Roles of Management information system in corporations

Author: Iloka Benneth Chiemelie

Published: 19/2/2014

Introduction

The concept of management information is a field that have witnessed numerous evolutions over the course of time, and it comprises of different features of the organizational functionality. Basically, management information system has been described as a necessity for all forms of organizations (Barabba 1991).

Initially, the concept of MIS was developed with the main purpose of processing data from the organization and presenting the processed data as a reference in future uses. The system was high capable of handling all forms of data collection and processing. As noted by Harsh (1981), the initial concepts saw a system that was very interpersonal, and required each individual to make choses from the processed data and use them to undertake their required job descriptions. This concept was however modified to include a distinction which is made between the gathered data and the information this data are processed into. The basic description for information is that it is a product of an analysis. In any case, gathered data can be analysed in a number of ways, yielding difference shades and specification of information as the outcome of such analysis. As such, it was required that the concept of the system should be designed in an individual-oriented forma, with each of the individuals using the system having a different orientation that best fits their individual needs for such systems.

Going on with what is presently obtainable, this system has also been modified further in such a form and format that it is now capable of creating significant impact on its users, providing the right platform for decision making in companies and investigation of issues (Keller, Gerhard & Thomas, 1998). While the use concept is still on, further discoveries were made in the sense that was an impact yielded will require further modification, which will be some kind of selective approach in the analysis and reporting format of the system (IBM Agricultural Symposium 1983). As such, the concept of exception was added to the MIS format and activity packages.

 As a result of the changes in the business environment of modern business setting, which is shifted towards increase in competition as a result of increase in globalization and internationalization of firms, it is now clear that there is a need for companies to properly organize their business process in order to ensure that they are better positioned towards meeting the changes in demands of the market. Since these needs can be from either individuals or group of people, there is a subsequent need for recording of information which will be used as future references when similar needs arises (House 1983; Integrated Decision Support Systems in Agriculture - Successful Practical Applications 1990).

On the note of the needs for information system, this paper seeks to understand the roles played by information system in corporations, key stage in the development and implementation of information systems, the importance of knowledge management in big corporations, and why knowledge management is very difficult. In the view of that, this paper will begin with a presentation of the definition of MIS, and then proceed with a sub-section of the areas that this paper seeks to understand. On that note, this will be a detailed research that seeks to review studies on the concept of MIS, with the paper aiming to present a better understanding of the concept and how future application can be enhanced.

What is MIS?

The concept of MIS emerged in the last decade or two, and since its emergence, it has been described in a number of ways. It is known by different names in the form of information system, the information and decision system or computer-based information system. Such differences in its names serves as clear prove of the fact that the concept has been understood in different ways. As such, it has more than one definition and some of the definitions accorded to MIS are as defined below:

1.      MIS is a system which is capable of providing information to support decision making organizations.

2.      MIS is a system that integrates man and machine for the purpose of supporting operations, management and decision making in the organization with necessary information.

3.      MIS is also defined as a system which is based on the database of the organization and evolved for the purpose of providing information to the people in the specific organization where it is adopted.

4.      MIS has also been defined as a computer-based information system that aids the organization in the process of undertaking its designated operations (source as adapted from University of Mumbai, 2013).

Although differences exist in the definition of MIS, there is a clear consensus on what the concept is believed to be all about in the sense that all the definitions point towards a system that aid in decision making, management and operation process in organizations. As such, MIS can be defined in this paper as a system of networks that have the capability of collecting data, processing the collected data and storing them for future uses, as well as making the processed information available whenever they are needed in the organization.

Roles performed by information system management

According to the press release by the University of Mumbai (2013), it was noted that MIS is important in the organization just as the heart is important in the body. In this description, it was noted that the information is the blood while MIS is the heart. In the body, the heart plays a very important role in the form of supplying blood to different parts of the body, which includes the brain. Once there is no heart, the body is dead because there won’t be any alternative for supplying the necessary blood required for full functionality of the body.

It was further noted that MIS plays exactly the form of function that the heart plays in the organization setting. This is because the system ensures that the right data are collected from the numerous sources of data in the organization, the process and sent to all the necessary destinations where they would be out into full use (University of Mumbai, 2013). The system is expected to undertake the function of providing the needed information for the individuals or group of individuals that might need it to undertake their business process in the organization.

The system is able to meet these diverse needs through wide range of systems such as Query Systems, Analysis Systems, Modelling Systems and Decision Support Systems. MIS provides the necessary support for strategic planning, management control, operations control and processing of transaction (University of Mumbai, 2013).

MIS is of vital help to the clerical personnel in processing transactions as it answers their questions in relations to problems faced in the transaction settings, status of given record and through a reference to different documents. MIS is also of vital help to junior management executives in the sense that it serves as the right medium through which operational data are gathered for planning, scheduling and control and further decision making process in the operations level in order to correct or reverse situations that seems to be out of control. MIS also helps middle managers in short term planning process, setting targets and controlling the functionality of the business processes. When supported by the use of management tools, the MIS is of high importance to top management in the sense that they can be used to set corporate goals, undertake strategic planning and evolve the business plan as well as ensures concise implementation of set business plans.

The last but not the least in the identification of the roles played by MIS is the fact that it is used in generation of information, communication purposes, identification of problems and supporting the decision making process. As such, the MIS plays a very significant role in the management, administration and operations of any given organizations. From the above analysis, it becomes very clear that MIS is very important in the organization. This is because it helps to coordinate the management process by determining what is done and how it will be done. The end product then becomes that human errors resulting from making decision based on gut feeling is eliminated and the company is well positioned to adopt decisions that have higher chances of influence the organizational outcome positively.

Key stages in the development and implementation of information management systems

The University of Mumbai (2013) also proceeded to identify and explain the key stages in the development and implementation of management information systems. These key stages are as analysed below.

Identification of need and purpose – it has been noted earlier in this discussion that there are differences in demand for MIS, and these differences means a subsequent difference in the usage pattern. As such, it can easily be noted that the first purpose that needs to be handle planning and development of MIS in organizations will be to understand the need for such system and the people that will make use of it. This need can be identified by a number of ways such as research and productivity level. In cases where the productivity is low, it can be thought that an incorporation of MIS will effectively improve the productivity level and complaints or request from staffs in relation to MIS can also be used as a determination factor in understanding the need for the system to be integrated into the organization process.

System design – once the needs have been identified as described, the second stage as highlighted by the University of Mumbai (2013) is centred on designing the system in accordance with the identified needs. This implies that the system should be designed in such a way that it would be able to meet the needs identified and easy for the intended users to make use of it.

Trial of designed system – before any system should be integrated into the organization, there is a need to conduct a trial of system in order to identify vulnerabilities and address such issues. This is because the lack of trial could mean an integration of a system that will yield negative influence in organization process. Thus, the third stage is the trail of the system, and the trial is usually advised to be done in such a way that the intended users are able to take a glance at the system as they are the people best positioned to understand the issues arising from the system and necessary amendments in the sense that they are also the intended future users.

Implementation – once the trail process has been declared a success, the next step is to implement the system. In order to ensure that the implemented system becomes a success in the company, there is a need for the workforce to be trained. This is because the new system might require new skills that the workforce is not familiar with and this make sit necessary for the workforce to be acquainted with the necessary skills in order to ensure that the new system is capable of yielding significant results.

Basically, the development and implementation of MIS is centred on doing what is best for the organization or understanding the right approaches that will help the organization to meet set goals. On the positive side of management information systems, it is now clear that there is a need for corporations to adopt such business strategy as it helps the company towards meeting its set goals by defining the best approaches to achieve corporate objectives. On that note, it becomes clear that the question corporations need to answer is not whether or not to adopt such an approach as its adoption will have positive influence. Instead, the question should look to understand the best practices necessary to ensure a successful development and implementation, and that is what this section of the paper seeks to understand.

Knowledge management in companies and its importance

Knowledge management has become an essential tool for sustainability in the current changing business environment (Grant, 1996). Karma (2006) stated that the ability of organizational to combine its intellectual assets with organizational management is the key for sustainable competition in the marketplace. These claims can further be supported by stating that, the advancement of globalization now means that companies will not depend only on their parent market but seek penetration into more markets in order to maximize their profit and management of the company’s knowledge system is important because it will provide competitive edge in the new markets penetrated.

The growing interest in information management had led to emergence of new roles and implementation of different information management technologies such as chief knowledge officer (Davenport and Prusak, 1998) and knowledge workers (Schultze, 2000). These new roles and technologies focus on how organizations can adopt knowledge management as a tool for dominating the knowledge based market (Karma, 2006). While they are different studied on knowledge management, it is still unclear about how organizations can adopt knowledge management in creation of dynamic capabilities and fostering innovation. Nevertheless, some scholars have identified that organization’s inability to properly manage knowledge in their system is because of their lack of understanding on the interaction of different organizational elements and effects of such interaction (Gold et al., 2001; McDermott, 1999; Schultze and Boland, 2000).

Knowledge is complicated to expresses, and two views exist in relation to how it is gained. The first view is that knowledge comes from data (Bierly et al., 2000), and information, and the other is that data and information comes from knowledge (Braganza, 2004). Support for the first view is that data (raw facts without meaning) is acquired first, then transformed into information (data with meaning), which later changes into knowledge (beliefs that influence people’s actions). The second view is of the notion that knowledge is steadily available and used in the development of information and data. Alavi and Leaidner (2001, p. 109) defined knowledge as information acquired in the minds of individuals, which is related to facts, procedures, concepts, interpretations, ideas, judgment and observations. 

Two types of knowledge were identified by Nonaka and Konno (1998) as explicit and tacit knowledge. Tacit knowledge is known information or data, which is gotten from past experiences and governs the beliefs and values of the owner (Marwick, 2001, p. 814). In accordance with Nonaka and Konno (1998), this type of knowledge can be technical or cognitive. Technical aspect of tacit knowledge includes personal skills, crafts and general know-hows, while the cognitive aspect are beliefs, values, mental models and ideas which make the foundation for decision making in humans and are often unnoticed or taken for granted. On the other hand, explicit knowledge are those which are formed from reports, equations, formulae and specifications (Michael, 2010). Explicit knowledge are easily transmitted between individuals and teams (Gladstone, 2000).

Both internal and external pressures have made knowledge management important for the sustainability of organizations. Differences exist in relation to how knowledge should be managed and as such, there are differences as well on the definition of knowledge management. Silver and Shakshuki (2002) highlighted two forms of knowledge management perspectives as technology-centred and people-centred. They stated that technology-centred knowledge management is form computer, data communication and data analysis firms who believe that knowledge is the same as objects and can be encoded, stored, transmitted or processed in a system. The people-centred is adopted by organizational theorists with background in psychology, human development, organizational behaviour, dynamism, sociology and cognition. People with this view strong believe in the development of human intellectual capital, organization management skills and people as the essence for corporate success. They view the sharing of knowledge in the system and between the organization’s partners as the main objective of knowledge management.

While differences exist in the form of definition of the two knowledge management perspective discussed above, Silver and Shakshuki (2002, p. 255) are of the opinion that both are important in the organization. They stated that knowledge management is a people-centred view which believes in the promotion of the use of technology and information systems. Thus, they developed a knowledge management framework that is modelled around gathering of data and information from the environment, processing of gathered data or information by adopting human brains or technologies, storage of the processed information, and transmission of this information within a particular system, as well as presenting the leakage of this information into other contradicting systems.

From the above review of literature, it becomes clearly evident that the importance of knowledge management is for organizations to maintain competitiveness. Whether knowledge is derived from data and information, or information and data are products of knowledge, existing literature support that knowledge management is a process of keeping the knowledge possessed by a particular company within the company, distributing it to all areas of the system in order to increase efficiency, and ensuring that the knowledge is not disseminated outside company so that other companies will not copy or imitate the gained knowledge (Silver and Shakshuki, 2002, p. 255).

The basic understanding presented from the above analysis is based on the notion that Knowledge management is an important aspect of the business process in the sense that it lays down the right foundation for keeping record of sensitive production information with the spheres of the corporation. Companies need to be very protective of their knowledge system as it is the angle from which new phenomenon are developed, innovation enhanced and productivity advanced. On that ground, proper knowledge management is of high benefit to companies because it helps to set the standards for what is obtainable in the organization process and how the production is undertaken. When companies properly manage their knowledge, they will be able to maintain as well as enhanced competitiveness in the market place because they will produce goods and services in such a way that their competitors will find it very difficult to imitate.

Difficulties in knowledge management

A number of researchers such as Alavi and Leaidner (2001, p. 109) have presented an understanding of the issues associated with knowledge management and these issues can actually be linked to the definition of knowledge management. For instance, Alavi and Leaidner (2001, p. 109) defined knowledge as information acquired in the minds of individuals, which is related to facts, procedures, concepts, interpretations, ideas, judgment and observations. 

From the above definition, the authors point at some of the difficulties involved in knowledge management and this is based on the variables contained in the definition above. The first issue comes in the form of understanding what knowledge is all about. Since knowledge is something that comes from an individual’s mind, it can be seen that there is a need for the people who possess these knowledge to actually know that what they possess is knowledge. However, the authors pointed out that while people possess knowledge that that might be very useful for the growth of the company, these people might not view such as being knowledge, but will instead see it as mare information and as such it limits the potentials of such knowledge to be applied.

The second challenge comes in the form of understanding how to apply such knowledge. While the person who possess the knowledge might end up understanding that what he or she possess is actually a knowledge that can be used to enhance the organization process or even an individual improvement, there is always a difficulty associated with understanding how such knowledge will be applied. The authors noted that the reason comes in the form of the people who possess this knowledge under having a background understanding of the knowledge possessed. Thus, it can be noted that there are unlimited amount of knowledge available in the knowledge bank across the world, but the problem is that people who possess these knowledge don’t actually know how to put them into practice.   

Conceptualization and Interpretation is another issue with knowledge as identified by Alavi and Leaidner (2001, p. 109) is that it is not easy to be conceptualized and interpreted. This is still in line with earlier discussion in which it was noted that while people might have a vast knowledge network with their knowledge bank, they might not understand what it is all about or how it. In order for knowledge to be put into useful processes, there is a need for the knowledge to be properly conceptualized and interpreted into the real world setting, in which the conceptualization will be used as the setting form which the knowledge will be put into practical use and when the knowledge is not properly conceptualized, it won’t be interpreted into its actual meaning and the end point is that knowledge might be put into situations where they can’t actually yield the expected results.

Control and measurement is the final difficulty experienced in knowledge management that will be touched in this work. The authors highlighted that when a given knowledge is being put into practice, there is a need to measure the performance obtained from using that particular knowledge as it would lead to comparison with other knowledge and give the users a detailed understanding of which of the generated knowledge to adopted for utmost performance. However, this is difficult as knowledge cannot easily be measured.

Although limitations exist as to the adoption and application of knowledge, it is important to understand that these limitations don’t void the actual importance of knowledge management in the modern industry. This is because knowledge is very necessary for initiating competitive strategies such as innovation and creativity, as it is only through knowledge that the business will be able to understand the problems it is facing and adopt the necessary measures towards ensuring that such problems are solved. As such, no matter the level of limitation that might have been associated with knowledge management, the fact still remain that companies need to properly manage their knowledge in order to ensure that they are capable of ripping the necessary benefits emanating from such practices.

Conclusion

Management information system is now an important aspect of the management process. From the indications presented in this paper, it is now clear that MIS is very important because it helps the organization to understand issues facing them in the external environment and develop the right approach towards handling these issues through the adoption of systems that are capable of critically studying the problem, understanding the sources of the problem and laying down the right foundation for sourcing solutions to the problem. Basically, MIS is the key to information process in modern organization. This is because it helps to keep record of their business process and make use to these records for future references.

The current business environment is influenced heavily as a result of increase in globalization and internationalization, which now means that companies don’t need to be worried only by their local competitors or focus only in their local market, but instead need to study the possibility of international firms penetrating into their countries or the possibility of them penetrating into international markets. Such a situation now creates the need for information management in organizations as companies will have to maintain a balance in the information that exist in their workplace in order to be well positioned to meet the changes in the market sphere.

This is the background from which the paper was developed, in view of understanding the importance of MIS in the organization setting and how it is developed and implemented. Based on the understanding gained from this paper, it is purely clear that MIS is important as it helped to accumulate, process, and keep record of information in the organizational setting, which the company can make use of to undertake their business process in such a way that set objectives are easily achieved. Basically, MIS is very important because it helps to build an organization in which standard ensured through information dissemination.

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