MANAGEMENT INFORMATION SYSTEMS

What are management information systems? A simple answer would be that management information systems are systems that are used to deliver management information. It could also be said that these systems might or might not be implemented by means of computing technology. They might be very formalized (i.e., explicit) or more informal (i.e., implicit). The real problem in understanding management information systems comes with what is defined as management information, as well as the particular view taken on how managers actually go about engaging with this information and these systems in doing managerial work on a day-to-day basis. Generally, the controversy with these systems is not about what they are but rather about why they are necessary or not and how they are actually used or not. It is in addressing these questions that a particular view of management information systems will tend to come to the fore.

Most contemporary authors would agree that it is useful to define management information as essential information extracted or filtered from the transactional or primary organizational activities to support management in identifying and solving problems as well as in making decisions to ensure the efficient and effective management of the organization. Again, this seems quite easy and intuitive to understand. It may be this intuitive need and the possibilities presented by computing technology that made H. Igor Ansoff claim, in his 1965 paper "The Firm of the Future" that "man-computer decision making is potentially the most powerful competitive tool which will be available to the firm of tomorrow." Was it? Is it still? The answer must be yes and no. The history of management information systems, especially formalized computer-based systems, has been rather disappointing. Many of the promises of efficient and effective decision making and problem solving through real-time and accurate information has not materialized. Managers continue to talk of information abundance, even overload, but argue they often lack what is really relevant—this is mostly expressed by the phrase, "we are drowning in data but we are starving for information."

Is it that these systems are not real-time enough, or that they are collecting the wrong data, or perhaps that they are presenting it in inappropriate ways? All of these may be possibilities. However, it may also be more fundamental. If a look is taken back to the 1960s and early 1970s, it is seen that controversy surrounded the idea of computer-based management information systems from its inception. The two most prominent detractors were Russell Ackoff, with his paper "Management Misinformation Systems" (1967), and John Dearden, with his paper "MIS Is a Mirage" (1972). Both of these authors felt that the management decision-making processes were much more complex than suggested by the proponents of computer-based management information systems. They also argued that the proponents did not have an adequate understanding of the way in which managers used information in actual decision-making processes. The extensive studies by Henry Mintzberg in the early 1980s of managerial work seemed to confirm that managers were indeed much less structured, informal, and intuitive in their use of information in decision-making processes. By the end of the 1980s and in the beginning of the 1990s, it became evident that management information systems were not the "grand solution" to the management problem its proponents thought it would be. Nevertheless, there were many benefits indirectly derived from these efforts, especially an understanding of how mangers actually go about making decisions and solving problems.

Historical Roots

The logic that would make management information systems a self-evident need in the second half of the twentieth century started long before the first computer was applied in a business context. In fact, one could trace the origin of this logic back to the very inception of the modern period and the work of the seventeenth-century philosopher René Descartes. Descartes, considered the father of the modern worldview, was struck by the large number of competing, and often contradictory, systems of knowledge about the world that had been presented to him as part of his education. He believed that humanity will only progress if they establish an absolutely certain basis to separate true statements from false statements—that is, to secure knowledge on a trustworthy foundation. This principle forms the implicit basis from which the father of modern management, Frederick Winslow Taylor, two hundred years later shaped its essence.

Taylor, akin to Descartes, was struck by the unsystematic manner in which factory work was being conducted and the lack of systematic knowledge on how to achieve results with a required degree of certainty. With this in mind, Taylor developed standardized techniques and methods to measure work. Tasks were divided into the smallest possible unit—the rational division of labor. Every unit was then rationalized according to available knowledge provided by detailed study of workers' movements, actions, and techniques for executing work. Every unnecessary technique, movement, or action was illuminated until only that which can no longer be doubted remained. A similar procedure was then applied to the workers themselves. The optimized work and worker were then placed under detailed monitoring to ensure compliance and to provide feedback for improving the work process. The improvements that Taylor achieved were phenomenal—even for very basic work such as shoveling things. He reported improvements of hundreds, and sometimes even thousands, of percent.

There is no doubt that Taylor's scientific management (often referred to as "Taylorism") was spectacularly successful. It was rapidly adopted by many factories and became the self-evident model for managing work in that organizational setting. However, this success masked the implicit outcome of the scientific management logic. This outcome must be carefully considered because it helps reveal the logic for management information systems and shows why management information systems never realized the potential that was anticipated by its original proponents.

The important implicit outcome of scientific management was the separation of cognition and action—in other words, "thinking about work" and "doing the work" became separated. Thinking was transferred from the worker to the management function or process. Thus, through scientific management, thinking and worker action became separated for the sake of absolute efficiency, and the need for an information system to act as a bridge for this gap came about—initially messengers and telephones, later computer-based information systems.

In Taylorism, management becomes conceived of as the brain that moves the body (work processes) in a planned and coordinated way. The information system becomes viewed as the system that connects the brain with the body—the nervous system as it were. From this separation of work and thought about work, established by scientific management, management information systems emerged as a self-evident need. As organizations grew in size and complexity, this need became more and more acute. Likewise, the problem of allocating resources—workers, machines, material, and so on—could no longer simply be solved on "diagrams and maps," which acted as models for the reality. As organizations became more complex than can be represented on diagrams and maps, more sophisticated models were needed to act as representations of reality, where different possible allocations, or scenarios, could be developed and evaluated. Thus emerged the need for decision-support systems. Likewise, more and more detailed information about work in progress and work completed were needed so that the planning horizon could be up to date.

Evolving Role

It is therefore not surprising that Henri Fayol, in his seminal work General and Industrial Management (1949), concluded that the essential management activities were planning, organizing, controlling, and leading. These activities flow logically from the way management became articulated in scientific management. As these management activities became more clearly articulated, they became supported by an increasingly complex set of techniques for gathering data and reporting results. In this regard, the development of managerial accounting was significant, with the first work on budgeting appearing in 1922 and the development of "responsibility accounting" in the early 1950s. However, the development of computer-based management information systems to support management activities was not yet evident, as the first electrical computers, the ENIAC (1946) and the UNIVAC 1 (1951), were seen as primarily mathematical machines.

In 1954, the UNIVAC 1 was installed at General Electric as a business application to do payroll processing. The business community rapidly appropriated the computer as a business tool, with its use growing to 100,000 business computers by 1974. In its first decade of application, the computer was essentially used as a more efficient technology for automating work that involved laborious calculation, such as payroll calculations. The focus was on its speed and accuracy as a mathematical tool. However, it soon became evident that the capturing or recording of data required for the calculations could also be used to create reports for managers. As such, computer-based management information became an unintended consequence of the automation of calculating operations.

The automation of more and more work processes generated increasing amounts of data for the manager to consider. Herbert Simon, the Nobel laureate, realized that managers would need systematic methods to use this, now increasingly abundant, data. Simon produced the first systematic account of managerial decision making in his seminal work The New Science of Management Decisions (1960), wherein he makes the distinction between structured and unstructured decisions. In a structured decision, the nature of the problem and the data required to consider a solution for the problem are known in advance. In an unstructured decision, the problem needs to be structured before it can be considered. It is therefore not possible to know in advance exactly what information will be required. Together with this work, a number of other works started to appear that had a particular influence on the way management information systems was conceived.

Framework for Definition

The most widely used, and undoubtedly the most influential, framework for management information systems was the framework presented by Anthony Gorry and Michael Scott Morton in 1971. This framework rapidly became the blueprint for the development of management information systems and is still used in most textbooks as the basis for discussing management information systems.

Gorry and Scott Morton proposed that the type of decisions and, therefore, information needs would vary according to the level of management control. Based on this idea, they suggested a framework for identifying the type of information required by each level of management. They concluded that operational management needed largely internal information, which is well defined, detailed, and narrow in scope. Furthermore, their information need tends to be current, usually referring to the most recent period—day, week, or month. They normally require a high level of accuracy and a structured and well-defined format of presentation. Typical examples of these would be the daily sales or production reports that provide detailed functional information such as sales per units, sales per salesperson, or sales per region. On the other end of the spectrum, they concluded that strategic management required general information that is broad and far-reaching in scope—mostly from external sources. Their information tended to be aggregated and summarized with an emphasis on forecasting, prediction, and future scenarios. The presentation of their information often varied to accommodate the diversity of formats used by the variety of sources—both internal and external. Typical examples of these would be internal strategy documents, government and central bank economic forecasts, market analyst commentaries, and share price predictions. From this initial framework, they proposed different types of systems to support the three management levels in the organization. The operational control process—first line or supervisory management—tend to be supported by frequent, detailed reports on the most recent work completed or in progress. The systems implemented to automate the basic operational business activities (e.g., payroll systems)— referred to as transaction processing systems— provide the data for this management reporting. The management control level—referred to as middle management or tactical management level—is supported by some form of decision-support system. These systems implement the decision process as defined by Simon, using modeling techniques that were developed by the emerging management science field—as explained by Ralph Sprague and Eric Carlson (1982) and, more recently, by George Marakas (1999).

Management science field emerged out of the operations research field of study, where mathematical models were being developed to solve complex resource allocation problems. (Operations research was itself an outcome of resource allocation problems encountered in World War II.) It was only in the latter half of the 1980s that the concept of an executive information system for strategic planning emerged. As the organizational hierarchies increased, the senior managers felt increasingly isolated from the basic business operations; the management separation of scientific management affected them the most. Thus, one had a contradiction in which the operational managers had the direct experience and knowledge of the business and the senior managers had the authority to allocate resources but not the knowledge to do so effectively. The executive information system was seen as the solution to this problem. Robert Thierauf (1991) proposes that an executive information system would provide the executive access to information about the operations in an easy to use, aggregate format with the ability to "drill down" and look at the detail data behind the aggregate presentations. With the coming of the executive information systems, the three management levels were associated with three distinct types of systems: management reporting systems, decision-support systems, and executive information systems. These systems are best summarized in the following manner. Operational managers are mostly supported by management reporting systems that provide specific, detailed, and current information about operations in the form of regular management reports. These systems act as the essential feedback for operational control and short-term problem solving. Middle managers are mostly supported by decision support systems. They are interactive computer-based systems intended to help decision-makers use data and mathematical models (such as cash flow or scheduling models) to identify and solve unprogrammed, semistructured problems. The system supports, rather than replaces, managerial judgment. Its objective is to improve the effectiveness of the decisions and not necessarily the efficiency with which decisions are being made. Strategic managers are supported by a variety of internal and external sources. One such internal source is the executive information system. It provides, in a useful and navigable format, direct online access to relevant, timely, accurate, and actionable information about aspects of an organization that are of particular interest to the senior managers. It allows the senior managers to identify broad strategic issues and then explore the information through increasing layers of detail, until they are able to explore the root causes of the issues.

From this discussion, it is evident why management information became viewed as essential information filtered from the transaction processing systems or primary organizational activities and processed, or structured, by the management information system to support management—in an appropriate manner for each level of management—in identifying and solving problems or making decisions to ensure the efficient and effective management of the organization. Gordon Davis and Margrethe H. Olsen, in the second edition of the influential text Management Information Systems: Conceptual Foundations, Structure, and Development (1985, p. 6), define management information systems as follows: "Management information systems are integrated, user-machine systems for providing information to support operations, management, and decision-making functions in an [organization]."

Unrealized Promise

These conceptual frameworks are useful to think through how management information systems could and ought to be designed and developed, but what about the actual implementation of these systems in organizations? With these conceptual models in mind, and based on the expected value of management information systems, organizations proceeded to invest huge amounts of resources in their design, development, and implementation. The management information systems project was the major concern for organizations in the 1970s and the 1980s. Even the functional unit responsible for information systems in the organizations was often referred to as the "Management Information Systems Department." Management reporting systems quickly became the backbone to support operational control in organizations—and could be said to be the most successful and enduring element of management information systems. Data capturing became more real-time (at the moment when it happens) and end users became more proficient at creating their own reports, queries, and so on. Decision-support systems have been relatively successful in small and specific areas of application. However, it has become evident that modeling organizational processes is much more complex than anticipated and that the most important factors considered by managers in decision making are often part of their tacit and intuitive understanding of the particular situation at hand. The field of decision support systems has grown to include support for group decision making, embedding artificial intelligence technology into these systems. However, effective decision support in areas that really matter still remains elusive. Relatively recent developments include data warehousing and online analytical processing. Executive information systems also have been moderately successful and continue to be used to a lesser or greater degree.

As with decision-support systems, the intuitive and unstructured nature of executive work remains the Achilles' heel of executive information systems. Neither decision-support systems nor executive information systems have become pervasive in any sense of the word. There appears to be a consensus that management information systems have not quite delivered on the promises heralded in the early 1970s. Studies of the investment in this technology have shown high levels of investments with rather low, or even negative, returns on investment, as reported by Paul Strassman in his book The Business Value of Computers (1990).

Management information systems have become much less of a concern for organizations—as reflected in research agendas, development priorities, and general business discourse. Some of the concerns about management information have shifted to other areas, such as enterprise resource planning systems. The most important factor for this change in emphasis is the shift in organizational thinking and development. By the second half of the 1980s and the early 1990s, organizational theorists and practicing managers realized that the standardized and stable production processes assumed by scientific management were simply no longer feasible. Organizations needed to be more flexible and able to respond to the increasingly sophisticated, interconnected, and dynamic environment. The only way to gain this flexibility was to reconnect "thinking about work" with "doing work"—thereby reversing the ill effects of scientific management. This attempt has led to the development of new models for managing organizations. To name but a few, these new models include learning organizations (where employees are encouraged to think about and improve their own work), quality circles (where quality problems are solved through collaborative consultation), empowerment of workers (through authority and resources), and multiskilling (where the widening of the skill base of all employees is encouraged). The design of computer-based information systems has responded to these changes. Thus the development of information technology to support learning, collaboration, and sharing of knowledge occurred, rather than the development of technologies for management control. The new technologies included initiatives such as computer-supported cooperative work systems in the form of groupware (to support collaboration), intranets (i.e., Internet technology that is available to an organization for sharing data on an internal basis), and knowledge repositories (to share knowledge through the organization).

Although management information systems will undoubtedly remain in some form as an integral part of the information systems infrastructure of organizations, it will not perform the central role that was once envisaged by its early proponents. In the new (i.e., postscientific management) organizational climate, new technological solutions are needed and are being developed. There is no doubt that they will also disappoint, because the problem of information and information systems is always, in the final analysis, a social problem rather than merely a technical one.

See also:Artificial Intelligence; Chief Information Officers; Group Communication; Group Communication, Decision Making and; Knowledge Management; Knowledge Management, Careers in; Organizational Communication; Systems Designers.

Bibliography

Ackoff, Russell L. (1967). "Management Misinformation Systems." Management Science 14:147-156.

Ansoff, H. Igor. (1965). "The Firm of the Future." Harvard Business Review 43(5):162-178.

Davis, Gordon B., and Olsen, Margrethe H. (1985). Management Information Systems: Conceptual Foundations, Structure, and Development. London: McGraw-Hill.

Dearden, John. (1972). "MIS Is a Mirage." Harvard Business Review 50(1):90-99.

Fayol, Henri. (1949). General and Industrial Management. London: Pitman.

Gorry, G. Anthony, and Scott Morton, Michael S. (1971). "A Framework for Management Information Systems." Sloan Management Review 13(1):55-70.

Introna, Lucas D. (1997). Management, Information and Power: A Narrative of the Involved Manager. Basingstoke, Eng.: Macmillan.

Marakas, George M. (1999). Decision Support Technology for the 21st Century. Englewood Cliffs, NJ: Prentice-Hall.

Mintzberg, Henry. (1980). The Nature of Managerial Work. Englewood Cliffs, NJ: Prentice-Hall.

Simon, Hubert A. (1960). The New Science of Management Decision. New York: Harper & Row.

Sprague, Ralph H., and Carlson, Eric D. (1982). Building Effective Decision Support Systems. Englewood Cliffs, NJ: Prentice-Hall.

Strassman, Paul. (1990). The Business Value of Computers. New Canaan, CT: Information Economics Press.

Taylor, Federick W. (1914). The Principles of Scientific Management. London: Harper & Row.

Thierauf, Robert J. (1991). Executive Information Systems: A Guide for Senior Management and MIS Professionals. New York: Quorum.

Lucas D. Introna

Management Information Systems

All businesses share one common asset, regardless of the type of business. It does not matter if they manufacture goods or provide services. It is a vital part of any business entity, whether a sole proprietorship or a multinational corporation. That common asset is information.

Information enables one to determine the need to create new products and services. Information tells companies to move into new markets or to withdraw from other markets. Without information, the goods do not get made, the orders are not placed, the materials are not procured, the shipments are not delivered, the customers are not billed, and the business cannot survive.

But information has far lesser impact when presented as raw data. In order to maximize the value of information, it must be captured, analyzed, quantified, compiled, manipulated, made accessible, and shared. In order to accomplish those tasks, an information system (IS) must be designed, developed, administered, and maintained.

INFORMATION SYSTEMS

An information system is a computer system that provides management and other personnel within an organization with up-to-date information regarding the organization's performance; for example, current inventory and sales. It usually is linked to a computer network, which is created by joining different computers together in order to share data and resources. It is designed to capture, transmit, store, retrieve, manipulate, and or display information used in one or more business processes. These systems output information in a form that is useable at all levels of the organization: strategic, tactical, and operational.

Systems that are specifically geared toward serving general, predictable management functions are sometimes called management information systems (MIS). A good example of an MIS report is the information that goes into an annual report created for the stockholders of a corporation (a scheduled report). The administration of an information system is typically the province of the MIS or information technology (IT) department within an organization.

Some applications have infringed on the familiar MIS landscape. Enterprise resource planning (ERP) software and executive information systems (EIS) both provide packaged modules and programs that perform the same functions as traditional MIS, but with greater functionality, flexibility, and integration capabilities.

Mainframes. The original computerized information systems were based on mainframes. “Mainframe” is a term originally referring to the cabinet containing the central processor unit or “main frame” of a room-filling computer. Firms such as IBM were instrumental in the mid-twentieth century in helping businesses integrate and operate information systems and technology into their business operations. After the emergence of smaller minicomputer designs in the early 1970s, the traditional large machines were described as “mainframe computers,” or simply mainframes. The term carries the connotation of a machine designed for batch rather than interactive use, though possibly with an interactive time-sharing operating system retrofitted onto it. It has been conventional wisdom in most of the business community since the late 1980s that the mainframe architectural tradition is essentially dead, having been swamped by huge advances in integrated circuit design technology and low-cost personal computing. Despite this, in the twenty-first century there are still uses for mainframe systems that store vast amounts of data.

The Internet. The Internet has opened up further developments in information systems and the exchange of information via Web-based e-mail, intranets, and extra-nets. These technologies allow for much faster data and information exchange and greater access for more users. Web-casting and videoconferencing allow for real-time information exchanges. Mobile computing technologies accessed by handheld devices, such as multi-functional mobile phones, personal digital assistants, and podcasting (via iPods), are offering further modes of communication.

Information systems are also crucial if a firm decides to practice telecommuting, or teleworking. Telecommuting is defined as when employees can conduct full operations without being inside the business's office, instead working from a location such as an employee's home.

Telecommuting is seen as an asset both in improving employees' quality of life, and with allowing an organization more flexibility. A 2005 article in Technovation noted a firm's ability to adapt to telecommuting as a policy is directly linked to its information technology resources. As some scholars note, these advances in technology can fundamentally change the nature of management.

However, some have also argued that security of a company's data has increased in importance with the increase in information technology. A 2007 Software World article stated that such practices as telecommuting make information systems vulnerable to attack. Due to the range of threats to information systems (including viruses and hackers), information security—such as passwords, firewalls, and so forth—are crucial to an organization.

INFORMATION SYSTEM DESIGN AND ADMINISTRATION

The design of an information system is based on various factors. Cost is a major consideration, but there certainly are others to be taken into account, such as the number of users; the modularity of the system, or the ease with which new components can be integrated into the system, and the ease with which outdated or failed components can be replaced; the amount of information to be processed; the type of information to be processed; the computing power required to meet the varied needs of the organization; the anticipated functional life of the system and/or components; the ease of use for the people who will be using the system; and the requirements and compatibility of the applications that are to be run on the system.

There are different ways to construct an information system, based upon organizational requirements, both in the function aspect and the financial sense. Of course, the company needs to take into consideration that hardware that is purchased and assembled into a network will become outdated rather quickly. It is almost axiomatic that the technologies used in information systems steadily increase in power and versatility on a rapid time scale. Perhaps the trickiest part of designing an information system from a hardware standpoint is straddling the fine line between too much and not enough, while keeping an eye on the requirements that the future may impose.

Applying foresight when designing a system can bring substantial rewards in the future, when system components are easy to repair, replace, remove, or update without having to bring the whole information system to its knees. When an information system is rendered inaccessible or inoperative, the system is considered to be “down.”

A primary function of maintaining an information system is to minimize downtime, or hopefully, to eradicate downtime altogether. The costs created by a department, facility, organization, or workforce being idled by an inoperative system can become staggering in a short amount of time. The inconvenience to customers can cost the firm even more if sales are lost as a result, in addition to any added costs the customers might incur.

Another vital consideration regarding the design and creation of an information system is to determine which users have access to which information. The system should be configured to grant access to the different partitions of data and information by granting user-level permissions for access. A common method of administering system access rights is to create unique profiles for each user, with the appropriate user-level permissions that provide proper clearances.

Individual passwords can be used to delineate each user and their level of access rights, as well as identify the tasks performed by each user. Data regarding the performance of any user unit, whether individual, departmental, or organizational can also be collected, measured, and assessed through the user identification process.

The open systems interconnection (OSI) seven-layer model attempts to provide a way of partitioning any computer network into independent modules from the lowest (physical/hardware) layer to the highest (application/program) layer. Many different specifications can exist at each of these layers.

A crucial aspect of administering information systems is maintaining communication between the IS staff, who have a technical perspective on situations, and the system users, who usually communicate their concerns or needs in more prosaic terminology. Getting the two sides to negotiate the language barriers can be difficult, but the burden of translation should fall upon the IS staff. A little patience and understanding can go a long way toward avoiding frustration on the part of both parties.

There is more to maintaining an information system than applying technical knowledge to hardware or software. IS professionals have to bridge the gap between technical issues and practicality for the users. The information system should also have a centralized body that functions to provide information, assistance, and services to the users of the system. These services will typically include telephone and electronic mail “help desk” type services for users, as well as direct contact between the users and IS personnel.

INFORMATION SYSTEM FUNCTIONS

Document and record management. Documenting and recording management may well be the most crucial aspect of any information system. Some examples of types of information maintained in these systems would be accounting, financial, manufacturing, marketing, and human resources. An information system can serve as a library. When properly collected, organized, and indexed in accordance

with the requirements of the organization, its stored data becomes accessible to those who need the information.

The location and retrieval of archived information can be a direct and logical process, if careful planning is employed during the design of the system. Creating an outline of how the information should be organized and indexed can be a very valuable tool during the design phase of a system. A critical feature of any information system should be the ability to not only access and retrieve data, but also to keep the archived information as current as possible.

Collaborative tools. Collaborative tools can consist of software or hardware, and serve as a base for the sharing of data and information, both internally and externally. These tools allow the exchange of information between users, as well as the sharing of resources. As previously mentioned, real-time communication is also a possible function that can be enabled through the use of collaborative tools.

Data mining. Data mining, or the process of analyzing empirical data, allows for the extrapolation of information. The extrapolated results are then used in forecasting and defining trends.

Query tools. Query tools allow the users to find the information needed to perform any specific function. The inability to easily create and execute functional queries is a common weak link in many information systems. A significant cause of that inability, as noted earlier, can be the communication difficulties between a management information systems department and the system users.

Another critical issue toward ensuring successful navigation of the varied information levels and partitions is the compatibility factor between knowledge bases. For maximum effectiveness, the system administrator should ascertain that the varied collection, retrieval, and analysis levels of the system either operate on a common platform, or can export the data to a common platform. Although much the same as query tools in principle, intelligent agents allow the customization of the information flow through sorting and filtering to suit the individual needs of the users. The primary difference between query tools and intelligent agents is that query tools allow the sorting and filtering processes to be employed to the specifications of management and the system administrators, and intelligent agents allow the information flow to be defined in accord with the needs of the user.

KEY POINTS

Managers should keep in mind the following advice in order to get the most out of an information system:

• Use the available hardware and software technologies to support the business. If the information system does not support quality and productivity, then it is misused.
• Use the available technologies to create and facilitate the flow of communication within your organization and, if feasible, outside of it as well. Collaboration and flexibility are the key advantages offered for all involved parties. Make the most of those advantages.
• Determine if any strategic advantages are to be gained by use of your information system, such as in the areas of order placement, shipment tracking, order fulfillment, market forecasting, just-in-time supply, or regular inventory. If you can gain any sort of advantage by virtue of the use of your information system, use it.
• Use the quantification opportunities presented by your information system to measure, analyze, and benchmark the performances of an individual, department, division, plant, or entire organization.

INFORMATION SYSTEMS AND OUTSOURCING

With companies outsourcing significant portions of their business operations (such as supply chain management), information systems can play an important role. General Motors (GM) is one company that outsourced many of its information technology operations in 2003. Doing so required coordinating operations and information systems among GM's internal IT operations and numerous other companies. One major task in this process has been standardizing information technology and other software processes.

Others note that globalization and, indeed, multinational operations would simply not be possible without sophisticated information systems.

An information system is more than hardware or software. The most integral and important components of the system are the people who design it, maintain it, and use it. While the overall system must meet various needs in terms of power and performance, it must also be usable for the organization's personnel. If the operation of day-to-day tasks is too daunting for the workforce, then even the most humble of aspirations for the system will go unrealized.

A company should not view information systems as ancillary. As management school professor Petter Gott-schalk notes, information technology operations should be central to a company's management. The emergence of the CIO, or chief information officer, as a top management position also speaks to the importance of information systems and information technology.

A company will likely have a staff entrusted with the overall operation and maintenance of the system and that staff will be able to make the system perform in the manner expected of it. Pairing the information systems department with a training department can create a synergistic solution to the quandary of how to get non-technical staff to perform technical tasks. Oft times, the individuals staffing an information systems department will be as technical in their orientation as the operative staff is non-technical in theirs. This creates a language barrier between the two factions, but the communication level between them may be the most important exchange of information within the organization. Nomenclature out of context becomes little more than insular buzzwords.

If a company does not have a formal training department, the presence of staff members with a natural inclination to demonstrate and teach could mitigate a potentially disastrous situation. Management should find those employees who are most likely to adapt to the system and its operation. They should be taught how the system works and what it is supposed to do. Then they can share their knowledge with their fellow workers. There may not be a better way to bridge the natural chasm between the IS department and non-technical personnel. When the process of communicating information flows smoothly and can be used for enhancing and refining business operations, the organization and its customers will all profit.

SEE ALSO Knowledge Management

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Zehir, C., and H. Keskin. “A Field Research on the Effects of MIS on Organizational Restructuring.” Journal of American Academy of Business 3 (September 2003): 270–279.

Management Information Systems (MIS)

A management information system (MIS) is a computerized database of financial information organized and programmed in such a way that it produces regular reports on operations for every level of management in a company. It is usually also possible to obtain special reports from the system easily. The main purpose of the MIS is to give managers feedback about their own performance; top management can monitor the company as a whole. Information displayed by the MIS typically shows "actual" data over against "planned" results and results from a year before; thus it measures progress against goals. The MIS receives data from company units and functions. Some of the data are collected automatically from computer-linked check-out counters; others are keyed in at periodic intervals. Routine reports are preprogrammed and run at intervals or on demand while others are obtained using built-in query languages; display functions built into the system are used by managers to check on status at desk-side computers connected to the MIS by networks. Many sophisticated systems also monitor and display the performance of the company's stock.

ORIGINS AND EVOLUTION

The MIS represents the electronic automation of several different kinds of counting, tallying, record-keeping, and accounting techniques of which the by far oldest, of course, was the ledger on which the business owner kept track of his or her business. Automation emerged in the 1880s in the form of tabulating cards which could be sorted and counted. These were the punch-cards still remembered by many: they captured elements of information keyed in on punch-card machines; the cards were then processed by other machines some of which could print out results of tallies. Each card was the equivalent of what today would be called a database record, with different areas on the card treated as fields. World-famous IBM had its start in 1911; it was then called Computing-Tabulating-Recording Company. Before IBM there was C-T-R. Punch cards were used to keep time records and to record weights at scales. The U.S. Census used such cards to record and to manipulate its data as well. When the first computers emerged after World War II punch-card systems were used both as their front end (feeding them data and programs) and as their output (computers cut cards and other machines printed from these). Card systems did not entirely disappear until the 1970s. They were ultimately replaced by magnetic storage media (tape and disks). Computers using such storage media speeded up tallying; the computer introduced calculating functions. MIS developed as the most crucial accounting functions became computerized.

Waves of innovation spread the fundamental virtues of coherent information systems across all corporate functions and to all sizes of businesses in the 1970s, 80s, and 90s. Within companies major functional areas developed their own MIS capabilities; often these were not yet connected: engineering, manufacturing, and inventory systems developed side by side sometimes running on specialized hardware. Personal computers ("micros," PCs) appeared in the 70s and spread widely in the 80s. Some of these were used as free-standing "seeds" of MIS systems serving sales, marketing, and personnel systems, with summarized data from them transferred to the "mainframe." In the 1980s networked PCs appeared and developed into powerful systems in their own right in the 1990s in many companies displacing midsized and small computers. Equipped with powerful database engines, such networks were in turn organized for MIS purposes. Simultaneously, in the 90s, the World Wide Web came of age, morphed into the Internet with a visual interface, connecting all sorts of systems to one another.

Midway through the first decade of the 21st century the narrowly conceived idea of the MIS has become somewhat fuzzy. Management information systems, of course, are still doing their jobs, but their function is now one among many others that feed information to people in business to help them manage. Systems are available for computer assisted design and manufacturing (CAD-CAM); computers supervise industrial processes in power, chemicals, petrochemicals, pipelines, transport systems, etc. Systems manage and transfer money worldwide and communicate worldwide. Virtually all major administrative functions are supported by automated system. Many people now file their taxes over the Internet and have their refunds credited (or money owning deducted) from bank accounts automatically. MIS was thus the first major system of the Information Age. At present the initials IT are coming into universal use. "Information Technology" is now the category to designate any and all software-hardware-communications structures that today work like a virtual nervous system of society at all levels.

MIS AND SMALL BUSINESS

If MIS is defined as a computer-based coherent arrangement of information aiding the management function, a small business running even a single computer appropriately equipped and connected is operating a management information system. The term used to be restricted to large systems running on mainframes, but that dated concept is no longer meaningful. A medical practice with a single doctor running software for billing customers, scheduling appointments, connected by the Internet to a network of insurance companies, cross-linked to accounting software capable of cutting checks is de facto an MIS. In the same vein a small manufacturer's rep organization with three principals on the road and an administrative manager at the home office has an MIS system, that system becomes the link between all the parts. It can link to the inventory systems, handle accounting, and serves as the base of communications with each rep, each one carrying a laptop. Virtually all small businesses engaged in consulting, marketing, sales, research, communications, and other service industries have large computer networks on which they deploy substantial databases. MIS has come of age and has become an integral part of small business.

But while virtually every company now uses computers, not all have as yet undertaken the kind of integration described above. To take the last step, however, has become much easier—provided that good reasons are present for doing so. The motivation for organizing information better usually comes from disorder—ordering again what has already been ordered, and sitting in boxes somewhere, because the company controls its inventory poorly. Motivation may arise also from hearing about others who are exploiting some resource, like a customer list, while the owner's own list is in sixteen pieces all over the place. There are sometimes also reasons for not automating things too much: in modern times a business can grind to a dead halt because "the network is down."

Upgrading the information system usually begins by identifying some kind of a problem and then seeking a solution. In that process a knowledgeable resource-person brought in from the outside can provide a great deal of help. If the problem is over-stocking, for example, solving that problem will often become the starting point for a new information system touching on many other aspects of the business. The first question a consultant is likely to ask will concern how things are managed now. In the description of the process, the discovery of potential solutions will begin. It is usually a good idea to call on two or three service firms for initial consultations; these rarely cost any money. Once the owner feels comfortable with one of these vendors, the process can then be deepened.

The business owner has the option of buying various software packages for various problems and then gradually linking them into a system with the help of a value-added reseller (VAR) or a systems integrator. This solution is probably best for the small business with fewer than 50 employees. Larger companies may in addition also want to explore options offered by application services providers or management service providers (ASPs and MSPs respectively, collectively referred to as xSPs) in installing ERP systems and providing Web services. ASPs deliver high-end business applications to a user from a central web site. MSPs offer on-site or Web-based systems management services to a company. ERP stands for "enterprise resource planning," a class of systems that integrate manufacturing, purchasing, inventory management, and financial data into a single system with or without Web capabilities. ERPs are very popular with larger and midsized firms but were increasingly penetrating the small business sector as well in the mid-2000s.

see also Automation

BIBLIOGRAPHY

"History of IBM—1910s." IBM. Available from http://www03.ibm.com/ibm/history/history/decade_1910.html. Retrieved on 15 April 2006.

Laudon, Kenneth C., and Jane Price Laudon. Management Information Systems: Managing the Digital Firm. Prentice Hall, 2005.

"Learning Zone—MIS: Time to plunge into automated systems." Printing World. 6 April 2006.

Shim, Jae K. and Joel F. Siegel. The Vest Pocket Guide to Information Technology. John Wiley & Sons, 2005.

Torode, Christina. "xSPs Rethink Business Models." Computer Reseller News. 15 July 2002.

                                        Darnay, ECDI

MANAGEMENT INFORMATION SYSTEMS

Before management information systems can be understood, the terms systems, information, and management must briefly be defined. A system is a combination or arrangement of parts to form an integrated whole. A system includes an orderly arrangement according to some common principles or rules. A system is a plan or method of doing something.

The study of systems is not new. The Egyptian architects who built the pyramids relied on a system of measurements for construction of the pyramids. Phoenician astronomers studied the system of the stars and predicted future star positions. The development of a set of standards and procedures, or even a theory of the universe, is as old as history itself. People have always sought to find relationships for what is seen or heard or thought about.

A system is a scientific method of inquiry, or observation, of the formulation of an idea, the testing of that idea, and the application of the results. The scientific method of problem solving is systems analysis in its broadest sense. Data are facts and figures. However, data have no value until they are compiled into a system and can provide information for decision making.

Information is what is used in the act of informing or the state of being informed. Information includes knowledge acquired by some means. In the 1960s and 70s, it became necessary to formalize an educational approach to systems for business so individuals, work groups, and businesses who crossed boundaries in the various operations of business could have appropriate information. Technical developments in computers and data processing

and new theories of systems analysis made it possible to computerize systems. Much of this computerization of systems was an outgrowth of basic research by the federal government.

Management is usually defined as planning, organizing, directing, and controlling the business operation. This definition, which evolved from the work of Henri Fayol in the early 1900s, defines what a manager does, but it is probably more appropriate to define what management is rather than what management does. Management is the process of allocating an organization's inputs, including human and economic resources, by planning, organizing, directing, and controlling for the purpose of producing goods or services desired by customers so that organizational objectives are accomplished. If management has knowledge of the planning, organizing, directing, and controlling of the business, its decisions can be made on the basis of facts, and decisions are more accurate and timely as a result.

Management information systems are those systems that allow managers to make decisions for the successful operation of businesses. Management information systems (MIS) consist of computer resources, people, and procedures used in the modern business enterprise. MIS also refers to the organization that develops and maintains most or all of the computer systems in the enterprise so that managers can make decisions. The goal of the MIS organization is to deliver information systems to the various levels of corporate managers. MIS professionals create and support the computer system throughout the company. Trained and educated to work with corporate computer systems, these professionals are responsible in some way for nearly all of the computers, from the largest main-frame to the desktop and portable PCs.

BACKGROUND

Management information systems do not have to be computerized, but with today's large, multinational corporations, computerization is a must for a business to be successful. However, management information systems began with simple manual systems such as customer databases on index cards. As early as 1642, the French mathematician and philosopher Blaise Pascal (1623–1662) invented the first mechanical adding machine so that figures could be added to provide information. Almost two hundred years later, Charles Babbage (1791–1871), a professor of mathematics at Cambridge University in England, wanted to make a machine that would compute mathematical tables. He attempted to build a computing machine during the 1880s. He failed because his ideas were beyond his technical capabilities, not because the idea was flawed. Babbage is often called the father of the computer. With the advent of the computer, management information systems became automated.

In the late 1890s, because of the efforts of Herman Hollerith (1860–1929), who created a punch-card system to tabulate the data for the 1890 census, it was possible to begin to provide data-processing equipment. The punch card developed by Hollerith was later used to form a company to provide data-processing equipment. This company evolved into International Business Machines (IBM). Mainframe computers were used for management information systems from the 1940s up until the 1970s. In the 1970s, personal computers were first built by hobbyists. Then Apple computer developed one of the first practical personal computers (PC). In the early 1980s, IBM developed its PC, and since then, the personal computer industry has mushroomed. Almost every management information system revolves around some kind of computer hardware and software.

Management information systems are becoming more important, and MIS personnel are more visible than they were in the 1960s and 1970s, when they were hidden away from the rest of the company and performed tasks behind closed doors. So remote were some MIS personnel from the operations of the business that they did not even know what products their companies made. This has changed because the need for an effective management information system is of primary concern to the business organization. Managers use MIS operations for all phases of management, including planning, organizing, directing, and controlling.

THE MIS JOB IN THE EARLY TWENTY-FIRST CENTURY

MIS personnel must be technically qualified to work with computer hardware, software, and computer information systems. Colleges and universities could not produce enough MIS personnel for business needs, and job opportunities were great in the mid-2000s. MIS managers, once they have risen through their technical ranks of their organization to become managers, must remember that they are no longer doing the technical work. They must cross over from being technicians to become managers. Their job changes from being technicians to being systems managers who manage other people's technical work. They must see themselves as needing to solve the business problems of the user, and not just of the data-processing department.

MIS managers are in charge of the systems development operations for their firm. Systems development requires four stages when developing a system for any phase of the organization:

Phase I is systems planning. The systems team must investigate the initial problem by determining what the problem is and developing a feasibility study for management to review.

Phase II identifies the requirements for the systems. It includes systems analysis, user requirements, necessary hardware and software, and a conceptional design for the system. Top management then reviews the systems analysis and design.

Phase III involves the development of the systems. This involves developing technical support and technical specifications, reviewing users' procedures control, designing the system, testing the system, and providing user training for the system. Management again reviews and decides on whether to implement the system.

Phase IV is the implementation of the system. The new system is converted from the old system, and the new system is implemented and then refined. There must then be ongoing maintenance and reevaluation of the system to see if it continues to meet the needs of the business.

TYPES OF SYSTEMS

Management information systems can be used as a support to managers to provide a competitive advantage. The system must support the goals of the organization. Most organizations are structured along functional lines, and the typical systems are identified as follows:

Accounting management information systems : All accounting reports are shared by all levels of accounting managers.

Financial management information systems : The financial management information system provides financial information to all financial managers within an organization including the chief financial officer. The chief financial officer analyzes historical and current financial activity, projects future financial needs, and monitors and controls the use of funds over time using the information developed by the MIS department.

Manufacturing management information systems : More than any functional area, operations have been impacted by great advances in technology. As a result, manufacturing operations have changed. For instance, inventories are provided just in time so that great amounts of money are not spent for warehousing huge inventories. In some instances, raw materials are even processed on railroad cars waiting to be sent directly to the factory, eliminating the need for warehousing.

Marketing management information systems : A marketing management information system supports managerial activity in the area of product development, distribution, pricing decisions, promotional effectiveness, and sales forecasting. More than any other functional area, marketing systems rely on external sources of data. These sources include competition and customers, for example.

Human resources management information systems : Human resources management information systems are concerned with activities related to workers, managers, and other individuals employed by the organization. Because the personnel function relates to all other areas in business, the human resources management information system plays a valuable role in ensuring organizational success. Activities performed by the human resources management information systems include, work-force analysis and planning, hiring, training, and job assignments.

The above are examples of the major management information systems. There may be other management information systems if the company is identified by different functional areas.

see also Information Processing ; Information Systems

bibliography

Rochester, Jack B. (1996). Using Computers and Information: Tools for Knowledge Workers. Indianapolis, IN: Que E&T.

Stair, Ralph M., and Reynolds, George W. (2003). Principles of Information Systems: A Managerial Approach (6th ed.). Boston: Thomson/Course Technology.

Lloyd W. Bartholome

management information system (MIS) An information system whose prime purpose is to supply information to management. The early concept of an MIS, commonplace in the 1960s and early 1970s, was that systems analysts would determine the information requirements of individual managers in an organization, and would design systems to supply that information routinely and/or on demand.

Decision support systems (DSS) form a class of MIS, giving managers much greater independence in their use of computer-based information. They depend on the union of office information systems (including personal computing facilities for managers, operated by themselves) with more conventional database and data-processing systems. They assume that managers will be able to build and access their own personal databases, as well as accessing the corporate databases, and that they will be able to formulate their own access enquiries without depending on specialist intermediaries.