Purpose of a Management Information System

by Chelsea Levinson - Updated June 28, 2018
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A Management Information System, or MIS, collects data from many different sources and then processes and organizes that data to help businesses make decisions. These days, technology and data collection are so prevalent that businesses large and small are using Management Information Systems to improve their outcomes. A good MIS can give your business a competitive advantage because it turns thousands of data points into helpful, usable information that can be used to tweak your strategy and increase profits.

How a Management Information System Works

The term Management Information System sounds complicated, but actually the concept is quite simple when you break it down. A business collects many different types of data. For example, a clothing retailer tracks inventory, manufacturing, personnel, online and in-store sales and marketing, just to name a few. An MIS collects all of this data from various sources and processes and organizes it. Next, the MIS takes all of this processed data and generates a user-friendly report that management can consult while making decisions. Using the clothing retailer example, a manager might look at an MIS report and learn that on Wednesdays, in-store business is slow and, therefore, the store is overstaffed. The manager can now make the decision to cut back employee hours on Wednesdays, keeping in line with demand. Ultimately, utilizing this data will help maximize profits and ensure that business operations are running smoothly.

It’s important to note that Management Information Systems don’t have to be massive networks. A sole proprietor using just one computer could set up an MIS. One example of this would be a doctor who uses an MIS to track scheduling, wait times, patient data, billing, dealings with insurance companies and accounting. Or, a freelancer might use an MIS to track their hours, invoicing, clients, marketing efforts and sales.

Types of Decisions

An MIS can be used to aid in the planning of many different functions of a business, such as marketing, logistics, personnel, finance and accounting, information planning and upper management. Using marketing as an example, an MIS helps forecast sales and analyzes the behaviors of customers. A report might reveal that your potential customers are spending time shopping on your website, only to abandon their carts when they encounter the checkout process. Now, you can tweak your checkout process or offer your customers other incentives for completing their purchases, thus increasing sales. Some retail companies will go so far as to email customers who have abandoned their carts and offer promotional codes. You can bet that these savvy companies are doing so because their data showed that far too many customers were abandoning full carts, and this tactic works to reel them back in.

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Benefits to MIS

Using a Management Information System is beneficial because it provides data for both the big and small picture on operations, management, strategy and transactions. Knowledge is power. Understanding your business’ data helps you plan for operations and resource allocation in an organized and systematic way. With the rapid development of technology and data systems, businesses that stay one step ahead remain competitive. A good MIS helps businesses make small, incremental changes that can add up to large outcomes.

About the Author

Chelsea Levinson is a J.D., researcher, writer and award-winning video producer. She has created content for Vox, AOL, H&R Block, Comcast, Bank of America, State Farm, Delta Air Lines, MAKERS, PBS, Levo and more.

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