Payroll and order processing are examples of a computerized management information system

MIS (management information systems) is the department controlling hardware and software systems used for business-critical decision-making within an enterprise.

The MIS department was originally the whole of information technology. From the 1960s to the early 1980s, practitioners and business schools referred to MIS, rather than IT. In the early days, enterprise computing's main role was to help the CEO and CFO with information systems management for a few key run-the-business tasks, such as order entry, accounting and budgeting. No enterprise applications existed; programmers painstakingly wrote code to carry out these functions, usually on a mainframe.

These systems were business-critical, meaning a business would fail if it had to go back to manual accounting. If MIS failed, the business was in danger. The CFO oversaw MIS, ensuring the developers and administrators delivered what accounting needed.

In the 1980s, with the advent of personal computers that ran spreadsheets, the scope of computing's responsibilities began to change. Personal spreadsheets took business-critical processes out of the domain of upper management; MIS needed to service a wider range of users -- deploying external, as well as internal, software programs. The name of the department changed to reflect this new set of internal customers, becoming information systems (IS). The MIS department became one, still-vital part of the overall IS department.

How a MIS works

In addition to serving as a department within a company, MIS refers to computer software that is used to store, organize and analyze information. Management information systems are used to track sales, inventory, equipment and related business information. In the past, management information systems ran on mainframe computers. As computing systems evolved, MIS moved to run on client/server systems. Today, it’s common for MIS to run in the cloud or in a hybrid cloud.

Types of MIS

The four types of MIS are:

• Transaction Processing System (TPS), which processes the routine transactions associated with a business. Example transactions include payroll processing, order processing, such as for an e-commerce business, and invoicing.
• Management Support Systems (MSS), which store and organize data, enabling end users to generate reports and analyze data to address business needs and inform planning. A data warehouse is an example of a Management Support System.
• Decision Support Systems (DSS), which analyze business data to assist managers with decision making. For example, a DSS could project revenue figures based on new product sales assumptions.
• Expert Systems, which provide managers with insights and advice, using artificial intelligence (AI) to simulate the expert knowledge of a human in a particular field.

MIS vs. IT management

In the 1990s, the rise of the enterprise application brought about a new set of IS tasks. Companies succeeded by providing better services to the consumer than competitors, via a proper mix of enterprise applications and homegrown ones. The applications handled a wider range of functions than the original MIS department: order entry, accounting and budgeting, but also enterprise resource planning, supply chain management and sales force automation. Many of these tasks were not solely the property of the IS department -- outside vendors, outsourcers and line-of-business computing departments all claimed a share of enterprise computing.

Information systems became more of a strategic director of the software and underlying hardware technologies in the enterprise's architecture, and less of a controlling central entity. Again, the name changed to reflect the new role: information technology, or IT, rather than IS. Again, the original MIS department became a smaller part of the overall whole.

Today, the term management information systems is used broadly in various contexts. These include, but are not limited to:

• Decision support systems
• Resource and people management applications 
• Project management
• Database retrieval applications.

Although the boundaries between MIS and IT management have become fuzzy over the years, typically, MIS still covers systems that are critical to the company's ability to survive, including accounting and order entry. Upper management should understand the importance of MIS in the context of enterprise revenue.

In many businesses, MIS handles legacy software and hardware, coded by programmers long since retired, who left no documentation for the systems. This is equally a role of IT management and business coordination. The enterprise upgrades or modernizes these systems only very carefully, and with high appreciation of the risks involved. Therefore, the importance of MIS, and the people who support it and know its quirks, remains high -- even if it is a little-discussed part of enterprise IT.

Importance of MIS

MIS, both the department and the software system, can help companies gain a competitive advantage. The data managed by an MIS system can help managers make better decisions related to sales, manufacturing, resource allocation and more. Both the MIS department and the software systems help organizations increase productivity by enabling workers to spend more time on productive tasks.

The MIS department plays an important role in providing these support services within an organization:

• Governance, which involves systems and controls over employees’ use of computing systems. This MIS department defines, manager and enforces rules on how (and whether) employees can access the company’s technologies and network infrastructure. MIS is responsible for IT security, as well as enforcing codes of conduct related to computer systems use.
• Infrastructure, which refers to the technology systems that support the day-to-day functioning of the business, such as phones, desktop/laptop computers, servers, application software and cloud computing. The MIS department provides internal help desk and support services, assisting employees and troubleshooting issues related to the infrastructure.
• Data management, which involves the provisioning and management of systems that enable employees to access and update critical business data. The MIS department is responsible for ensuring the availability and security of the data management systems.

Management information systems careers

The management information systems job description is likely to include financial concepts and duties alongside those of IT administration. Roles and responsibilities include network and computer systems management, business systems analysis, data integration, and compliance and audit preparations, as well as soft skills such as being a communicator who can liaison with the business units that rely on MIS.

A management information systems career could entail evaluating business applications and selecting those that will help the enterprise achieve sales, marketing or related goals. In turn, the MIS department then deploys and manages these applications throughout their lifecycle.

MIS jobs may require a degree in computer science or management information systems, specifically. The candidate should be able to manage IT and software vendors, and troubleshoot and optimize the computer systems and applications. In addition, they should be able to track metrics related to how effectively the application supports business objectives. The MIS career entails extensive planning and analysis for large-scale and business-critical projects, and it may require experience or education on finance and economics.

Information systems are developed for different purposes, depending on the needs of human users and the business. Transaction processing systems (TPS) function at the operational level of the organization; office automation systems (OAS) and knowledge work systems (KWS) support work at the knowledge level. Higher-level systems include management information systems (MIS) and decision support systems (DSS). Expert systems apply the expertise of decision makers to solve specific, structured problems. On the strategic level of management we find executive support systems (ESS). Group decision support systems (GDSS) and the more generally described computer-supported collaborative work systems (CSCWS) aid group-level decision making of a semistructured or unstructured variety.

The variety of information systems that analysts may develop is shown in the figure below. Notice that the figure presents these systems from the bottom up, indicating that the operational, or lowest, level of the organization is supported by TPS, and the strategic, or highest, level of semistructured and unstructured decisions is supported by ESS, GDSS, and CSCWS at the top. This text uses the terms management information systems, information systems (IS), computerized information systems, and computerized business information systems interchangeably to denote computerized information systems that support the broadest range of user interactions with technologies and business activities through the information they produce in organizational contexts.

Transaction Processing Systems

Transaction processing systems (TPS) are computerized information systems that were developed to process large amounts of data for routine business transactions such as payroll and inventory. A TPS eliminates the tedium of necessary operational transactions and reduces the time once required to perform them manually, although people must still input data to computerized systems.

Transaction processing systems are boundary-spanning systems that permit the organization to interact with external environments. Because managers look to the data generated by the TPS for up-to-the-minute information about what is happening in their companies, it is essential to the day-to-day operations of business that these systems function smoothly and without interruption.

A systems analyst may be involved with any or all of these systems.

Office Automation Systems and Knowledge Work Systems

At the knowledge level of the organization are two classes of systems. Office automation systems (OAS) support data workers, who do not usually create new knowledge but rather analyze information to transform data or manipulate it in some way before sharing it with, or formally disseminating it throughout, the organization and, sometimes, beyond. Familiar aspects of OAS include word processing, spreadsheets, desktop publishing, electronic scheduling, and communication through voice mail, email (electronic mail), and teleconferencing.

Knowledge work systems (KWS) support professional workers such as scientists, engineers, and doctors by aiding them in their efforts to create new knowledge (often in teams) and by allowing them to contribute it to their organization or to society at large.

Management Information Systems

Management information systems (MIS) do not replace transaction processing systems; rather, all MIS include transaction processing. MIS are computerized information systems that work because of the purposeful interaction between people and computers. By requiring people, software, and hardware to function in concert, management information systems support users in accomplishing a broader spectrum of organizational tasks than transaction processing systems, including decision analysis and decision making.

To access information, users of the management information system share a common database. The database stores both data and models that help the user interact with, interpret, and apply that data. Management information systems output information that is used in decision making. A management information system can also help integrate some of the computerized information functions of a business.

Decision Support Systems

A higher-level class of computerized information systems is decision support systems (DSS). DSS are similar to the traditional management information system because they both depend on a database as a source of data. A decision support system departs from the traditional management information system because it emphasizes the support of decision making in all its phases, although the actual decision is still the exclusive province of the decision maker. Decision support systems are more closely tailored to the person or group using them than is a traditional management information system. Sometimes they are discussed as systems that focus on business intelligence.

Artificial Intelligence and Expert Systems

Artificial intelligence (AI) can be considered the overarching field for expert systems. The general thrust of AI has been to develop machines that behave intelligently. Two avenues of AI research are (1) understanding natural language and (2) analyzing the ability to reason through a problem to its logical conclusion. Expert systems use the approaches of AI reasoning to solve the problems put to them by business (and other) users.

Expert systems are a very special class of information system that has been made practicable for use by business as a result of widespread availability of hardware and software such as personal computers (PCs) and expert system shells. An expert system (also called a knowledge-based system) effectively captures and uses the knowledge of a human expert or experts for solving a particular problem experienced in an organization. Notice that unlike DSS, which leave the ultimate judgment to the decision maker, an expert system selects the best solution to a problem or a specific class of problems.

The basic components of an expert system are the knowledge base, an inference engine connecting the user with the system by processing queries via languages such as structured query language (SQL), and the user interface. People called knowledge engineers capture the expertise of experts, build a computer system that includes this expert knowledge, and then implement it.

Group Decision Support Systems and Computer-Supported Collaborative Work Systems

Organizations are becoming increasingly reliant on groups or teams to make decisions together. When groups make semistructured or unstructured decisions, a group decision support system may afford a solution. Group decision support systems (GDSS), which are used in special rooms equipped in a number of different configurations, permit group members to interact with electronic support—often in the form of specialized software—and a special group facilitator. Group decision support systems are intended to bring a group together to solve a problem with the help of various supports such as polling, questionnaires, brainstorming, and scenario creation. GDSS software can be designed to minimize typical negative group behaviors such as lack of participation due to fear of reprisal for expressing an unpopular or contested viewpoint, domination by vocal group members, and “group think” decision making. Sometimes GDSS are discussed under the more general term computer-supported collaborative work systems (CSCWS), which might include software support called groupware for team collaboration via networked computers. Group decision support systems can also be used in a virtual setting.

Executive Support Systems

When executives turn to the computer, they are often looking for ways to help them make decisions on the strategic level. Executive support systems (ESS) help executives organize their interactions with the external environment by providing graphics and communications technologies in accessible places such as boardrooms or personal corporate offices. Although ESS rely on the information generated by TPS and MIS, executive support systems help their users address unstructured decision problems, which are not application specific, by creating an environment that helps them think about strategic problems in an informed way. ESS extend and support the capabilities of executives, permitting them to make sense of their environments.

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