Management information system

A management information system refers to an element of business that gathers relevant company data, fosters communication between people in a company, and helps to guide the decisions of company leaders. This area of business has existed since computers were first adapted into businesses around the 1960s. Since that time, it has become more specialized and is now mostly separate from Information Technology and Information Services. Management information systems are distinct because their most common function is to provide company leaders (management) with the data they need for decision-making. However, management information system personnel may work on many other tasks within a company.

Background

In the past, businesses were generally much smaller than they are today. The first businesses were run by individuals, families, or small partnerships such as an artisan and an apprentice. Business leaders and their workers generally communicated face-to-face across small geographic distances, often within a single room. Technology was relatively primitive and payment was made with cash, such as metal coins, or barter (trading). Records were few and those that did exist were simply written by hand in ledgers or similar books.

Over the centuries, businesses have grown exponentially in size, societal importance, and complexity. Many businesses include dozens or even hundreds of employees, generally split into authority-based hierarchies, task-based branches, or departments focusing on specialized tasks. In the 2020s, many business leaders and employees may not work in the same building, or even in the same city, state, or country, with a large percentage of workers doing most or all of their daily tasks remotely via computer. Technologies for business tasks such as manufacturing, as well as for recording, storing, and processing business information, have also grown enormously in variety, capabilities, and complexity. Most modern businesses rely on digital technologies, some of which are so complicated they require full-time experts to oversee and manage.

Many businesses, particularly large ones, face an ongoing challenge. Their large sizes, numerous branches, significant resources, and multiple fields of specialty make them potentially more diverse, capable, and lucrative than smaller businesses. However, those same factors may also create serious complications when it comes to communication inside the business and between the business and outsiders (such as consumers, investors, stockholders, competing businesses, and government officials).

Size, complexity, and diversity in a business might create barriers or delays in communicating information, including data vital to the business’s overall success. Difficulty in using information technology, such as databases, cloud storage, and various management apps, might keep some company members uninformed about what they need to know to make the best decisions. The sheer amount of data modern companies collect may make finding particular information a seemingly impossible “needle in a haystack” type of task.

Poor communication within and beyond a business poses serious threats to the business’s profitability and overall stability. Without necessary information, business leaders cannot make the most effective decisions, and managers and workers cannot fully understand what they are expected to accomplish. For these reasons, many modern businesses have turned to management information systems (MIS) to help keep lines of communication open between all areas of a large business.

Overview

Management information systems have been around in some form since big businesses first began to adopt computers in the 1960s and 1970s. These first computers were expensive, complex machines that required experts to operate. Since software was rare or nonexistent, company programmers had to write their own code to tell the computers what to do. Many businesses began to use these massive computers for activities, such as budgeting, accounting, and order entry, that had previously been done with ink and paper.

Once a company transitioned to a computer system, it relied on it and the ever-increasing body of information it held. If the computer system malfunctioned or failed, the company would be in a dire situation and would likely also collapse. For that reason, MIS professionals became an integral part of computerized companies.

In the 1980s, the creation of personal computers (PCs) and new business software, notably spreadsheets that made accounting relatively fast and easy, changed the role of MIS in business. Many MIS technicians who used to work on large computers with vital information used only by top company officers shifted to helping employees with their own PCs and programs; this section of the field became known as Information Services (IS), and then Information Technology (IT), personnel.

During this time, a smaller number of MIS experts remained in positions in which they worked directly with company leaders, thus preserving the “management” aspect of the “management information system” title. By the 2020s, MIS has become a highly specialized field with few direct links to IS or IT departments.

In modern large businesses, MIS is a group or department that oversees the company’s use of both computer hardware and software, particularly hardware and software used to make important, “business critical” decisions. Many people and groups within an organization may rely on MIS. Primary among these groups are executives, managers, and related operational staff members who are responsible for overseeing daily activities at the workplace. These people require up-to-date, accurate data from MIS sources to show how the company is progressing and whether changes are in order.

Another group that often uses MIS data is the finance department and financial analysts, who study information relating to the company’s income, expenses, and so on. Human resources personnel may use MIS data to learn more about employees, individually or in groups, and determine whether employees are working up to their highest level of performance; if not, human resources may recommend more training or staff changes. Marketers may use MIS data to learn more about products and demographics. MIS data may even prove useful to stakeholders such as customers, partners, and suppliers outside of the actual company hierarchy.

To meet the varied needs of these many information users, MIS personnel may participate in a wide variety of actions within an organization. Likely the first and most basic activity of MIS is to gather information about the business. This may include almost any sort of data that pertains to the business and its operations; a few examples include revenue or expense calculations, employee schedules, incoming and outgoing shipment notices, and quality testing results.

MIS personnel gather and record this diverse information in ways that can be easily accessible by the people who need it. In this way, MIS also becomes a sort of “middleman” between different groups in an organization, working to help other groups connect and communicate effectively. Sometimes, MIS is even given the task of training employees to better manage their own data and communicate in more efficient ways with coworkers and bosses. MIS personnel also use their data to compile reports, including reports intended for the business’s leaders, staff, and consumers, as well as reports for the government or other authorities.

However, the most fundamental task for MIS experts is usually in helping executives, managers, and other business leaders make sound decisions. To do this, MIS personnel use not only the data they have gathered but also their skill in communication and knowledge of the workings of the business.

MIS is commonly used as a term for a specialized branch of a company’s technology department, but it may also be used to designate types of software used for coordinating business technology on the management level. In the 2020s, many MIS systems operate on cloud-based servers where they may be accessible to executives and workers in many parts of a company, as well as in diverse geographic locations.

Technologists often divide MIS software and applications into four main categories. One of the most common is called a transaction processing system (TPS), which handles many day-to-day functions of business computing such as invoicing, processing payroll, and handling product orders. Another common form is management support system (MSS) software, which processes and analyzes data to make it easy to find and understand so business leaders may make informed decisions quickly and efficiently. The other two main types of MIS software are DSS and expert systems, which analyze business data to directly help guide leaders’ decisions. DSS programs use calculations and projections, while expert systems use artificial intelligence (AI) to simulate expert human knowledge and provide highly detailed suggestions to managers.

Bibliography

Ingram, David. “What Is a Management Information System?” Houston Chronicle, 12 Feb. 2019, smallbusiness.chron.com/management-information-system-2104.html. Accessed 25 July 2023.

Kernochan, Wayne. “Management Information Systems (MIS).” TechTarget, 2023, www.techtarget.com/searchitoperations/definition/MIS-management-information-systems. Accessed 25 July 2023.

“Management Information Systems (MIS) Degree.” University of Tampa, 2020, www.ut.edu/academics/sykes-college-of-business/information-and-technology-management-(itm)-degrees/management-information-systems-degree. Accessed 25 July 2023.

“What Are Management Information Systems?”University of Arizona, 25 June 2024, www.uagc.edu/blog/what-are-management-information-systems. Accessed 7 Feb 2025.

“What Is MIS? Management Information Systems.” Texas A&M University, 2023, mays.tamu.edu/department-of-information-and-operations-management/management-information-systems/. Accessed 25 July 2023.

“What Is MIS?” University of Arizona, 2023, eller.arizona.edu/departments-research/schools-departments/mis/what-is-mis. Accessed 25 July 2023.