Meaning Management Information System
Management information system (MIS) is a system which is used by business for producing information needed by managers for day-to-day decisions. It is composed of five elements which are interrelated such as hardware, software, people, procedures and collection of data. It is a set of systems and procedures which acquire data from distinct sources, assemble it and provide it in readable format. MIS create reports which are used by management team in order to have a comprehensive overview of all business operations. The presence of vital information regarding organization enables managers to perform strategic planning, operational control and management control efficiently.
Management information system is a crucial tool which facilitates managers in making effective decisions at right time. It derives information from every aspect be it related to past, present and projected future as well as on various relevant events occurring both inside and outside the organization. Availability of correct information at right time not only eliminates the risk of wrong decisions but also functions as a powerful controlling technique. The role of MIS is increasing nowadays due to increase of complexities in business and economic decisions, and voluminous regulations of government.
Components of MIS
Various components of MIS are as follows: –
- Hardware: Hardware component includes computer devices, servers, networking equipment, printers, workstations etc.
- Software: Software are the programs which are mean for handling of data. It includes database software, spreadsheet programs etc.
- People: People are the one who utilize the information system.
- Data: Data is one which is acquired and recorded by information system.
- Business Procedure: Procedure are the guidelines which instruct on how to record, analyze and store data.
Objectives of MIS
The basis objectives of MIS are as discussed in following points: –
- Data capturing: MIS collects all relevant information from both inside as well as outside of organization. It captures contextual data as well as the operational information which are relevant and contribute to effective decision making.
- Data Processing: MIS involves processing of collected data to extract meaningful information. Processing of data means doing calculations with data, sorting it, classifying it and also summarizing it. Availability of information is must for carrying out functions such as planning, organizing, coordinating, directing and controlling at strategic, operational and tactical level.
- Information storage: Once the data is processed into readable information, now it is systematically stored for future references.
- Information retrieval: The MIS system should be capable of retrieving the information from database in which it is stored as and when required by users.
- Information propagation: Now the finished product of MIS which is the processed information should be circulated periodically to all users using the organizational network.
Advantages of MIS
The advantages provided by MIS can be well-understood from points given below: –
- Improved decision making: The first and foremost advantage of MIS is that it facilitates managers in effective decision making. It is a computerized system which supplies all relevant information to managers in timely manner. Availability of right information enables in developing better understanding of business operations. Managers frame effective strategies in quick time which results in practicing better control over all activities.
- Fast data processing and information retrieval: This is one of crucial role played by the computerized information system. Businesses are able to convert raw data into a meaningful piece of information at a faster rate. It results in providing quality services to customers/clients.
- Enhance data security: A computerized information system offers high security of data stored in business database. It restricts the unwanted access to database server and also implement various other security measures like user’s authentication, access right control, biometric authentication system etc.
- Eliminates data duplication: MIS designs database systems in a way where duplication of data can be minimized to maximum possible level. Whenever a data is uploaded in one department, it automatically become available to other departments also.
- Improved data accuracy: Implementation of data validation and verification checks is quite easier in computerized information system as compared to manual system. This way it ensures more accuracy of data stored on company’s database.
Disadvantages of MIS
MIS has also some limitations in addition to its advantages which are as given below: –
- Quite expensive to set up and configure: Major disadvantage in MIS is that an organization need to incur huge expenses in order to implement this system. There is a requirement of lots of hardware devices as well as software for running this information system. Moreover, a business needs to revise its procedures and train its staff which ultimately adds to expenses.
- Risk of fraud: It is must to ensure proper controls and checks at every point of transaction. In case of any lapse, there may be some risky instances like intruder posting unauthorized transactions like invoice for products which were never delivered etc.
- Heavy reliance on technology: There is a large dependence upon technology in computerized information system. In case of any failure to hardware or software, the information cannot be accessed until the needed software or hardware gets replaced.