How Do Employees Use a Management Information System?

To provide information, MIS must perform five specific functions:

1. Collect data
2. Store data
3. Update the data
4. Process the data into information
5. Present the information to users

Step 1: Collecting Data

1. Must gather data and info needed to establish the firm’s database.
2. Should include all past and current data that may be useful in managing the firm.
3. Must be relevant and accurate data.
4. Two data sources: internal and external

a) Internal Sources of Data (where most data come from)

• Internal sources of info include managers and employees, company records and reports, and minutes of meetings.
• Past and present accounting data can also provide info about the firm’s transactions with customers, creditors, and suppliers

b) External Sources of Data

• Include customers, suppliers, financial institutions and banks, trade and business publications, industry conferences, online computer services, lawyers, government sources, and firms that specialize in gathering data for organizations.

Step 2: Storing Data

Method chosen to store data depends on the size and needs of the organization.

Small = enter data and store them directly onto hard drive; Medium-sized to large store data in a larger computer system and provide access to employees through a computer network.

Step 3: Updating Data

MIS (Management Information System) must be able to update stored data regularly to ensure that the information presented to managers and employees is accurate, complete, and up-to-date

Step 4: Processing Data

Data Processing = the transformation of data into a form that is useful for a specific purpose.

Most business data are in the form of numbers such as daily sales totals or production costs for a specific product; fortunately, computers can be programmed to process such large volumes of numbers quickly.

Statistics = a measure that summarizes a particular characteristic of an entire group of numbers

Step 5: Presenting Information

MIS must be capable of presenting the information such as through reports, tables, graphs, or charts.

• Business Reports
  
  Typical business reports include:
  
  1. An introduction – Describes the problem, identifies the research techniques, and previews the material that will be presented.
  2. The body of the report – Describes the facts that were discovered in the process, and should provide a foundation for the conclusions and the recommendations.
  3. The conclusions – Describe the findings contained in the report.
  4. The recommendations – Presents suggestions on how the problem might be solved.
  
• Visual Displays (graphs, bar charts, and pie charts) and Tables
  
  1. Used to present information and may be a diagram that represents several items of info in a manner that makes comparison easier.
  2. Tabular displays are used to present verbal or numerical information in columns and rows (two or more related variables) -> generally have less impact than visual displays.

Making Smart Decisions

Three different software applications can actually help to improve and speed the decision-making process for people at different levels within an organization.

1. Decision-Support System (DSS)
   
   A type of software program that provides relevant data and information to help a firm’s employees make decisions.
   
2. Executive Information System (EIS)
   
   A computer-based system that facilitates and supports the decision-making needs of top managers and senior executives by providing easy access to both internal and external information.
   
3. Expert System
   
   A type of computer program that uses artificial intelligence to imitate a human’s ability to think. Provides recommendations or suggests specific actions in order to help make decisions. Uses a set of rules to analyze information. Used to schedule manufacturing tasks, diagnose illnesses, determine credit limits, evaluate loan applicants, and develop electronic games.