A management information system, or MIS, is any computer system used to collect and store information, with tools for analyzing that information so that you can monitor operations and make informed business decisions. Software that tracks sales data, produces weekly reports and expands on past sales to provide you with sales forecasts would be one example of a management information system. More sophisticated systems could track production in different departments, monitor inventory, keep track of costs and even monitor the company's stocks.
In the past, MIS was often a system that ran independently of other company systems. At one time, it would be found almost exclusively on mainframe computers and the information it processed was used exclusively by management. Today, MIS is often used interchangeably with information systems (IS) as well as information technology (IT).
Origin of Management Information Systems
The history of information management can be traced back to the industrial exhibition of Paris in 1801. There, Joseph Marie Charles Jacquard introduced the world to punch cards. These cards, which were similar to the computer punch cards used through much of the 20th century, were used in weaving looms to make intricate patterns in cloth.
The Creation of Punch Card Systems
At that time, looms were hand-operated and if you wanted to create a complex pattern in cloth, you had to know – and remember – the order that different color threads were to be weaved into the fabric. Jacquard's punch cards had multiple rows of holes punched into them. Each card represented a single row of threads in the cloth. The cards, when strung together and inserted into the loom, would determine the pattern in the cloth.
If you changed the order in which the cards were inserted, you would change the pattern. If you used the same order every time, every piece of cloth would have the exact same pattern.
Thus, for the first time, Jacquard's punch cards could automate the storage and management of the information used to specify how a loom was to be operated.
Evolution of Punch Cards
The use of punch cards expanded in the following decades and in the 1880s, punch cards were used to compile information. Cards were "programmed" with information by punch card machines and other machines would process these cards, tally them and print out the results.
By 1911, IBM emerged, then called the Computing-Tabulating-Recording Company. By this time, punch cards were used for recording and storing all sorts of information, including time tracking and recording weights on scales. Even the U.S. Census was using punch cards to manage its information.
The Emergence of MIS in Computers
When computers began to emerge in the 1940s and 1950s, punch cards were still a big part of information systems. They continued to play a role until the 1970s when they were replaced by magnetic storage media like tapes and disks. These storage devices greatly increased the speed of calculating data Consequently, MIS began to develop for accounting. Calculating data and compiling it into reports could now be done in a fraction of the time it would have taken before.
MIS Developing Beyond Accounting
From the 1970s to the early 1990s, as computers became smaller, faster and more affordable, MIS developed beyond accounting to other business areas, like inventory systems, sales, marketing, manufacturing processes and engineering. Most of these systems ran independently of each other, each using different software on different computers. For a large company to get a complete picture of its progress, reports from different departments would be re-entered into another system, often in a mainframe computer. Small businesses simply didn't have the resources to complete such an endeavor and would have to compile different reports manually, often on paper.
Even as computers could be connected in networks in the 1990s, the different software systems were often not compatible. Companies then began upgrading their systems so that different department systems could communicate with each other. By the end of the 1990s, even small businesses could afford integrated information systems and even connect different office systems together using the internet.
The Five Eras of MIS
In order to make sense of the evolution of management information systems, it's helpful to break down the history into four or five eras.
First Era (mid-1960s to mid-1970s)
During the first years of computerized MIS, information systems were centralized and concerned solely with governance and the needs of management. Most information systems and their reports were under the control of accounting departments. Technology included third-generation mainframe computers, like the IBM 360. Languages included Assembler, Fortran, COBO and, Database e. Ethernet networks were developed during this time.
Second Era (mid-1970s to mid-1980s)
While MIS was still mainly concerned with governance and the needs of management, more departments were beginning to benefit from the technology. In many companies, steering committees and user-led initiatives determined the shape and scope of additional IS projects. Technology included the first personal computers (PCs), minicomputers and mid-range computers.
Third Era (mid-1980s to late 1990s)
During the third era, centralized information systems began to spread out and information became decentralized. Each department had its own computer system. Managing information was often referred to as "herding cats." It was during this era that a new position emerged in many companies to oversee the acquisition and management of multiple information systems: the Chief Information Officer, or CIO. Technology during this era included internetworking and the beginning of the internet.
Fourth Era (late 1990s to today)
During the current era, information systems are still tightly tied to governance and management, however the systems are widely distributed, within the reach of nearly every employee who needs it across multiple platforms. Many information systems are integrated between different companies, so that a client business can readily access supplier information and their customers, in turn, can access that information. Technology now includes social media, search engines and ubiquitous computing through a variety of platforms including laptops, tablets and smartphones.
Fifth Era (today forward)
The increase in internet bandwidth over recent years has led to a substantial reliance on cloud computing. As a result, some maintain that this marks a new era in worker's ascendancy and that we are now in a fifth era for management information systems. Today, practically any employee is now in a position to make informed decisions with tools that are readily available across multiple platforms. Furthermore, the line between who produces and who consumes MIS information is increasingly blurred.
Evolution of Management due to Technology
This could mark the end of controlling top-down management styles, which are being replaced by more autonomy of employees. Management expert Peter Druker predicted this as an inevitable back in 1954 in his theory on Management by Objectives. In this paradigm, top-down management can actually harm a company because, being in the trenches, employees are more and more likely to understand customer needs better than their supervisors and, being in specialized fields, may have more understanding of the nuts and bolts behind a business than those supervisors.
“Knowledge workers have to manage themselves,” Drucker said. “They have to have autonomy.”
Types of Management Information Systems
Companies today usually have several types of information systems useful for managing different aspects of their business. Most of these work with transaction processing systems and compile information that can be used to make effective management decisions.
Transaction Processing System (TPS)
A TPS is usually at the base of any company's integrated information system. It takes in raw data from sources inside and outside of the company and stores it in a database. Users are able to query the database for any information they need.
Data can be processed in real-time as it is entered, or by using batch processing, in which case information is processed at specific times in the day. Sales and inventory are usually processed in real-time, whereas payroll information, which isn't as time-sensitive, is often processed in batches, often after hours.
Management Support Systems (MSS)
Once the TPS has gathered and stored needed information, this information can then be accessed by a management support system to analyze the data, empowering managers to make informed decisions.
An example of an advanced MSS is a data warehousing system. These systems extract information from multiple databases throughout the company and store it in a central database. According to Forrester Research, approximately 60 percent of companies with revenue of $1 billion or more use data warehouses as a management tool. Retailers use data warehousing to collect information on customers to determine their demographics and shopping patterns. Banks use data warehousing to detect credit card fraud.
Decision Support Systems (DSS)
Decision support systems assist managers in making informed decisions using interactive computer models that explore real-world processes. The DSS retrieves specific data from the internal database that pertains to the questions raised by the user. For example, if a sales manager wanted to figure out which type of new product would sell the fastest, she could use a DSS to compare sales data and demographic information about customers to determine what types of products and what sales points would be most appealing to the largest demographic groups.
Executive Information Systems (EIS)
An executive information system works much the same way as a DSS, however the software is customized for specific executives so they can make informed strategic decisions. As an example, a CEO could use an EIS to compare his company's financial data to its competitors, with the information presented in spreadsheets or graphs.
Expert systems use artificial intelligence to provide managers with advice that is similar to what a human consultant would offer. The AI can learn to solve problems using what-if reasoning. Because AI is still relatively new, expert systems are expensive and take a lot of time to program. However, this is a trend that is still growing.
Advanced expert systems are used by airlines to determine scheduling of aircraft and their crews, significantly reducing expenses by eliminating idle time on the tarmac and half-empty planes going into the air. Expert systems are also useful in oil exploration, scheduling employee shifts and even diagnosing illnesses.
MIS Today For Small Businesses
Any computer system designed to help make informed management decisions can be called an MIS. As a result, even a sole proprietor working on a single laptop with the appropriate software and appropriate data accessible by that software could be said to have her own management information system.
A building contractor working onsite on a tablet is able to access customer billing information, get quotes for materials, and calculate job time estimates in a matter of a few minutes. Even if a small business owner doesn't have a large database of information to draw upon, chances are her suppliers and and organizations she can join do have the information she needs. Online marketers using Google Analytics are able to tap into a management information system that would have been unheard of just a few decades before, able to monitor visitors, analyze landing page performance and see customer preferences – all for free.
Of course, most of today's software used to make important management decisions are no longer referred to as management information systems, yet they can often do the job much more efficiently and at less expense than the mainframe solutions used when these software products were in their infancy.