Management Information SystemsManagement Information Systems

Management Information Systems (MIS)

An MIS provides managers with information and support for effective decision making, and provides feedback on daily operations.

A manufacturing MIS can help managers monitor a manufacturing process to maximize the value to processes within an organization.

Information is provided to managers through various summary reports that are usually generated through accumulation of transaction processing data.

Each MIS is an integrated collection of subsystems, which are typically organized along functional lines within an organization.

Thus, a financial MIS includes subsystems that address financial reporting, profit and loss analysis, cost analysis, and the use and management of funds.

The architecture of an MIS is shown below.

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Sources of Management Information

Management information systems is one of the systems that managers use to obtain information. Other systems include decision support systems, executive support systems and expert systems.

Data Inputs to an MIS

Most of the data source for MIS is the organization’s various transaction processing systems that capture and store data from ongoing business transactions.

Data may also come from various functional areas (accounting, finance, sales, etc.) of an organization.

External sources of data may include customers, suppliers,

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competitors, stockholders, and so on. Outputs of an MIS

The output of most management information systems is a collection of reports that are distributed to managers. These include scheduled reports, key-indicator reports, demand reports, exception reports, and drill-down reports.

Scheduled Reports

These reports are produced periodically, or on a schedule, such as daily, weekly, or monthly.

Examples: a weekly summary report that lists total payroll costs of a company. See next page.

Key-Indicator Report

A key-indicator report summarizes the previous day’s critical activities and is typically available at the beginning of each workday.

Examples include inventory levels, production activity, and sales volume.

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Demand Report

These reports are produced on demand or when requested by managers.

Example are: hours worked by a particular employee, total sales to date for a product, and so on.

Exception Reports

Exception reports that are automatically produced when a situation is unusual or requires management action.

For example, Inventory reorder report for items whose stock goes below a predetermined number.

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Drill Down Report

These reports provide increasingly detailed data about a situation, as illustrated below.

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Guidelines for Developing Effective Reports

Certain guidelines should follow when designing and developing reports that yield best results. These are mentioned below.

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Characteristics of an MIS

A management information system performs the following functions:

Provides reports with fixed and standard formats:

All reports are produced in an easy-to-read and standard format, so managers in various functional areas find consistencies in reports.

Produces hard-copy and soft-copy reports:

Standard reports are typically printed on papers and they are termed as hard copy

Soft copy reports are displayed on computer screens.

Uses internal data stored in the computer system:

MIS reports use primarily internal sources of data that are contained in computer databases (through TPSs).

End users are able to develop their own custom reports:

Although most of the standard reports are designed by and analyst, the users should be able to develop reports on an ad-hoc basis.

Requires formal requests from users

Whenever an information system personnel (analyst, programmer) develops a report, a formal request is necessary. This is not required for ad-hoc reports.

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MIS for Competitive Advantage

Provides support to managers as they work to achieve corporate goals.

Enables managers to compare results to established company goals and identify problem areas and opportunities for improvement.

MIS and Web Technology

Data may be made available from management information systems on a company’s intranet.

Employees can use browsers and their PC to gain access to the data.

Functional Aspects of the MIS

A management information system is organized according to the business functionality of an organization.

Thus an MIS contains systems in areas of accounting, human resources, marketing, manufacturing, research and development, legal services, operations/support, and finance. See figure next page.

Each functional system uses its own set of function-specific subsystems, all of which interface with both the TPS and the MIS.

Each functional system requires different information and support for decision making; but they share some common information needs.

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An organization’s MIS is an integration of various functional systems

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Financial MIS

Inputs to the Financial MIS

• Strategic plan or corporate policies Contains major financial objectives and often projects financial needs.• Transaction processing system (TPS) Important financial information collected from almost every TPS - payroll, inventory control, order processing, accounts payable, accounts receivable, general ledger.• External sources Annual reports and financial statements of competitors and general news items.

Financial MIS Subsystems and Outputs

• Financial Subsystems Profit/loss and cost systems Auditing Internal auditing External auditing Uses and management of funds

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A Marketing Management Information System

A marketing MIS supports managerial activities in product development, distribution, pricing decisions, and promotional effectiveness.

For example, the marketing MIS can be used to analyze appropriate product prices. A bicycle manufacturing company wants to sell bikes at a low price while maintaining a certain level of profit. A marketing MIS can perform a price analysis and produce a report to guide the pricing decision.

Many factors such as intense competition and an increasingly

sophisticated customer audience, are forcing companies to rethink their approach to marketing.

The marketing MIS is customer driven. The challenge for the marketer is to:

1. Quickly plan, create, and deliver marketing program according to customer audience.

2. Capture feedback from the customers.

3. Fine-tune the program to better meet market (customer) needs.

4. Respond quickly to requests for information.

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A marketing management information system has data inputs, processing subsystems and output reports

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Inputs to the Marketing MIS

As compared to other management information systems, the marketing MIS relies on external sources of data. The sources include the Internet, competition, customers, journals and magazines, and other publications.

Strategic Plan and Corporate Policies

Marketing relies on the organization’s strategic plan for sales targets and projections.

A sales projection of a firm might be that it is expected to increase sales by steady 10% for the next five years. A marketing MIS report from such a firm might organize current sales performance as compared to the sales projection.

Strategic plan can also contain information about projected needs for the sales force, product and service pricing, distribution channels, promotion, and new product features.

Transaction Processing System

The transaction processing system and E-commerce of an organization contains a large amount of data on products, customers, and sales force.

Sales data on products can reveal which products are selling and which ones are slow sellers. Reports summarizing order data might include sales activity by customer, product, and geographical region.

The marketing MIS might use the product information to formulate future sales, develop advertisements, or make product development decisions.

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Customer data may be used to develop customer incentive programs such as frequent flyer mileage in airlines.

External Sources

Data on competitors such as new products and services, pricing strategies, strengths and weaknesses of existing product lines, packaging, marketing and distribution methodology- is important.

Knowing what the competitors are doing or are likely to do is helpful in designing new products and services, and marketing an existing product line.

Competitive data on competitors can be obtained from their marketing materials, brochures, sales promotions, and the web.

The process of obtaining competitive market information is termed as marketing intelligence.

Information on the target market of a farm’s product is also important.

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Subsystems of a Marketing MIS

Subsystems for the marketing MIS include marketing research, product development, promotion and advertising, and product pricing. These subsystems produce various market-related reports.

Marketing Research

The purpose of the marketing research is to conduct a formal study of the market and customer preferences.

Surveys, questionnaires, pilot studies, and interviews are popular marketing research tools.

Marketing research can identify special features such as style, color, size, appearance, price, and warranties of a product expected by current as well as prospective customers.

Data collected for marketing research can be used to generate reports on key indicators like customer satisfaction and total service calls.

Product Development

Although product development involves the conversion of raw materials into finished goods and services, many factors such as materials, plant capacity, labor skills, cost, and engineering factors are important.

The product development subsystem analyzes these factors in developing and pricing new products.

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Promotion and Advertising

One of the most important functions of any marketing effort is promotion and advertising. Product success is directly related to advertisement and sales promotion.

Television coverage, newspaper ads, Internet ads, promotional brochures and literature, and training program for salespeople are part of the process.

Computer programs can used to set-up budgets for various promotional activities, and then monitor expenses and overall effectiveness of each of the activities.

Product Pricing

Product pricing involves determining retail, wholesale, and discount price on a product.

Most companies try to develop pricing policies that maximize total sales revenue.

Computer programs are used to help determine the price of a product depending on supply and demand of the product in the market.

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Outputs of a Marketing MIS

Reports generated by the marketing MIS can help marketing mangers make good sales decisions.

The sales-by-product report lists all major products and their sales for a period, such as a week or month. This report shows which product is doing well and which ones need improvement or should be discarded altogether.

The sales-by-salesperson report lists total sales for each salesperson for a period, such as a week or month. This report can be subdivided to include products sold by each salesperson.

The sales-by-customer report lists sales for each customer for a period, such as a week or month. This report can be used to identify high and low-volume customers.

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A Human Resource Management Information System

A human resource or personnel MIS is concerned with activities related to employees of an organization. Activities performed include:

workforce analysis and planning hiring training job and task assignment other personnel-related issues.

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Inputs to the Human Resource MIS

There are typically three inputs: strategic plan, TPS, and external sources. Strategic Plan or Corporate Policies

Plans such as corporate restructuring, decentralization, mergers, strategic alliance, and total quality program have impact on human resources.

Implication of these plans requires employee training, relocation,

additional budget, and so on.

Transactions Processing System

Payroll Data: Costs for employee payroll, healthcare, retirement, and other

expenses come directly from the transactions processing system.

Summary of this information by department, division, branch, and location is valuable.

This information is important to budget payroll expenses for the next cycle.

Order Processing Data: Orders placed by employees of an organization can be arranged

by dollars, items, quantity, and so on.

Orders placed for a certain cycle can be used to budget for the next cycle.

Personnel Data: Personnel data includes job classification, skill, work experience,

performance evaluation, and so on.

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This data can be to match an employee for a certain type of job or project.

External sources

Data on salaries and benefits paid by job categories from other companies is an important resource for a company.

This data can be used to determine wages for new employees.

Information on various government regulations such as taxes, ethics rules, union rules, export rules, are also important.

Human Resource MIS Subsystems and Outputs

Most organizations have computer systems to assist with human resources planning, hiring, training and skills inventory, and job and salary administration.

Outputs include reports such human resources planning report, job application review profiles, skills inventory reports, and salary surveys.

Human Resource Planning

The purpose of this subsystem is to place the right number and kinds of employees in the right jobs when they are needed.

Effective planning requires defining the future needs of employees. Data on current and future projects can provide this information.

A typical output is a human resources needs and planning report. It should identify the number of employees needed by job category by time line.

For example, a new software contract may require 10 programmers in three months.

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Personnel Selection and Recruiting Companies seeking new employees often use computers to

schedule recruiting efforts and trips, and test a candidate’s skills.

For example, a computerized testing can be used to test a candidate’s programming skill, communication skill, ability of group interaction, personality, and so on.

Recruitment efforts by HR also include participation in job fairs, sending managers to college campuses, sending fliers, job posting in the internet, creating resume database, and so on.

Training and Skills Inventory Specialized training may include training for new software, new

instrument, advanced programming, and management skills.

General training might include corporate policies, ethics, dress codes, sexual harassment, and so on.

Scheduling employees in corporate training classes, educational conferences, self-paced computer programs, and setting up intranet, are some of the activities of the HR.

“Skills inventory report” of employees is a typical report that can be generated on a scheduled basis.

Scheduling and Job Placement When a large group of employee is involved in a particular project,

scheduling is important. For example, scheduling engineers and support personnel for a round-the-clock space shuttle flight at JSC is very important.

Placement of military personnel, at various locations of the world, is facilitated by computers. Employee work schedules can be developed for each employee.

Schedules and job placement reports by department and location are some of the reports to mention.

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Wage and Salary Administration

Determine wages, salaries, and benefits (medical, dental, retirement) by job skill and education of employees as compared to industry standard.

Develop evaluation procedure for employees. Some large companies use Intranet to evaluate employees.

Develop employee retirement plan (savings, IRA, 401K, 403B), including the utilization of voice, Intranet and Internet for easy access of this information.

Create wage and salary report of employees by job skills, experience, department and so on.

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Other Management Information Systems

Accounting MISs

Provides aggregated information on accounts payable, accounts receivable, payroll, and other applications.

Smaller companies may retain an outside accounting firm to assist in accounting functions.

Geographic Information Systems (GISs)

Enables managers to pair pre-drawn maps or map outlines with tabular data to describe aspects of a particular geographic region.

A housing company may use it to display various data for a plot along with the map.

Government agencies may use it to display good or bad crops for a region in a broad geographical region.

Finding a location or distance between to points is common use in the web.

Fire department may use it to quickly locate a fire hydrant in case of emergency.

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