Alokab Consulting & Industrial Development
It is the job of managers to attempt to control processes and functions within the organization and to make strategic decisions concerning its future. With the explosion of information that has occurred over the past few decades, this means that managers need to be able to process and analyze massive amounts of data. Information technology offers managers a number of tools to support them in their decision making and planning processes as well as in their administrative and organizational tasks. Management information systems are information technology systems that are used to help managers effectively manage the organization as a whole or manage structured problems, processes, functions, or departments within the organization. Decision support systems are information technology systems that are used in unique, complex situations where a decision needs to be made.
Every day, managers are required to make countless decisions in an attempt to control processes and functions. Many of these decisions can affect the effectiveness and efficiency of the organization as well as its profitability. Processes that malfunction or schedules that slip even in the smallest way can snowball, affecting other parts of the project or organization. It is the manager’s job to keep this from happening and to make decisions about how best to keep the projects and processes on track so that the organization can continue to perform at a high level.
In today’s organizations, this means that the manager needs to be able to process and analyze massive amounts of data — facts, figures, or details — in order to make the best decision possible. In addition, according to systems theory, the organization comprises multiple subsystems and the functioning of each affects both the functioning of the others and the organization as a whole. On a practical level, this means that the decisions a manager makes often affect not only the function, department, or specific process or personnel about which the decision was made, but the whole interconnected chain. For example, the manager of the engineering department may be faced with the decision about how to best deploy his/her personnel on the various projects being undertaken by the organization. If the engineering manager makes the deployment decision based on which project manager complains the loudest, the other projects may not have sufficient personnel to do the engineering tasks on their projects. Because of this fact, the other projects may experience schedule slippages or end up with less than optimal engineering designs for their products. Either consequence could mean penalties imposed by the customer for late delivery or the product not meeting specifications as well as longer term consequences of the business losing its reputation in the industry and not being able to win new work. Therefore, it is essential that managers make the best decisions possible.
Use of Management Information Systems
With the advances in computer technology that have occurred over the past decades, information technology is able to offer managers a number of tools to support them in their decision making and planning processes as well as in their administrative and organizational tasks. Management information systems are information technology systems that are used to help managers effectively manage the organization as a whole or manage structured problems, processes, functions, or departments within the organization. For example, the manager of a bookstore needs to know what inventory is on hand both in the store and at the distributor, what books have been sold during given time periods, and what books customers have requested. S/he also needs to receive this information in usable form (e.g., with a user-friendly interface that allows searching of the various databases) and be able to use these data to place orders to replenish stock and meet current and anticipated customer demands. The manager also needs to know what the buying trends of the store’s clientele are, what the trends are in new books, and be able to forecast specific titles that should be purchased and stocked as well as whether or not the bookstore should change the emphasis in the types of books that it carries. The manager also needs to know how much money was received each day including whether the receipts were by cash, check, house account, or credit card and relay this information to corporate headquarters. If the receipts do not balance at the end of the day, the manager needs to discover where the discrepancies lie and balance the accounts. The manager also needs to be able to schedule personnel so that all shifts are covered with sufficient personnel, including sales associates and receivers, taking into consideration the various needs of the employees (e.g., days off during the week, maximum number of hours to be worked during the week, requests for leave or vacation time, shift preferences). The manager can be aided in all these tasks and more through information technology.
Resources for an Effective Management Information System
As illustrated in Figure 1, a good management information system uses several types of resources. The physical system of the organization includes the facilities, equipment, and personnel necessary to produce the business’s products or services. Internal data are gathered throughout the physical system, stored in the database, and processed by the information processing resources. These resources comprise the server, workstations, application programs, and information technology personnel. The information technology system together is used to analyze the data and summarize it in ways that the managers and executives can use and understand. These individuals use this information to make decisions about the operations of the organization. There are two other sources of information that need to be taken into account by decision makers. These are information gathered from the environment in which the organization operates (e.g., political realities, business intelligence, economic trends). This information can also be fed into the management information system and used in decision making. Not all data can be processed by the information technology system, however. As illustrated in the figure, there are additional internal data (e.g., word of mouth, observation) that are important in managerial decision making processes that can only be factored in by the manager. The management information system alone cannot make decisions. It is only a tool to be used by the manager.
Management information systems can support managers in their tasks by retrieving and processing data received during transactions and presenting it to managers in formats that they can use in their operations and decision making capacities. Management information systems use data captured and stored during transactions (e.g., what books have been sold, what books have been received, how many transactions have been made and in what amounts). Management information systems synthesize and summarize this information and present them to the manager in a usable form rather than giving him/her raw data. This is done through various screen or print reports designed into the system or through special reports designed by the manager to meet the special needs of the store or situation.