A Management Information System or MIS is used by businesses to gather, compile and analyze information. Today, an MIS is highly integrated with a company's computer systems, usually involving databases with vast amounts of data. While the type of information used can vary from one business to another and even between departments, the role of management information systems is almost always the same: to improve operations, strategies and decision-making.
The amount of information available to any business today can be overwhelming. How this information is managed and therefore leveraged to better decisions depends on the goals and objectives of your business. Just as no two people use their cell phones for the same things, no two businesses use MIS in the same way. To understand the functions of management information systems in an organization, it's best viewed at four different levels: transactions, operations, management and strategy.
Information management begins at the transaction level, where the information is gathered and stored. This means deciding which information is important enough to be collected and stored. For example, if your business sells clothes online, you would probably record customer information, including names, addresses and purchase history. Once this information is compiled, it would give you insight into your customers' demographics and preferences. However, if you also recorded items they searched for, items they browsed for more than a few seconds and items they removed from their shopping carts, you would have much more information that could tell you how you can improve your sales.
Even at the transaction level, an MIS can have a vital role in your organization. Suppose a customer calls to ask about an item. If the customer service representative has the customer's transaction history at his or her fingertips, he or she could more easily assist by immediately knowing the customer's name, purchase history and returns history. Knowing if the customer is calling from New York or Los Angeles, the representative can more easily predict how long an item will take to be shipped.
Having accurate and timely information can help all operations in a company to make better decisions and to ensure everything runs smoothly. Knowing exactly how many orders have been placed, the production department will know how much work they have to do today.
Information used at the operations level often goes hand-in-hand with better management decisions. For example, if the warehouse manager knows that 500 customers have pre-ordered an item that is due to arrive on Friday, he may decide to have a few workers come in on Saturday to reduce Monday's workload. At the same time, the accounting department will know that there will be an influx of cash when Monday's credit-card orders are all processed. The marketing department will be able to determine which ad campaigns were responsible for the bulk of those orders and which should be used again.
A well-optimized management information system can pay off beyond operations and management decisions. As the owner of a small company, you can review purchases over the past year to determine which markets to explore next. For example, suppose your retail website originally sold dresses and other garments and last year you began offering shoes at a good profit margin. Today, however, dresses account for very few sales and a high percentage of returns. Sales of shoes have been steadily increasing. At the same time, your web developers have pointed out that "handbags" and "belts" are now the most popular search items on your website. Based on this information, you have the information you need to phase out dresses and begin offering these sought-after accessories to your customers.