Computers play a central role in a business’s management information system, or MIS. In past decades, most companies had a few computers that served as information hubs. Today, a range of computing devices funnel important data from a variety of sources, from sales to time cards to inventory. The MIS software gathers the data and generates actionable information to guide the business.
In general, an MIS provides timely information to help managers make sound business decisions, such as when to replenish inventory, when to offer deals to customers and how to forecast sales for the coming quarter. Though some small businesses can get away with pen and paper, the great majority of MIS systems use computers to process large amounts of data quickly.
Business doesn’t stand still. Internal and external circumstances change daily, and you need a road map of good information to guide you through the twists and turns. The whole purpose of MIS is to use the hard data of your business to inform day-to-day and long-term decisions. Computers ease the task of processing the data.
The most sophisticated computers in the world can’t help your business if they’re not “fed”. Before an MIS can provide useful information, data must first enter the system.
Sales and accounting systems, for example, typically capture data when a customer places an order. Workers on the factory floor can enter manufacturing data into tablets or PCs, or the production machines themselves can capture data automatically. These detailed, nuts-and-bolts numbers are the raw materials that eventually become useful management information.
Modern computers excel at repetitive number crunching, accurately processing many thousands of data items per second. To summarize a month’s business transactions by hand might take hours or days, while a computer can do this task in moments. Useful operations include arithmetic calculations, sorting data numerically or alphabetically and searching for a single record among thousands in a file.
Many MIS systems rely on database management systems to organize, process and protect data. The database is a special program that acts as a data warehouse, storing the raw data and also cataloging it. The database has levels of security to guard against unauthorized access. It gives the various MIS applications — accounting, payroll, inventory management and others — added efficiency, reliability and flexibility.
An MIS delivers information to managers in the form of reports. They may take many forms, including printed lists, informative screens or alerts by text or email. Generally, reports may have details, listing individual records sorted by date or other criteria, and summary figures that show totals and averages.
For example, a monthly sales report shows customer names and what they bought. The MIS may generate the reports on demand, on a schedule or when preset conditions are met.
Many of the reports in an MIS system are “canned”, as software developers wrote the specifications when the system was first created. Ad hoc (improvised) reports are also possible. In this instance, you can use database software to create a custom report.
For example, in a certain month, an item you make may have been painted the wrong color. An ad hoc report can pull useful information from the MIS, such as who bought the item and when or which production machine made the item. The manager may create the report herself from a menu-driven reporting system, or she may ask a data technician to do it for her.
With the falling price of computer hard drives, it’s now possible to store enormous amounts of information cheaply. Even small businesses can afford to keep reams of detailed records on hand and use them to study customer buying patterns, production quality statistics and the actions of competitors.
With tongue in cheek, computer professionals use the term “garbage in, garbage out” to sum up how errors in data or mistakes in programming can lead to disastrous outcomes. Because computers deal with large amounts of information, it’s possible that small arithmetic errors, for example, may give wildly incorrect results. Savvy businesspeople must be aware of the potential pitfalls of relying too much on computerized reports.