Basics of Management Information System | Planning Tank

A management information system is a computerized database for storing financial information to be used at all levels in the management. The information is stored in such a manner that it helps produce regular reports. It’s mainly beneficial to the managers to analyze their performance. Top level management can monitor the entire company with the help of a management information system. Management Information System is typically used to compare in between actual performance and planned performance. Thereby, making progress against goals and then help make corrections in the results. It receives its data from company units and functions. Some information is also received from computer linked check-out counters.

Management Information System

Management Information System Origin and Evolution

Management information system represents electronic automation of different kinds of counting, record keeping and techniques of accounting like ledger, on which businessmen keep track of their business. The modern history of Management Information System can be segregated into 5 parts, as done by Jane Laudon and Kenneth Lauren in their book called Management information system. These eras are described in detail below –

  1. First era– Mainframe and Mini computer computing–it was ruled by IBM, in this era, they supplied the hardware and software. But the computers were so huge, that they took up entire rooms and needed a whole team to run them. Later on, the size of the computer’s were reduced and the computers were able to handle greater capacities with reduced costs. With increment in technology smaller and affordable computers were introduced and in a small space, they allowed larger business firms to run their businesses on sites itself.
  2. Second era –personal computers –in the second era, minicomputers were introduced, therefore larger rooms that were required to store computers in the first era, were no longer needed as mini computers took up less space and were even more efficient. This lets companies provide it’s workers computers to work on and at relatively low costs.
  3. Third era –client and server networks –during the third era with client and server networks rose, as technological complexities increased and costs were further reduced, the end users which are the ordinary employees of the company used Management Information System for sharing information within the enterprise with fellow employees. With the help of network, computer’s shared information on the server letting it accessible to thousands of employees access data simultaneously on networks called the intranets.
  4. Fourth era –enterprise software–with high speed network, original department specific software’s were consolidated into integrated software’s, tying all aspects of the business together. This let entire management had access to quality information about all aspects of the business.
  5. Fifth era – also known as cloud computing–it’s the latest technology, it employs networking technology to deliver applications and data storage independent of location, configuration, and nature of hardware. With the advancements of technology like Wifi and high speed cell phone’s, managers access information via laptop’s, computers and smartphones.

Alro Read: What is Information Management?

Characteristics of a Good Management Information System

Its main function is to help organization executive’s make decisions that will advance organizational goals. It gives decision makers confidence that their decisions will have desired results. The five main characteristics are below-

  1. Relevance– information received from an Management Information System is related to the decisions a manger will make. It takes data that is originated from the activity area, that concerns the manager and later is organized into meaningful forms for making great decisions.
  2. Accuracy –this is one of the important characteristic, as the key measure of the effectiveness of an Management Information System is how accurate and reliable the information a system provides. The accurate the information, better will be the decision.
  3. Usefulness –the information received by the manager may be relevant and accurate, but is of use only if it’s helpful in taking the decision that the person has to take.
  4. Timeliness –The output has to be current, as the decisions for a specific future period gets taken from current date data, therefore the more recent the data, more these decisions will reflect reality and reflect their effect on company.
  5. Completeness – Presents all relevant and useful information for taking a particular decision.

Advantages of Management Information System

  • Organizations easily identify their weaknesses and strengths with the help of employee performance record and revenue report. After a careful identification of these, organization’s can improve their business processes and operations.
  • Management gets an overall view of the company performance by sitting in the comfort of their cabin with just a click of a button. Quick comparison can be made between actual performance and desired performances. Even new goals can be set for the employees with the help of Management Information System.
  • It acts as a perfect tool for planning and communication with in the organization.
  • Customer data and feedback can help an organization align business process according to customer needs. An effective management of data can help the organization in performing promotion activities and direct marketing.
  • Can even help a company in gaining competitive advantage.
  • The reports derived using a Management Information System may help the company with decision making related to many fields in a company.


Management information systems are not just a need but a necessity for modern-day business. They help employees at all levels complete their work effectively and efficiently in minimum time. They even help businesses complete their short-term goals like daily works and long-term goals such as planning. There are lots of types of Management information system kinds available for use in the market, something for every type of organization and all kinds of work. Manage the data and information related to your firm effectively using the best and most suited management information system of your choice and do your work in a better way.