To provide information, MIS must perform five specific functions:
- Collect data
- Store data
- Update the data
- Process the data into information
- Present the information to users
Step 1: Collecting Data
- Must gather data and info needed to establish the firm’s database.
- Should include all past and current data that may be useful in managing the firm.
- Must be relevant and accurate data.
- 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.
- Decision-Support System (DSS)
A type of software program that provides relevant data and information to help a firm’s employees make decisions.
- 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.
- 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.