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Importance of MIS:
MIS when properly developed and used in an organization brings in a lot of benefits
for the organization. A list of the benefits of MIS for a organization are:
MIS increases productivity:
MIS reduces time, errors and costs associated with processing information.
To increase productivity, MIS follows Online Transaction Processing. OLTP is the
gathering of data as input, processing that input data and updating the data to create
valuable information from this processed data.
Another area in which modern MIS improves productivity is by allowing customers to
process their own transactions through the use of a Customer-Integrated System.
MIS enhances the quality of decision-making:
MIS helps top management to do business in a better way, find solutions to
problems/opportunities, or help them in decision-making by providing the relevant
information.
MIS support for decision-making falls in two categories:
When MIS helps you analyse a situation by providing all the relevant
information about the situation and then expecting you to make the decision.
When MIS actually makes some sort of recommendation or giving some insight
into what decision to take.
MIS improves communication and helps develop team work:
MIS helps to manage information and facilitates communication between diverse
teams. A collaborative management information system is a specific system to
improve team work.
MIS can facilitate organizational transformation:
MIS helps organizations to remain competitive or enter new markets and transform
the way business is done.
Characteristics of MIS:
A management information system has the following characteristics:
1) System approach:
The information system follows a Systems approach. The systems approach implies
a wholistic approach to the study of the system and its performance to achieve the
objective for which it has been formed.
2) Management oriented:
For designing of MIS top-down approach should be followed. Top-down approach
suggests that the system development starts from the determination of the
management needs and overall business objectives. Management oriented
characteristic of MIS also implies that the management actively directs the system
development efforts.
3) Need based:
MIS design and development should be as per the information needs of managers at
different levels that are strategic planning level, management control level and
operational control level.
4) Exception based:
MIS should be developed on the exception based reporting principle, which means an
abnormal situation, that is the maximum, minimum or expected values vary beyond
the limits. In such cases there should be exception reporting to the decision-maker at
the required level.
5) Future oriented:
Besides exception based reporting, MIS should also look at the future. In other words
MIS should not merely provide past or historical information; rather it should provide
information on the basis of projections based on which actions may be initiated.
6) Integrated:
MIS is an integrated system. It is integrated with all operational and functional
activities of management. This is an important characteristic and- requirement for a
system to qualify as MIS. The reason for having an integrated system is that
information in the managerial context for decision-making may be required from
different areas from within the organization. If MIS remains a collection of isolated
systems and each satisfying a small objective, then the integrated information need
of managers will not be fulfilled. In order to provide a complete picture of the
scenario, complete information is needed which only an integrated system can
provide.
MIS Functions:
MIS is set up by an organization with the prime objective to obtain management
information to be used by its managers in decision-making. Thus, MIS must perform
the following functions in order to meet its objectives.
1) Data Capturing:
MIS captures data from various internal and external sources of an organization. Data
capturing may be manual or through computer terminals. End users, typically record
data about transactions on some physical medium such as paper form or enter it
directly into a computer system.
2) Processing of data:
The captured data is processed to convert it into the required management
information. Processing of data is done by such activities as calculating, comparing,
sorting, classifying and summarizing.
3) Storage of information:
MIS stores processed or unprocessed data for future use. If any information is not
immediately required, it is saved as an organizational record. In this activity, data
and information are retained in an organized manner for later use. Stored data is
commonly organized into fields, records, files and databases.
4) Retrieval of information:
MIS retrieves information from its stores as and when required by various users. As
per the requirements of the management users, the retrieved information is either
disseminated as such or it is processed again to meet the exact demands.
The broad functions of MIS are as given below:
To improve decision-making: MIS helps management by providing background
information on a variety of issues and helps to improve the decision-making quality of
management. The fast and accurate information supplied by MIS is leveraged by the
managers to take quicker and better decisions thereby improving the decision-making
quality and adding to the bottom line of the company.
To improve efficiency: MIS helps managers to conduct their tasks with greater
ease and with better efficiency. This reflects in better productivity for the company.
To provide connectivity: MIS provides managers with better connectivity with the
rest of the organization.
How do the organizations use their strategic information systems for gaining
competitive advantage?
A Strategic Information System can offer competitive advantage to an organization in
the following ways:
1) Creating barriers to competitors entry: In this strategy, an organization uses
information systems to provide products or services that are difficult to duplicate or
that are used to serve highly specialized markets. This prevents the entry of
competitors as they find the cost for adopting a similar strategy very high.
2) Generating databases to improve marketing: An information system also provides
companies an edge over their competition by generating databases to improve their
sales and marketing strategies. Such systems treat existing information as a
resource. For example, an organization may use its databases to monitor the
purchase made by its customers, to identify different segments of the market, etc.
3) Locking in customers and suppliers: Another way of gaining competitive
advantage is by locking in customers and suppliers. In this concept, information
systems are used to provide such advantages to a customer or a supplier, that it
becomes difficult for them to switch over to a competitor. For example, an
organization may develop its information system and give many benefits to its
customers, like reliable order filling, reduced transaction costs, increased
management support and faster delivery service.
4) Lowering the costs of the products: strategic information systems may also help
organizations lower their internal costs, allowing them to deliver products and
services at a lower price than their competitors can provide. Thus such information
systems can contribute to the survival and growth of the organization. For example,
airlines use information systems strategically to lower costs so that they may counter
competitors discount fares.
5) Leveraging technology in the value chain: This approach pinpoints specific
activities in the business where competitive strategies can be best applied and where
information systems are likely to have a greater strategic impact. This model
advocates that information technology can best be used to gain competitive
advantages by identifying specific, critical leverage points.