extended to decision making by groups. Communications applications were developed to improve collaborative work of all types. Personal computers and workstations (q.v.) have provided significant processing and communications capabilities for every worker. These developments may be described as the use of information technology in support of "knowledge work." As defined in Davis and Naumann (1997), "knowledge work is human mental work performed to generate useful information. In doing it, knowledge workers access data, use knowledge, employ mental models, and apply significant concentration and attention."
Examples of knowledge workers include financial analysts, systems analysts (q.v.), managers, accountants, and designers. Valued for their knowledge and expertise, they either have the knowledge required for their work or know where to find it. The activities of knowledge workers receive significant benefits from information technology. Some examples of knowledge work are scanning and monitoring information sources, searching for information, formulating plans and making decisions, assigning responsibilities, organizing events, scheduling activities and resource use, authoring, performing evaluations, decision making, persuading others to adopt a plan or decision, and motivating behavioral changes.
One of the well developed areas of information system support for knowledge work is decision making. In planning and designing decision support applications, MIS developers have applied the Simon framework for decision making. This consists of three phases: intelligence, design, and choice. The intelligence phase is discovering problems and opportunities. The MIS support for this phase requires access to external data in order to scan the external environment plus database access to search internal data. The search processes can be both structured using predefined search and analysis processes or unstructured scanning and unique analyses. Adaptive analysis through use of neural networks (q.v.) may aid in identifying shifts in demands and other key factors affecting an organization. The decision design phase-for generation of alternatives- involves inventing, developing, and analyzing possible courses of action. The MIS support for decision design consists of statistical, analytical, and model-building software. The final step in the Simon model is choice. The MIS support for choice consists of various decision models, sensitivity analysis, and choice procedures. Expert systems (q.v.) may be useful in some applications. Fig. 4 gives examples of MIS support for two examples of decision making.
The Organization Function for MIS
The management information systems or information management function is a specialized organization function with responsibility to plan, design, build, maintain, operate, and manage the information infrastructure and applications. This includes acquisition and management of both internal staff and external resources. It also includes technical, advisory, and educational support to aid users in applying appropriate technology to their tasks.
The major activities of the MIS function are:
♦ Provide input to development of organizational strategy and plans for use of information technology to achieve competitive goals and to support organization objectives.
♦ Development and maintenance of the MIS plan and budget for the organization.
♦ Design, development, operation, and maintenance of infrastructures and support systems that enable organizational use of information technology.
♦ Set standards and quality control for desktop information technology and end-user systems acquisition, operation, and use.
♦ Development and operation of organizational databases.
♦ Acquisition or development and operation of a portfolio of applications for the organization.
♦ Provide information technology expertise and education for users in the organization.
The information management function may include both a separate organization function and personnel assigned to organization functions that use the technology. In other words, a central group may plan and implement the organizational infrastructure, etc., while information system personnel in marketing, human resources, etc. provide direct support for the information technology use within the functions.
A combination of technical expertise and organization function expertise is required for many projects such as developing applications. Team members include technical specialists in information technology and users whose knowledge and experience are in the function being supported and the tasks being performed. Simple applications may be developed by users themselves (with or without assistance), but these often lack robust features and controls that allow broader use.
Sources of Information on MIS
Major international professional societies for information system practitioners are the Society for Information Management (SIM) and the Association for Information Technology Professionals (AITP). SIM is primarily for MIS executives. It holds conferences and has local chapters. AITP is a broad-based organization oriented to information processing in organizations. It has local chapters and holds annual conferences. Special interest groups of larger organizations focus on information systems. SIGMIS (Special Interest Group on MIS) is part of the Association for Computing Machinery (ACM-q.v.). It publishes a quarterly journal, Database. INFORMS has an information systems group, the College on Information Systems. The International Federation for Information Processing (IFIP-- q.v.) is organized as a federation of societies from different countries. Its technical activities are performed by technical committees (TC). The technical committee for information systems is TC8 (Information Systems). It has nine working groups on various issues in information systems. They hold working conferences and produce conference reports. Information on IFIP and TC8 can be obtained from the IFIP Website: http:// www.ifip.or.at. In addition to international organizations, there are professional organizations and special interest groups in many countries.
The information system academic community is international. Although each country and/or area has an organization for information system academics, there is strong participation in international academic conferences and local and area conferences often attract faculty from other countries. The main international academic conference is the International Conference on Information Systems (ICIS), begun in 1979. The main international academic organization is the Association for Information Systems (AIS). It publishes two electronic journals: Communications of the AIS and Jouvnal of the AIS. It is a sponsor of ICIS and has affiliation with major regional conferences: Americas Conference on Information Systems (AMCIS), European Conference on Information Systems (ECIS), and the Pacific Asia Conference on Information Systems (PACIS). AIS provides information not only on its conferences but also affiliated conferences (http:// www.aisnet.org). AIS manages ISWorld Net, a comprehensive source of information on the academic field (http://www.isworld.org). AIS, ACM, and AITP have cooperated on model curricula for information systems.
The general computing and management science journals often contain articles on MIS topics. The most significant sources are Communications of the ACM and Management Science. The most widely read academic journals devoted to MIS are the MIS Quarterly and Information Systems Research. General management journals such as the Haravard Business Review and Sloan Management Review regularly have MIS articles. Computing Reviews of the ACM reviews MIS articles. There are a significant number of other general and specialized MIS journals published in North America and Europe.
The Future of MIS
The 1960s MIS concept of an organizational information system supporting not only routine transactions and routine reports but also organizational communications and management activities has been achieved. The original MIS concept has been extended to include applications that add value to products and services and that support a broad range of administrative and management functions. With the merging of computer and communications technologies the organizational use of information technology has been extended to internal and external networks, systems that connect an organization to its suppliers and customers, and systems that enable persons in organizations to perform work alone or in groups with greater effectiveness and efficiency. Many organizations have been able to achieve competitive advantage by the use of information and information technology in products, services, and business processes. Information technology-based systems have been employed to change organization structures and processes.
The future direction of MIS is likely to involve further improvements in areas that have already been changed and more support for knowledge work productivity. Advances in information technology such as voice recognition and higher transmission bandwidth (q. v.) will make possible improvements in transaction processing, further reductions in cycle times, and more customized products and services. Information technology has been associated with remarkable improvements in production productivity and clerical productivity, but there has been less impact on knowledge work productivity. Although information technology has been made available to all knowledge workers and information access has multiplied, the increased functionality and data access does not automatically result in improved productivity. One of the frontiers in organizational information systems is the structuring of systems, computer and communications technology, and data access, so that knowledge work productivity is enhanced.
