Types of Management Information Systems - Literature review Example

Types of Management information systems Name: Professor: Institution: Course: Date: Management information system (MIS) refers to a computer based system which is designed to provide information about the business operation to the decision makers. To understand MIS better, first, there is need to understand the meaning of word information and system. Information is defined as a processed data which is used to make decisions. System refers to the set of interacting components that work together to accomplish specific set goals. A business is organized in functional areas which perform specific functions. All the organizational functions involves human, financial or information are presented inform of a system. The system is designed in a way to enhance communication among employees and ensure effective decision making in the organization. Management information system involves three resources which include, people, technology and information. Management information systems are different from other information system because they are used to analyze operational activities in the organization (O’Brian, 2002). The systems provide information for monitoring performance the productivity information and maintaining coordination between purchasing and accounts payable. Management information system uses the data collected by transaction processing system and therefore the information is processed using management information system to meet the specific intention the organization has. Different level of organizational management which is Operational, tactical (Middle managers) and strategic (top managers) requires different management information system to help the make important decision for organization effectiveness. These types of management information are Decision Support systems (DSS), Information Reporting systems (IRS) and Executive management system (Bocij, Chaffey, and Hickie, 2006) Decision Support System refers to computer program application used by the organization to compile information from wide range sources to support the problem solving and decision making process in the organization. It provides specific-problem support to non-routine, dynamic and complex decisions in an interactive environment in which decision makers can quickly manipulate data and model business operation (O’Brien, 2002). Decision Support system (DSS) provides support in decision making for analytical work in semi-structured and unstructured situations. Decision support System provide managers with information to answer question on ‘what if’, ‘which goal’ by providing unique and powerful model to evaluate plans and alternatives to rest on the best solution (O’Brian, 2002). Another type of management system is Executive Support System (ESS) which some scholar refers it as Executive Information System (EIS).This system provides information to senior management which helps them to compare and, analyze and highlight information and data of the company to govern them make a strategic goals. (Bocij, Chaffey, and Hickie, 2006) Executive Support System provide a generalized computing and communication environment to senior managers to support strategic decision making process.ESS draw information from all the functional areas and enables managers to access information quickly and effectively. (O’B0rian, 2002).Executive Support system is important because top managers lack time and therefore they require information quickly to make effective strategic decisions. Executive Support System is advantageous to the organization in that; they are easy for top management level to understand, they provide timely and summary of the company information and therefore is easy to analyze, the ESS filter data for management and present it in graphical design and they therefore offer efficiency to decision makers. (Ravindranath, B, p.123, 2003).Executive Support system provides access to a variety of database, both internal and external, through a uniform interface. ESS is developed in a way that it is easy to use and track critical success factor of the organization, that is, the few vital indicators of the firm’s performance. With the use of this methodology, executive may define just the few indicators of corporate performance they need. With the drill-down capability, they can obtain more detailed data behind the indicators data. Executive Support System takes a wider strategic business objective where the critical businesses are identified and prioritized and used for strategic planning. (Ravindranath, p.124, 2003) Information reporting system is another type of management information system which provides information regarding day to day operation. This system enables the management to access daily transaction and help make day to day decisions regarding the running of the company ( Bocij, Chaffey, and Hickie , 2006) For the purpose of this paper, the discussion is focused on comparison and similarities between Decision Support system (DSS) and Executive Support System (ESS). The two types of management information system as discussed above are of great importance to all organizations who wants to operate within the trend of technology and stand a chance to gain competitive advantage in international market/economy. Decision Support System and Executive Support system has many differences and similarities. Both systems are types of management information system which assist an organization to make vital decision regarding the operation of the organization. They help the management to set strategies for monitoring performance and productivity of the firm. (O’Brian, 2002).However the two differ in terms of component, dynamic, level of management and analytical method. Decision Support System functions to provide the tactical management level with information to help in solving problems. It uses different component like dialogue database and model base. Dialogue is used for achieving interaction with the user so that they can formulate queries and models and review results.( Bocij, Chaffey, and Hickie,2006).information may be need to be collected from range of data sources such as operational systems sales report, financial accounting from financial statements or other important internal data. The model component provides analysis capability for decision support system. A financial model predicts what the future profitability of the company lies. Executive Support system doesn’t use any model once model is very important for development of any organization. Although Executive Support system is sometimes said to be a subset of Decision support system they have some differences which must be appreciated. In terms of users, Decision Support system is used by both senior managers and middle level managers to make long-term decisions while Executive Support system is used by top managers to make strategic decisions of the organization. Executive Support system focus on detailed report on the entire organization operation while Decisions support system focus on analyzing of information, projections, and probability to draw their decisions. (Ravindranath, p.123, 2003) While the Decision support system uses only internal environment information since its functions are specific and provides it to tactical managers (Middle managers) to make tactical decisions in the organization, Executive Support system uses both internal and external environment information because it has a wide spectrum of activities and provides it to strategic managers (Top level management) to make strategic decisons.Tactical decision are decisions made by middle managers in tactical planning and control planning. They implement long-term decision. While strategic decisions are those which top management does. They involve planning of long term organizational goal like vision and mission of the organization. (O’Brian, 2002) Ravindranath, (p.123, 2003) suggests that, Executive Support System is tailored/developed in a way that it fits personal/individual use of executive, meaning the software is only made for the use of top management while Decision support system software is tailored for general use because it is used by middle managers who are from different organization departments. Executive Support system handles structured form of question or problem. This is because the top managers want a summarized detail to make decisions or uncover a problem while Decision Support system has a semi structure decision type because it deals with analyzing information done by middle managers to solve the problem. According to the argument of Ravindranath (2003) in his book Decision support system and data warehouse, Executive Support system is applied in evaluation of the performance, idenditification of the problem, seeking opportunities and finding areas of expansion while Decision support system is applied in where many activities requires immediate action and quick decision making. Tourism industry is a good example whereby Executive Support System can be applied by managers in locating new areas for tourist entertainment. Both Executive Support system and Decision Support System are user friendly and highly interactive but ESS uses interactive graphic to help visualization of the situation and communication capabilities that link the top management to solve problems while DSS uses data from transaction processing system. (O’Brian, 2002) In contrast with Decision Support System, Executive Support system is described as software product located at central computer or and operated under user friendly interface which enables the top manager to quickly access information regarding the organization and use it to make strategic decisions of the firm. It is primarily employed for strategic business planning of goals and uses unstructured and open-ended questions that involve variables. In terms of accuracy it is highly accurate as it gathers data from both internal and external to scan and evaluate data.ESS can be modified to fit personal or individual executive decision making style and presents data graphically and therefore minimizes complexity of data as in Decision Support Systems. (Ravindranath, p.123, 2003) In conclusion the management in the organization should ensure that the management system information systems are maintained. Both Decision Support system and Executive summary assist the firm in different/similar ways. Though these systems fail sometimes.eg Executive Support System may fail due to technology related factor, while in DSS the users may interfere with its program and therefore employee should observe usage instruction. Reference Bocij, Chaffey, and Hickie, 2006. Business information system .3rd ed. Pearsons Education Publishers ltd O’Brian, J., 2002.Mansagement information systems: Managing information technology in e-business.5th ed. Boston: McGraw Hill-Irwin Inc Ravindranath, B., 2003. Decision support system and data warehouse. New Delhi: New age international publisher. Available at: [Accessed 5th Nov 2011] Read More