The Concept of Management Information Systems

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Management information systems, or MIS, are used by most companies across industries regardless of size. Management information systems are computer-based methods of arranging information in a cohesive, coherent fashion. These might include databases or other information repositories. Without these backbones of business, it would be impossible for most companies to operate.

MIS System Concepts

The characteristics of management information systems include their core function: to serve as databases. These databases hold financial and organizational information and produce reports on a company’s operations. For example, if your company wanted to see how a specific product was performing, you could pull a report from your MIS that compares it to similar products your business offers.

Management information systems are not limited to the scope of their reports. Through these repositories, you can get feedback on top sales performers or high-paying clients.

Importance of Management Information Systems

Before management information systems, information was not as readily available, and more employee time was spent auditing, creating spreadsheets and gathering data. For instance, without easily accessible sales records, it was challenging to have "proof" that an employee deserves a raise. With MIS, it’s easy to check that employee’s sales record and determine that he has exceeded his goals for the year.

A MIS can also be set up to run reports once specific goals of production or sales are hit. Management information systems typically tie into your point-of-sale systems seamlessly. Because MIS is a database, it can be programmed to respond to any set of parameters with a full report. Most of these systems no longer require you to have a coder or programmer on your staff, and MIS is typically preloaded with common report queries for you to run.

Depending on which MIS you are using, you may be able to have it built with custom queries. There are many different management information systems that come straight off the shelf, and they range from freeware to expensive, sophisticated systems that are designed with specific companies in mind.

History of Management Information Systems

MIS databases automate a number of report functions, such as record keeping, accounting and stock management. If the idea of a programmable database is confusing, you can think of it as a ledger. As long as people have been trading, buying and selling items, there have been records of those sales. However, before automation began in the 1880s, keeping a ledger was a full-time job for many people.

As technology advanced in the 1880s, punch cards became a standard method to keep track of stock, ordering and staff hours. The punch-card system is an example of a straightforward database. These punch cards were tallied and sorted by machine, thereby freeing up employees to focus on other aspects of the business. Punch cards are so reliable that many small businesses still use them to keep track of staff hours and stocking.

Technology advancements continued at a breakneck pace from the 1970s to the 1990s. IBM developed many different MIS capabilities, and other companies soon followed suit. Manufacturing, research and development and inventory systems were not connected within one system, however, so inventory systems were developed side by side with other management systems for engineering or development. Early MIS, therefore, was more of a collection of software that typically worked off specialized equipment.

MIS, Personal Computers and the Internet

As personal computer use spread through the world in the 1980s, businesses began using them as point-of-sale registers. These POS systems began to be linked to MIS systems with the spread of the internet in the 1990s. As automation and communication became more natural, businesses began to widen their customer bases. Today, a small business in Hong Kong can sell an item to someone in Canada with ease.

MIS and the internet have given all businesses the opportunity to become international companies. The ease of information management frees up staff to develop better products and sales techniques. It's easier than ever for a business to succeed, thanks to management information systems. However, MIS and the internet have also made sales and customer service more complicated in some ways.

Businesses Using Management Information Systems

All businesses should use some form of management information system. Not every business needs the same level of sophistication in MIS, however. For example, a small yarn company that works mostly at conventions and trade shows may only use an electronic spreadsheet to track its sales. A major yarn manufacturer, on the other hand, would need to track its stocks and international sales along with its domestic sales.

You would be hard pressed to find any company these days that does not use computers. If you've put off moving to a digital management information system due to the fear that it would be a complicated conversion, fear not. These days, most MIS are "plug and play" to make it easier for companies to adapt to these systems.

The term "plug and play" refers to anything that you can add to a system and use without needing to know anything about systems or programming. You should only upgrade your management information system and your point-of-sale system if you have a clear need for it — otherwise you invite risk of a mistake and undue time and financial resource consumption.

Databases and Queries

The term database refers to a collection of data that can be organized, analyzed and adjusted by a computer system. The more complex the database, the more computing power you will need. You can think of it as the "home base" for your data.

When you require specific information, you go to the database and ask it to run a report. Simple freeware databases are often similar to Excel or Google Sheets. Complex databases are usually developed on demand by large companies and have formal query structure built into them.

Queries are requests for information held in your database. Many MIS work with what is known as structured query language to produce graphs, lists, pictorials or other complex results. Database management is the new record keeper of businesses. You can think of SQL as the shorthand that your database manager knows to keep track of your business's metrics. Simply put, SQL is the language that the database needs to speak to answer your queries.

Changes in Database Needs

As companies and computing change, databases need to be updated. Typically, updates only occur if a problem is found with the current MIS. For example, if your MIS has worked off a certain version of Windows and "breaks" when Windows updates, you will need to change your MIS to match. Large companies typically employ people who are knowledgeable about the ways in which changes in operating systems could affect your MIS, and they can get in front of any issues before they arise.

Smaller companies may need to rely on contractors to upgrade their systems after changes have happened. This is the reason that operating systems will inform users about all changes to their programming. Typically, users are notified years in advance of their system becoming untenable because operating systems are critical for most companies.

Considerations for Business Owners

As a business owner, you can also purchase software packages to cover your MIS needs, and your database manager can link this software to your existing system. To do this, you will need to have a VAR, or value-added reseller, or systems integrator. Small businesses that do not require complex management systems should be able to handle the VAR with ease. Larger companies, however, are more involved and thus may need to update in a different manner.

It’s also possible to design your own MIS depending on the needs of your company. Large companies will likely want to hire a developer to create a MIS specifically tailored to your needs. While the upfront cost might be higher, the long-term savings of time and therefore money will likely be significant.

Types of Management Information Systems

In the early days of MIS, only large systems that required mainframes were considered MIS. Because PCs today are so powerful, that way of thinking is extremely outdated. You can access freeware MIS directly from your smartphone.

An example of this is the ability to confirm an appointment online with your doctor. By hitting "confirm" on your phone or laptop, you've bypassed needing to check in at the office, and the MIS knows when to bill you based on the details of your appointment.

To find out what MIS would work best for your company, you will have to explore a variety of different offerings. To ensure that you get exactly what you need, you could also hire a consultant or a contractor to build a system for your specific needs. However, out-of-the-box MIS shouldn't be overlooked as an option for smaller companies.

MIS Access Levels

MIS can have different access levels. For example, your sales employee could look up how the sales metrics are performing against last month's numbers. A store manager could check sales metrics for all the employees and also check how the company’s products are selling. A business owner could check all parameters for multiple stores to make staffing, product and service changes.

Example of MIS Access Levels

What does this need for varying access levels mean, exactly? For instance, consider the following example. Steve is a sales employee for Retail USA and has been a key sales representative for long enough that he has been assisting lower-performing employees. Steve would like to ask for a promotion at his next touch-base with his boss, Ryan.

To prove that he has been performing well and assisting other employees, Steve can run a report on all the sales he made or those with which he helped. Before his touch-base, Steve goes to the MIS and runs his sales reports for the past six months. He can take those as proof that he's ready to move up.

Next Level of MIS Access

Ryan, in turn, can look up the sales of all his employees to see how well Steve is measuring up. Ryan will review Steve's numbers and the numbers of employees with whom he knows Steve has been working. In the MIS, Ryan can easily pull a report of the employees who are most improved, who have the highest sales and who have the most customer compliments. All of this information is pivotal to take to his boss, Sandra, so she can approve Steve's promotion.

When Sandra reviews the information that Ryan has given her, she can then run Steve's sales numbers against those of all the other stores she manages. Not only will this gauge how Ryan’s top performer looks against other stores, but Sandra can also check what employees who are performing at Steve's level are being paid. In this instance, the MIS has supplied all of the technical numbers that Sandra needs to approve the promotion and raise while being fair to the rest of her employees.

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About the Author

Danielle Smyth is a writer and content marketer from upstate New York. She has been writing on business-related topics for nearly 10 years. She owns her own content marketing agency, Wordsmyth Creative Content Marketing (www.wordsmythcontent.com) and she works with a number of small businesses to develop B2B content for their websites, social media accounts, and marketing materials. In addition to this content, she has written business-related articles for sites like Sweet Frivolity, Alliance Worldwide Investigative Group, Bloom Co and Spent.