Businesses use management information systems to collect, interpret and analyze data as an aid in their decision-making processes.
Management information systems give business owners the ability to collect, process and interpret data. Data sets can include nearly all aspects of business operations, including sales revenues, production costs and employee output. Business owners examine MIS data, compare it to previous time frames and adjust their production strategies. While MIS affords some noticeable advantages for owners and managers, it also carries some significant drawbacks.
A guiding principle of MIS is that all computer-related business processes work as a single integrated system. An integrated system allows for improved communication among executives, managers, department heads and employees. For example, a fully integrated MIS system gives the same data framework to the sales department as it provides to the manufacturing plant. The shared data could lead to adjustments in the manufacturing plant to align production with sales goals.
The improved communication MIS provides to all levels of the business improves the decision-making skills of those in charge. The old saying "knowledge is power" applies when business owners use the data gathered in their MIS applications to make smarter decisions. For example, a business owner checks his MIS system and sees that his supply of components is not sufficient to meet his production goals. The owner can then decide either to order more components or to lower his production targets.
Data Quality Issues
One of the problems with an MIS framework is that the quality of the system depends largely on the quality of its data. If the data is insufficient, incorrect or misplaced, the decisions that managers make based on that data can be faulty. For example, a business owner finds a client order of 100,000 units in the MIS system. He orders additional components from his suppliers to meet that order. However, the actual order was only for 10,000 units. The owner unwittingly over-orders the components, costing the company thousands of dollars.
Another issue surrounding MIS processes involves data security. Hackers, identity thieves and corporate saboteurs target sensitive company data. Such data can include vendor information, bank records, intellectual property and personal data on company management. The hackers distribute the information over the Internet, sell it to rival companies or use it to damage the company's image. For example, several retail chains were targeted recently by hackers who stole customer information from their MIS systems and distributed Social Security numbers and credit card data over the Internet.