Introduction
Management Information Systems (MIS)s refer to a combination of all the computer structures in an organization that facilitate business operations, strategic decisions and tactical approaches. These may include people who coordinate the systems, decision-making processes involved, technology used, and lastly the information encapsulated in the organization.
MISs usually start by external and internal data collection. The system then processes the information and places it in an information warehouse or a database. The organization then integrates this data into its system. It must continually update and work on the data. Thereafter, the company allows authorized members to access the information and then use it for the right purpose.
In order to fully comprehend MISs, it is necessary to first define information systems. A system is a collection of elements that focus on meeting a certain purpose. Systems may have intangibles and tangible items that work together to achieve a particular aim. In the IT context, information systems consist of the data collection process, insertions, storage, processing, distribution and use of information.
All the people and technology involved in performing these functions are converted. Therefore, when one introduces the term ‘management’ before Information Systems, then one must incorporate managerial functions. These are information systems that are designed to cover management roles.
They may include decision making processes, facilitation of interpersonal interactions and communication purposes. Some of the examples of MIS include supply chain management, project management, resource management applications, and decisions support systems.
How companies use Management Information Systems
The first and most vital way in which one can use MISs in one’s organization is to make strategic decisions. MISs can support strategic planning by providing all the relevant information and knowledge that is likely to affect a company in the future. MISs allows companies to forecast business trends or employ metrics in order to guide their decisions about the future. Executive Information Systems exist for this very purpose.
They are designed to summarize reports from various departments in the company and thus assist executes in making strategic decisions. A senior executive would easily identify the strengths and weaknesses in his organization and thus work towards improving it. Alternatively, the same organization may use the information in order to assess buying trends. This will facilitate the prediction of sales revenues in each market segment.
As such, the company can positively influence its returns by taking advantage of this invaluable knowledge. Companies can also discard those operations that do not contribute directly to their organizational goals, which would ensure that they remain target oriented.
MISs can be used to smoothen operations in a company by providing all the information needed to carry out routine operations at a central location. Not only is it easy to access information easily, but members of the organization need not waste time in creating separate databases for use in their daily operations. This also eases communication processes because all members of an organization have a central reference point.
MISs have the ability to eliminate bottlenecks in work processes. An example of an application that facilitates such a function is enterprise resource planning (ERP). ERP systems bring together all the vital business processes in one database. This means that a company can perform efficient management and control of its processes. Some of these may relate to distribution, human resources, or accounting.
Organizations can also use management information systems in order to create financial statements, accounting records or other types of documents in the company. Traditional methods of financial reporting were often inaccurate and lacked transparency. By using Management Information Systems to perform this function, then companies can ensure that their accounting records are in order.
An example of an MIS that facilitates this function is a Knowledge Management System. Here, a firm usually collects, organizes and disseminates information through this application. As such skills, documents and records can be easily handled.
Some businesses rely upon management information systems in order to understand their markets. Since the marketing segment is directly responsible for revenue streams, then this can be a vital part of the revenue collection process. It can also contribute to better financial performance.
Companies often do this through various strategies such as customer relationship management. In this function, a company manages its relationship with existing and potential clients before, during and after a sale.
Some organizations can use the information in their MISs in order to align the business practices with consumer feedbacks. Alternatively, they may apply that knowledge when targeting certain marketing activities. For instance, they would know which clients would respond well to their direct marketing efforts.
Lastly, some organizations use their MISs to manage people. A number of human resource applications exist for this purpose. So many of them relate to performance parameters displayed by staff workers or may deal with other aspects of human resource management such as training, promotions and salary management.
When information is properly organized, companies can easily and transparently handle human resource issues. This leads to greater employee loyalty and satisfaction among the employees.
An example of a company that uses MIS and how it uses it
The company chosen for analysis is Angkor Mikroheranhvatho Kampuchea (AMK). This is a microfinance institution based in Cambodia. Its mission is to assist poor members of society to access microfinance services in order to improve their livelihoods (AMK 3). AMK is headquartered in Phnom Penh, Cambodia and has about 250, 000 active borrowers.
The organization mostly focuses on the rural communities in its undertakings. Some of the services that clients can receive from the organization include loans, fund transfers, savings and investment services. In the latter segment, the company can offer equity and guarantees for those interested in making investments with the organization.
A microfinance institution was chosen for this analysis because the industry has received renewed attention in the information systems sector. Stakeholders in the microfinance industry have realized that the significance of managing their information effectively.
These institutions have very large amounts of data and they need to process them in order to utilize them in various ways; as such, the company must have an effective way of managing this information using various ways.
AMK places information at the centre of its business processes. Some if it may be raw data such as client information, i.e. their names, occupation, ID number and basic accounting information. On the other hand, the company also requires information about a certain portfolio that they have.
This may involve detailed statistical or analytical work. The company focuses on making all information relevant and easily useable to its members (Microfinance Information Exchange 12).
Prior to the adoption of management information systems, AMK needed to have an MIS department that would facilitate the success of such a venture. When formulating this department, the organization first considered the level of technological expertise that members of that group possessed.
Individuals in this department needed to have knowledge about software development as well as computer systems so as to lead the rest of the organization in adoption of the same. Additionally, the organization ensured that some members of the team had prior experience with MIS in other microfinance institutions.
It was not enough to be an expert in information systems; one needed to have a strong background in other fields of finance such as accounting. On top of the above requirements, the MIS department needed to have an expert n the organization itself. Therefore, someone from another area of the company was represented in the department.
The existence of an MIS department is not the only recipe for success in this company. The organization often makes sure that it reviews any new system packages that the MIS team recommends.
Usually, before a package is introduced, the technical staff members need to discuss with their bosses how the new package will help the company, in vast details. Loan officers and tellers must also give their input concerning the new MIS package before it can be adopted (Pant & Hsu 99).
In operationalizing its MIS, the company first starts with the documentation process. At this point, it will take up all the reports, handbooks operations schedules and computer screens that are relevant to AMK’s goals. Thereafter, the firm then looks at the database information that exists. Here, it will evaluate the structure of the database as seen through its rows, columns and other graphical representations.
The company will create a model of the relationship between all the pieces of information in the group. If a new piece of MIS software is to be used, then the initiators will show top management how the software will work in the company. The software will be tested by performing calculations on the systems. Real data is entered and calculations are done in order to see whether the MIS software will yield appropriate data.
Why AMK requires MISs
AMK has utilized MISs for various purposes. One major aim for using this system is to facilitate functionality. In this regard, the organization employs MISs in order to complete and integrate a series of elements in its systems. One such function is its accounting package.
The company employs MISs to streamline the accounting packages. Additionally the firm needs to tracks its portfolios; this will ensure that every respective change is done in order to achieve that function. AMK needs to monitor its deposits; sometimes these may emanate from individual savings, loan repayments as well as personal investment.
The organization must differentiate between these transactions and capture them in real time. As such, a good MIS does come in handy. The firm also uses MISs in order to handle its customers.
Because of this, it possesses a customer information system in which it builds profiles as well as carries out the actual process of dealing with the consumers. This means that few employees have to rely on their own inconsistent judgment for such decisions.
The second application of the company’s MIS is in expanding the organization. This institution would be extinct if did not grow; therefore, it requires an organized system that would facilitate a methodical institutional growth process. The company achieves this by using its MIS in order to direct new development strategies or growth prospects.
Additionally, AMK requires MISs to guide operational decisions. In its transactions, the company must make decisions concerning a number of issues. For instance, its loan officers must decide between lending methodologies as well as the appropriate interest types for a client.
They must also choose the payment frequencies for those clients. MIS paves the way in adding flexibility to the manner in which business is conducted in this organization through loans. Alternatively, some clients may wish to change their savings accounts to a different type. Others may wish to relocate to another branch or region while others may want to increase their frequency of interest payments.
All these decisions can be difficult to make without the right information guidelines, hence explaining what management information systems do in this company.
The company uses MISs in order to deal with reporting and usability issues. It does this through report generation as well as management of reports.
Besides that, the company ensures that accounting standards and government supervisions are followed by looking into the degree of reporting in its practices. Besides this, the systems also look into the dates and numbers in all transactions so as to ensure that they are recorded correctly (O’Brien 51).
MISs also offer AMK support by backing up crucial data and facilitating the recovery process of the data that has been lost. It also supports the maintenance and support of infrastructure within the institution. During the end of a financially period, MISs will assist in processing all the information needed to carry out the work.
Lastly, MISs in this company is also applied in administrative decisions such as cost containment or performance management. The company needs to remain profitable, and the only way it can achieve this is through a sound policy process.
How MIS achieves these functions
As stated earlier, two of the reasons why the organization uses MISs are to ensure achievement of functionality as well as to create room for development. The system is able to do this by integrating the various components of the system in a manner that allows data sharing. It also eliminates multiple entries of data in different cases.
For instance, the company does not need to put in the same kind of information into its database for client detail tracking as well as deposit tracking. Once the employees enter the relevant information, then MISs can carry out tracking activities without requesting for the data again. In terms of functionality, MIS software always carries out accounting information within the organization flawlessly.
For instance, they will implement periodic updates of data, tracking systems as well as perform general ledgers and trial balances. In addition, MISs will do profit analysis and thus provide information about possible revenue declines. Besides the above, the system also assists in functionality by managing loan portfolios. It looks at historical data on services or products then integrates this with new accounting information.
It cross references groups, corrects portfolios and even informs the organization about any potential challenges such as the development of delinquency. The systems also carry out calculations on the credit scores, and thus alert the organization about some that are worth noting.
As stated earlier, MISs helps the company to engage in developmental activities. In this regard, it facilitates scalability of the computer systems within the company whenever it needs to expand. For example, MISs in the company often have models that can support the introduction of new products such as lines of credit.
Alternatively if the company wishes to start a new branch, it can depend on MISs to assist it in facilitating the move. Therefore, as the institution keeps growing, MISs continue to make the firm stronger through their capabilities.
Reporting issues in the company are done through a myriad of ways. First, the employees in the company can make their own reports within the system without soliciting for assistance from an MIS expert. These may be batch reports, use-defined or canned. The relative independence of the staff members is what explains why MISs are indispensable in the company. These systems are also intelligent enough to consider the user.
For instance, managers will get a different report from the operators. Management reports will often encompass summaries of loan officers and branch officers. On the other hand, operational reports will focus on delinquent reports or the quality of portfolios.
The MIS system also supports the organization in daily operations. Sometimes computer crashes and power outages may occur. MISs allow the organization to bounce back into action without having to worry about the loss of vital information.
Additionally, it ensures the safety of information by providing a mainframe in which the company can place this information. In situations where installation, user queries and software improvements have to occur, the company can always count on its management information systems to cover it.
Benefits of MIS to AMK
MISs have penetrated into all aspects of this microfinance institutions’ processes. Since the organization is a profit-making enterprise, it greatly appreciates cost savings that come from the systems. Employees do not have to waste time in replicating efforts or understanding newly introduced information.
These systems are also relevant to the gains in productivity because potential flaws in the company are easily detected and any opportunities for corrections are easily identified (Laudon & Laudon 15).
Perhaps the greatest benefit that AMK derives from MISs is the speed of decision making processes. Employees do not have to agonize over whether the information they are about to use is relevant or not.
They can be rest assured that it always is. For instance, if a customer needed to select an interest rate that is appropriate to his or her repayment levels, then all the loan officer has to do is refer to the system and it will determine the most suitable one. This eliminates flawed assumptions, inconsistencies and biases.
All the integrated information in the system is placed in categories that are relevant to profitability in the company. One can access information about a different part of the organization from another location. This implies that only minimal effort has to be applied to carry out daily activities in the company. AMK is now more effective and efficient in carrying out its functions.
Conclusion
MIS facilitates strategic, tactical and business decisions within organizations. The company chosen for analysis exemplifies this as seen through its application of MISs. AMK has benefited from better growth opportunities as well as greater decision making. It spends less time in performing manual functions and thus gets value for its efforts.
Works Cited
AMK. AMK: Finance at your doorstep. 2012. Web. Retrieved from www.amkcambodia.com
Laudon, Kenneth & J. Laudon. Management Information systems managing the digital firm. NJ: Prentice Hall, 2009. Print.
Microfinance Information Exchange. AMK: MFIs in Cambodia. 2012. Web. Retrieved from www.mixmarket.org/mfi/amk
O’Brien , James. Management Information Systems-managing information technology in the internetworked enterprise. Boston: McGrawhill, 1999. Print.
Pant, Simon & C. Hsu. Strategic Information systems planning. Atlanta: Information resources management association international conference 1995, Print.