By Ruben Canlas Jr. and Val Gonzales
Most of us think management information systems (MIS) is just a bunch of people we call during a technological disaster in our office cubicles. Actually, there’s more to MIS than yelling “tech support!” and setting up a department.
Okay, we know what you’re thinking. You’re asking questions like: “But how important is MIS to my business?” or “Does an entrepreneur like me need MIS at all?” and “Isn’t MIS for big businesses only?”
If you’re the smart type who won’t accept “It depends” for an answer, we urge you to read through this simple introduction. Then, next month, we will give critical guidelines and tips on how you can set up your own MIS.
What is MIS?
Funny, when we searched Google for a definition of MIS, there were very few good hits. Most of the results where about the MIS departments of various organizations, but hardly no pages explaining what MIS is, really.
We considered this an indication of how broad the concept of MIS is and, at the same time, how confused everyone is about MIS. Ultimately, the best (and probably the only relevant) definition we found was in dictionary.com: “A computer system designed to help managers plan and direct business and organizational operations.”
Consider a large-scale company. This company’s operations will include “IT equipment” such as computers, printers, telephone switchboards, faxes, network equipment, etc. In turn, this hardware will be running various computer programs like databases, email programs, virus checkers, spreadsheets—stuff which we call software. The hardware and software will of course need humans to maintain them: the peopleware.
Collectively, the hardware, software and peopleware make up the information systems of a company.
Information systems help a company to gather, save and process data. They then make it easier for management to analyze what is happening and make more informed decisions. Hence “management information systems.” Think about it. Without computers, managing the financial operations of a company with 10,000 employees scattered around the world would be very difficult!
Now, just because we used a big company for our example does not mean entrepreneurs do not need -- and cannot afford -- an MIS. We encourage the entrepreneur to look around their office and see the foundations of an MIS. The computers that you use, the modem connection to the internet and the cell phones are your hardware. A good word processor, a spreadsheet program and Google can be your software systems. Add the techie friend who helps you out and you got peopleware. Put all of these together and you got the foundations of a good MIS.
What does MIS do to an organization? In brief, MIS will help enrich your otherwise unrelated data and turn it into meaningful information that help you, as the manager, make better decisions.
Should you try out a new incentive scheme for your employees? What product should I manufacture more and which should I discontinue? Should you offer more freebies to regular customers or try a new packaging for an upcoming product? These questions can be answered by a good MIS. The following is a quick overview of how MIS helps all aspects of business.
Sales Management
MIS can enable you to gain a deeper understanding of sales information: who buys the most, for example, and from where. From this you can already make good marketing strategies. MIS can also identify who among your sales force sold the most and which. Then it can help you correlate this data with economic trends and other factors. It can also help you build strong relationships with your customers through the use of a customer relationship management system or CRM.
Moreover, MIS also will also help your sales department to analyze the historical sales records and trends to make more informed sales projections.
Financial Management
Another immediate benefit of MIS is in managing your funds. MIS can help integrate the company books and automatically generate financial reports. It can track your payroll and other expenses, and tell you where the money went, so you can make more informed budgeting decisions.
Production and Operations Management
A lot of production and operational processes have benefited greatly from MIS. One of these is inventory management. For manufacturers, an MIS applied to inventory management means easier inventory tracking: from raw materials, to works in process, to finished goods. These are often called MRPs or manufacturing resource planning systems.
For both manufacturers and retailers, a computerized inventory system will automatically estimate your reorder quantities and make your production cycles more efficient.
Human Resource Management
Did you know that MIS can greatly enhance your company’s HR operations? First, MIS can make it easier to store and retrieve vital employee records like CVs, compensations and benefits, etc. Companies who need to train their sales force regularly will benefit significantly from an online training module and a company bulletin board that allows employees to trade lessons learned, and sales tips and techniques.
Although you may have heard a lot of horror stories about MIS efforts that, ahem, mis-fired, there are a lot of shining examples where MIS saved the day.
Resource Planning
If you noticed, we have shown that management can benefit a lot by implementing information systems on Sales, Finance, Operations and HR. However, thanks to new technology, these various systems can even be integrated into what is called the Enterprise Resource Planning system or ERP.
Here’s a typical ERP at work in a typical burger joint. If you order one burger, the system will automatically send this information, via network, to the central commissary (usually a place that is separate from the store). The ERP now knows that the supplies are short of one bun and a patty.
At any given moment, for example, the commissary is aware that the store in Branch A is running out of buns, while Branch B will soon need more plastic cups. The ERP will help management in planning what supplies to send and to which branch. It will even suggest the optimal route that the delivery van will follow!
Dell-icious Example
A perfect and well-known example of how a company benefited from MIS is Dell Computers. Instead of simply selling preconfigured computers through the usual computer shops, Dell introduced a novel concept. It allowed customers to log into the Dell website, browse an online catalog and choose their own computer specifications. If a buyer, say, needed lots of memory but was okay with a low resolution monitor, he could do that and order directly through the website.
Because of this, Dell did not have to guess what customers wanted to buy. The buyers themselves were specifying the computer they wanted, before Dell was assembling the computer! In short, the statistics for customer demand were coming to Dell in real time, which greatly reduced Dell’s inventory problems. This allowed Dell to gain the lead and topple giants like Packard Bell and Compaq.
Does this example excite you? Or does it make you worry more about your IT budget? Fear not. Now that we have introduced to you the basic MIS concepts, we will next give you help on how best to set up an MIS on a budget. We will explain the basic components of an MIS and give you some guidelines on how to find the right people. See you!
*** For more information, contact Digital Solutions: tech[at]digitalsolutions[dot]ph
