3.3.

Management Information Systems (mis)

These can be defined as information systems that provide information for
userswith similar needs. The main purpose of Management Information
Systems isto providemanagers with the information they need to take
decisions and solveproblems. Management Information Systems are
supported by corporate databases,which include data generated by
transaction processing.Every organisation has to take decisions on many
issues that arise on a regular basis,whether weekly, monthly, or quarterly,
for which certain information is required.One example is the monthly
breakdown of sales figures on a client by client basis.Because the decisionmaking processes are clearly defined, the information neededto take
decisions can easily be identified. An administrative information system
cantherefore prepare regular reports on which to base these decisions; these
reportsare prepared and presented in a previously designed format. Thus,
these systems provide support for structured decisions, since administrators
know beforehand which factors should be taken into account in the decisionmaking process and the Management Information System provides clearly
structured reports with all the necessary information to take these structured
decisions.
The content of these reports can be enhanced by including the concept of
management by exception. In this case, the information processor compares
real performance with previously established standards, and when
performance falls outside acceptable limits, the managers attention is drawn
to the fact. Management by exception can be incorporated into Management
Information System reports in four ways:
1. by preparing a report only when exceptions occur
2. by using the reports sequence function to highlight exceptions. The
reports entries
can be arranged in ascending or descending order, according to one or more
key areas, such that entries requiring greater attention appear at the top of
the list. For example, a sales report could be arranged in descending order of
sales for each

client during a specific time period; clients purchasing the largest volumes
would therefore appear first. Another example would be sales volumes per
item, in which an ascending order would place the products with the lowest
sales volumes in agiven period at the top of the list, thereby alerting the user
to least successful items.
3. by grouping exceptions together. In this case, the reports are prepared so
the user can find exceptions in certain areas according to a particular
criterion.For example, a report could present clients outstanding invoices in
columns arranged by due date, either within one month, over 30 days, over
60 days orover 90 days. This makes it easy for managers to identify
outstanding invoices for specific periods in a single column.
4. by showing deviation from the norm. Results of actions are compared with
forecast actions and any difference is presented as a deviation. For example,
a report could compare data on real product sales by geographical area with
sales forecasts and present the difference in the deviations column. In the
1960s attempts were made to develop an information system that would
automatically meet all the companys information needs by means of an
administrative information system known as the mis (Management
Information System). The mis represented a formal commitment by executives
to make IT available to all managers. The idea of the mis was to maintain a
continuous flow of information to managers.

Figure 3.1 illustrates the relationship between the

management
and the environment in which it operates.

mis,

the companys

The environment is represented at the top of the figure, the central section
represents
the company management and the companys various subsystems, and mis
appears in the bottom section. Information and data flow from the
environment to company management and to the mis. In addition,
management sends information and data to the mis (mis inputs), which are
processed by information processors specially designed to provide output in
the form of documents and reports to management groups at strategic,
tactical and operational levels, as well as to the environment. The database
contains data from the accounts information system and also incorporates
data from the environment. Managers define the companys objectives, and
set targets, plans and standards (centre of Figure 3.1). These plans and
standards provide another type of input to the MIS, establishing the bases on
which control and feedback can operate.
The software uses the database to produce its regular reports. The mis output
should be relevant information sent in the right way to the right person at
the right
moment. This information must be carefully selected to help the decisionmaking
processes at strategic, technical and operational levels (management). This
output
is used by those responsible for resolving the companys problems.
This information is normally compiled in:
1. Strategic level reports to provide managers with the information they need
to
plan activities such as defining and reviewing the companys objectives,
setting
long-term targets (more than three years) and establishing company policies.
2. Tactical (and status) situation reports to enable management to draw up
new or
revised short-term plans (from 1 to 3 years) on a continual basis, and to
perform
their planning and control functions efficiently so that the subsystems can be
properly coordinated.
3. Operational reports with daily information to keep managers fully informed
of
the companys current situation, thus enabling them to carry out their control
functions. In addition, much of the information the company sends to the
environment is provided by the mis in the form of invoices to clients, and
salary

and tax payments.

Because the mis hosts an information system structured in accordance with
certain
previously determined decisions, it cannot be used to make decisions when
an unexpected problem arises. The idea behind the mis is to help interpret the
information needed to take previously defined decisions, and particularly at
the
strategic level, information needs are not easily identified.
Given the limitations of an information system like the mis in supporting
nonprogrammed
decisions, information system designers needed to look at the
problem from a completely different angle (Menguzzato and Renau, 1991).
Rather than being structured from the perspective of the person who
interprets

predetermined information needs, the information system should be

conceived to
give the greatest possible flexibility to the decision maker. In this way,
instead of
previously establishing what type of decisions are to be taken, information
should
be arranged according to its origin and type, based on decision-makers
general
knowledge, so the necessary information is available to them when they
have to
take a decision. The design of the companys database is therefore crucial: it
must
enable information to be used rationally, and must allow the information
system
to be properly integrated. The company database must be flexible enough to
be
structured according to the particular needs of different decision-makers.
This
reveals the need for more interactive systems that help the decision maker
to take
non-structured or only slightly structured decisions.