Definition of management information system

Written by stephen byron cooper Google
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Definition of management information system
Companies can consolidate their purchasing if they exploit the information held in the MIS. (Digital Vision./Digital Vision/Getty Images)

In the early days of computing programs were fed into computers on punch cards. The computing department in a company was known as the “DP” department, which stands for “data processing.” Once punch cards were replaced by tapes and floppy disks, the corporate computer section change its name to EDP, which stands for “electronic data processing.” Once PCs became widespread and the network became the focus of a company’s computing delivery system, EDP departments change their names to “IT,”IS” and MIS, which stand for “Information Technology,” “Information Systems” and “Management Information Systems,” respectively.

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Purpose

MIS objectives involve the construction of information gathering systems that enable automated data flows to cross through departmental boundaries. Enterprise Resource Planning systems log every financial transaction that arises out of the day to day operations of the organisation and stores that information. This data can then be com piled into the accounts of the company and ultimately feed its statutory reporting obligations through financial statements and tax returns.

Opportunity

The centralisation of all the transaction data of a company enables analysis of the company’s performance. If every sales invoice is recorded in the MIS manager can analyse the data to discern which products sell best and project future sales from past performance. The presence of purchasing data, invoice payments and payroll expenses also allows managers to measure changes in overall profit over time and also to compare the profitability of different products. National and international companies use the MIS to detect relative performance of regions or national subsidiaries.

Contacts

A database of static data underlies the transactional data held in the MIS. Rather than recording the address and tax code of a customer on each invoice, the MIS holds this information in a references section in the database. The need to relate this information to the invoice is fulfilled by a link from the invoice data to the customer reference data. The existence of a customer data base and records of past purchases enables the sales force to target customers, and also enables customer support through Customer Relationship Management.

Purchasing

As with sales, so purchasing benefits from the stratification of the MIS. All supplier information is also retained in a separate part of the database and a simple database query can produce a report of how much the company spent with each supplier. Purchasing managers can use this information to consolidate purchasing on a small group of preferred suppliers. This aids negotiations to lower purchase prices and thus, cut costs.

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