If you consume information in your daily life, such as reading a blog online, an information system was involved in processing and delivering that information. Information systems are sets of interconnected components that collect, process and store raw data that is subsequently delivered to users as information. For example, 0's and 1's in a binary code are raw data converted into text and images. Information system is a generic term that includes a wide variety of different information systems. A management information system is a type of information system used in business and commerce to improve the productivity of workers and management.

Components of Information Systems

You might picture an information system as simply consisting of the physical hardware, data and software that allow it to function. However, an information system also requires interaction with users and a set of rules to ensure secure and timely access is possible. The six components of typical information systems and their definitions are:

  1. Data: the raw input required to generate information.
  2. Hardware: computers, storage devices and other peripheral equipment.
  3. Software: the rules, algorithms and instructions that tell the hardware how to process, store and display the data.
  4. Communication: the telecommunication devices that transmit the data in the form of text, pictures and sound. Communication includes the mode of transmitting the information, such as the Internet.
  5. People: the producers and consumers of information. Information producers are systems analysts, computer programmers, computer operators and maintenance personnel.
  6. Procedures: the rules and processes required to optimize the security of the information system, including prioritizing the timeliness of the information generated.

Management Information Systems

A management information system, or MIS, is one of any type of computerized information systems used in business organizations. The components of an MIS are essentially the same as all other information systems. An effective MIS generates information that informs users about a business's current situation and the probable reasons for it.

Functional Areas

The diverse services of an MIS address the specific information needs of the departments, or functional areas, found in most business organizations:

  • Sales
  • Marketing
  • Finance
  • Accounting
  • Operations
  • Human resources
  • Information technology services

Each department has distinctive information needs. For example, the sales department needs sales reports; the accounting department needs updated financial statements; the marketing department needs a customer relations management system, or CRM, to manage all touchpoints where prospects and customers interact with the business.

As the information needs of business departments change, the business's information technology services provider — in-house or outsourced — should respond with new, or reformatted, information that addresses the new needs.

Need to Know

Consumers of MIS services are not the same, even within the same functional areas. The machine operator on the production floor needs process-control information that's entirely different from the process-control information needs of the production manager. As such, an MIS commonly generates information on a need-to-know basis to address the specific needs of specific types of business consumers. MIS pundits commonly place MIS users in three categories based on the type of information they need:

  • Operational users: reports that serve the needs of front-line people charged with running the daily operations of a business
  • Managerial users: reports for middle managers
  • Strategic users: reports for top level executives

MIS for Small Businesses

Innovative MIS services and modes of delivering those services are becoming increasingly more available to small-business operators. Previously the exclusive playground of big-budget corporations, cloud computing is one innovation that's putting huge enterprise MIS computing in the hands of small-business operators. It's possible now for small-business operators to outsource virtually all their MIS needs — from accounting services, marketing research services, big data services to CRM services — to cloud-based solution providers.