What Is a Management Information System?
In business, management information systems (or information management systems) are tools used to support processes, operations, intelligence, and IT. MIS tools move data and manage information. They are the core of the information management discipline and are often considered the first systems of the information age.
MIS produce data-driven reports that help businesses make the right decisions at the right time. While MIS overlaps with other business disciplines, there are some differences:
- Enterprise Resource Planning (ERP): This discipline ensures that all departmental systems are integrated. MIS uses those connected systems to access data to create reports.
- IT Management: This department oversees the installation and maintenance of hardware and software that are parts of the MIS. The distinction between the two has always been fuzzy.
- E-commerce: E-commerce activity provides data that the MIS uses. In turn, the MIS reports based on this data affect e-commerce processes.
The concept includes what computers can do in this field, how people process information, and how best to make it accessible and up-to-date. Cummings adds, “The ‘right information in the right place at the right time’ is what we are striving for. This discipline is much more eclectic than straight computer science.”
Besides computer science, there are fields of study that overlap with MIS, both at the theoretical and practical levels:
- Information Systems (IS): In IS, there is a greater emphasis on tools, while MIS places more emphasis on business processes and operations.
- Information Technology (IT): IT is similar to IS, but it focuses solely on computers.
- Informatics: A discipline that combines software engineering, information systems development, and networking.
- Electrical Engineering and Computer Engineering: These fields focus on the development and improvement of hardware and software, respectively. MIS helps determine the practical and theoretical implications of these changes.
History of Management Information Systems
The technology and tools used in MIS have evolved over time. Kenneth and Aldrich Estel, who are widely cited on the topic, have identified six eras in the field.
After an era ends, the previous era’s hardware are still in use. In fact, mainframes (albeit much faster, cheaper, and easier to access than their predecessors) are still used today.
From Ledgers to Flash Memory
In the days where businesses recorded all transactions in a bound ledger, tallying and tracking what was going on took a lot of time and work. In the late 1800s, process automation began to appear in the the form of punch cards. Associated machines tabulated the punch card data and printed results, which made it easier to capture transactions. The company that came to eventually be known as IBM was founded in the early 1900s and became the leader in business machines and punch cards. These cards evolved from a solution to automate pattern creation in weaving machines. The company adapted the idea to store and input data for applications from as simple as time for payroll to very complicated uses like recording census data. When general-purpose computers became available after WWII (originally developed for codebreaking, calculating shell trajectories, and other war-related needs), the punch card became an input method as well as a way to store outputs (though it required readers to decode and print the data so people could read it).
Later, magnetic media (such as tapes and floppy disks) took over the storage of input and output, and computers could read and write directly to their own memory. This eliminated the need for the specialized machines. Next, optical media (like CDs and DVDs) that could store much more data on a single disc came along. Today, we are transitioning to flash memory (which also goes by solid state, as in a solid state drive or SSD). Flash memory has a higher capacity, is less volatile, and you can reuse it thousands of times with little degradation in quality.
Each of these periods has brought an increase in storage capacity at a lower cost. In tandem with the constant increase in computing power, more and more powerful software, almost-ubiquitous connectivity via wifi and mobile devices, and ever-expanding networking that evolved into the internet, work that previously took many hours - like tabulating a company's shipping costs over a year or population increases in a state over a century - now takes little time or human effort.
On the software side, the functions that paper ledgers performed moved to spreadsheet programs (the term spreadsheet came from the large sheets of paper spread out on tables). Microsoft Excel is the best-known example, but it wasn’t the first to become popular. VisiCalc, which was created for the Apple II in the late 1970s by Dan Bricklin and Bob Frankston, was the first to gain popularity. There were spreadsheet programs available for mainframes and minicomputers before VisiCalc, but they didn’t offer the ability to see results in real time.
Spreadsheets became more powerful in the 70s and 80s. When connected with databases, they gave users the ability to easily and quickly access and manipulate data. As users’ needs and desires changed, specialized programs were developed for different user groups, allowing innovative ways to use data.
Information technology and MIS used to be synonymous. Task automation (such as report creation) led to an expansion of the work that fell under MIS. Simultaneously, the definition of IT expanded even more, and it now encompases areas beyond MIS, such as cyber security and network administration.
Categories of Management Information Systems
Management information system is a broad term that incorporates many specialized systems. The major types of systems include the following:
- Executive Information System (EIS): Senior management use an EIS to make decisions that affect the entire organization. Executives need high-level data with the ability to drill down as necessary.
- Marketing Information System (MkIS): Marketing teams use MkIS to report on the effectiveness of past and current campaigns and use the lessons learned to plan future campaigns.
- Business Intelligence System (BIS): Operations use a BIS to make business decisions based on the collection, integration, and analysis of the collected data and information. This system is similar to EIS, but both lower level managers and executives use it.
- Customer Relationship Management System (CRM): A CRM system stores key information about customers, including previous sales, contact information, and sales opportunities. Marketing, customer service, sales, and business development teams often use CRM.
- Sales Force Automation System (SFA): A specialized component of a CRM system that automates many tasks that a sales team performs. It can include contact management, lead tracking and generation, and order management.
- Transaction Processing System (TPS): An MIS that completes a sale and manages related details. On a basic level, a TPS could be a point of sale (POS) system, or a system that allows a traveller to search for a hotel and include room options, such as price range, the type and number of beds, or a swimming pool, and then select and book it. Employees can use the data created to report on usage trends and track sales over time.
- Knowledge Management System (KMS): Customer service can use a KM system to answer questions and troubleshoot problems.
- Financial Accounting System (FAS): This MIS is specific to departments dealing with finances and accounting, such as accounts payable (AP) and accounts receivable (AR).
- Human Resource Management System (HRMS): This system tracks employee performance records and payroll data.
- Supply Chain Management System (SCM): Manufacturing companies use SCM to track the flow of resources, materials, and services from purchase until final products are shipped.
Types of MIS Reports
At their core, management information systems exist to store data and create reports that business pros can use to analyze and make decisions. There are three basic kinds of reports:
- Scheduled: Created on a regular basis, these reports use rules the requestor has provided to pull and organize the data. Scheduled reports allow businesses to analyze data over time (e.g. an airline can see the percentage of lost luggage by month), location (e.g. a retail chain can compare sales figures from different stores), or other parameters.
- Ad-hoc: These are one-off reports that a user creates to answer a question. If the reports are useful, you can turn ad-hoc reports into scheduled reports.
- Real-time: This type of MIS report allows someone to monitor changes as they occur. For example, a call center manager may see an unexpected spike in call volume, and find a way to increase productivity or send some of the calls elsewhere.
Benefits of Using Management Information Systems
Beyond the need to stay competitive, there are some key advantages of effective use of management information systems:
- Management can get an overview of their entire operation.
- Managers have the ability to get feedback about their performance.
- Organizations can maximize benefits from their investments by seeing what is working and what isn’t.
- Managers can compare results to planned performance by identifying strengths and weakness in both the plan and the performance.
- Companies can drive workflow improvements that result in better alignment of business processes to customer needs.
- Many business decisions are moved out of upper management to levels of the organization that is closer to where the knowledge and experience lie.
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Management Information Systems in Healthcare Organizations
As healthcare companies continue to evolve with the changing technology landscape, and more information, like treatment data, patient information, and operations processes are stored within these systems, healthcare organizations face a need to gain visibility into this critical information anytime, anywhere.
MIS in healthcare enables data and information management related to clinical trials, financial and legal information, pharmaceutical details, physician credentials, and more, to be handled within one comprehensive system. However, because much of this information is confidential and must abide by HIPAA regulatory requirements, these organizations must also be confident that their MIS is safeguarded.
To enable healthcare teams to organize, manage, and store critical information within one holistic system, while also ensuring that their data is safe and all protected health information (PHI) is secure, they need a tool that provides transparency into critical processes, while remaining protected.
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MIS Degrees and Careers
The U.S. Bureau of Labor Statistics Occupational Outlook Handbook (OOH) projection for employment in computer and information occupations are projected to grow by 22 percent from 2010 to 2020, adding about 758,000 new jobs.
There’s a common misconception that MIS is just coding. Though that task is a part of it, there are many skills and attributes required for MIS-related careers, including the following:
- Problem solving
- Liking to work with people
- Strategic thinking, especially about technology. In a 1998 paper titled The Balanced Scorecard: A Foundation For the Strategic Management of Information Systems, authors Maris Martinsons, Robert Davison, and Dennis Tse state:
In addition to managing current performance, there is also a need to measure and evaluate the readiness of the IS department or function for the future. The future readiness perspective is concerned with: 1. continually improving the skillset of IS specialists in order to prepare them for potential changes and challenges in the future; 2. regularly updating the applications portfolio; and 3. putting effort into researching emerging technologies and their potential value to the organization.
- Developing and implementing new ideas
- Understanding both technology and business
- The ability to look at both details and the big picture
- Communication skills, both written and oral. R. Kelly Rainer, Jr. explains, “The ability of MIS employees to communicate effectively with users in order to understand their business problems. After gaining that understanding, MIS employees must present computer-based solution(s) to those problem(s) without using MIS jargon. The trickiest problem here occurs when a business problem does not have a computer-based solution. In some cases, users are looking for a ‘silver, computer-based bullet’ for a problem that does not have such a solution. For example, a problem with corporate culture might not have a technological solution.”
- Time and resource management
- Comfortable with technological change. R. Kelly Rainer, Jr. says, “One function of MIS employees is to keep abreast of emerging technologies and the potential impacts that these technologies will have on their organization. In fact, MIS employees must be conversant with SWOT (strengths, weaknesses, opportunities, and threats) analyses for each of these technologies. MIS employees must use original thinking when they present these analyses to organizational management.”
There are many employment paths for someone who wants to pursue a career in MIS. These are some MIS-related job titles/fields:
- Business analyst
- Business application developer
- Business intelligence analyst
- Computer and information systems manager
- Computer systems analyst
- Data communications analyst
- Data integration
- Database administrator
- Database analyst
- Information exchange
- Information integration
- Information resources management
- Information security
- Information systems manager
- IT consultant
- IT development project leader
- IT user liaison
- Knowledge management
- Network administrator
- Network systems analyst
- Systems analyst
- Systems developer
- Technical support specialist
- Web developer
While every modern business needs MIS, some industries devote more of their resources to the practice than others do; these include health care, financial services, and telecommunications. Therefore, job seekers might find more opportunity in those verticals.
If someone wants to pursue a degree in an MIS-related field, Collegefactual.com has compiled a list of the top BA programs in the U.S., based on related overall education quality, degrees offered, earnings potential, and other factors:
Recent Developments and The Future of Management Information Systems
Management information systems, like any discipline that involves computers and software, is constantly changing. Some recent developments in the field include the following:
- PCs Can Now Host MISs: A small business can have access to the powerful software that previously was only available to large enterprises.
- Application and Management Service Providers: Similar to renting cloud storage, companies can rent software packages and systems management services and expand as their needs change.
- Security: As proved by recent data breaches, data security has moved from a minor concern to a major one. Detailed information about security practices can be found here.
In the future, many of the same forces that will change the larger world will affect MIS, but some will have a greater impact than others. MIS experts weigh-in on the topic and what we can expect going forward:
Maeve Cummings believes:
One big area of development in information technology is artificial intelligence (AI), which goes far beyond robots that control production (for example, in the automobile industry). Machines are becoming smarter in that they can learn how to solve problems. One such system is a neural network, which is used to alert you that your credit card may have been used unlawfully. These neural networks form a pattern of your spending and based on that, they flag purchases that are out of character, which is when you're notified or your credit card is frozen, depending on the situation. Such developments undoubtedly affect MIS, but they also affect the culture, the law, medicine, military defense, etc.
With so much big data being collected and analyzed nowadays, there will be a great need for legal minds to help sort through the various issues of what should and should not be legal from a privacy point of view. Also, with the budding field of computer-aided mind reading, still very much in its infancy, the issue of what society is allowed to do with that information will be crucial. For example, if you can read a person’s mind to determine whether that person is lying or not, would that be considered evidence or testimony? The law protects people from incriminating themselves (i.e. testimony). However, evidence, such as blood and hair samples may be taken without the consent of the accused. So which is mind-reading? The most interesting part of this business is that it is constantly changing and becoming more powerful. That is also the most alarming part of it.
R. Kelly Rainer Jr shares his thoughts on emerging technologies:
- Artificial Intelligence: Narrow AI (AI for specific tasks) is now pervasive in many organizations. Advances in machine learning and deep learning are making narrow AI much more valuable to all of us. Think instantaneous translation, autonomous vehicles, robots, digital manufacturing (3D printing), etc. MIS departments must try to keep up with these advances and decide how narrow AI can be used in their organizations.
- The Internet of Things (IoT): The rapid increase of placing sensors on all objects (animate and inanimate) is leading to a sense-and-respond environment. MIS employees should perform the SWOT analysis on IoT for their organizations. A well-publicized example of IoT is General Electric and its Predix operating system.
- Blockchain: Distributed-ledger technology is now being used in a large number of areas. Again, MIS employees must keep up with this technology and see how it impacts their organizations.
- Financial Technology (FinTech): If your organization is in the financial sector, your MIS employees had better be closely watching start-up FinTech companies. These companies are planning on disrupting the traditional financial sector.
- Quantum Computing: As Moore’s Law begins to slow as we reach the physical limits on how many integrated circuits we can place on a chip, a new paradigm is emerging called quantum computing. Classical computing uses bits, which are either a “0” or a “1.” Quantum computing uses quantum bits (qubits). Unlike classical bits, qubits can store much more information than just 1 or 0 because they can exist in any superposition of these values. Quantum computing is in its very early days, but its potential can provide a dramatic increase in computing speeds. For example, scientists are hoping to be able to accurately model the climate. Another application lies in the field of information security.
Revue of Top Management Information Systems Textbooks
The future of MISs and new technologies will provide new ways to use data to improve business processes, acquire and work with customers, educate employees, and more. If you’re interested in learning more about management information systems, these books can help flush out your understanding of the field and its opportunities.
Management Information Systems for the Information Age by Steven Haag and Maeve Cummings. Learn the basics of the field and study examples of how organizations have implemented the concepts presented.
Management Information Systems: Managing the Digital Firm by Kenneth C. Laudon and Jane P. Laudon. This is geared toward business students and provides insight into how businesses leverage IT systems to meet their corporate objectives.
Management Information Systems, Moving Business Forward by by R. Kelly Rainer, Jr. and Hugh J. Watson. This book ties MIS concepts to practice activities, and the activities give students experience with software used in the business world.
Business Information Management: Improving Performance Using Information Systems by Dave Chaffey and Gareth White. In this book, you’ll learn how to apply problem-solving skills to MIS-related problems while looking at them from the perspective of different roles inside a company.
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