Information Management Systems
Business reasons and the IT capabilities that have led to a move from an emphasis on data processing to information management
Information systems (IS) concept includes activities such as gathering, processing, storing, distributing and using information in organizations. Transaction processing systems, decision support systems, information management systems, knowledge management systems, database management systems, and office information system all are different types of information systems.
This article aims to discuss about reasons which lead to move from data processing / transaction processing systems to information management systems and also discuss about new capabilities of information management systems compared to transaction processing systems.
Data processing / transaction processing Systems
Transaction processing systems automates handling of data by capturing, validation and storing data for future usages such as producing reports or tracking the data. Feature of transaction processing is to speeding up data processing more accurately and deficiently.
Batch transaction processing, Real-time transaction processing, Data validation, Historical significance of transaction processing systems and Manual transaction systems are all different types of data processing systems.
Management Information Systems
A management information system is integration of different computer systems to provide information to manage organizations effectively. In this system, collection, processing, storage and dissemination of data is provided for management functions which includes: Decision support systems, Resource and people management applications, Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Customer Relationship Management(CRM), Project management and Database retrieval applications.
New distributed systems provides more competitive advantages for companies and allow them direct communication between suppliers and clients. In the transactional data processing systems, all the system is in one place, however in distributed management information systems, the sub systems can be distributed into different physical locations which provides more advantages. For example it makes it possible to outsource from cheaper countries such as India for customer supporting or allowing managers in different physical locations access the information system easily.
Transaction processing systems are central to a business, in case of any failure of the TPS can harm all the firms which are linked to it.
“Transaction processing systems are often so central to a business that TPS failure for a few hours can spell a firm’s demise and perhaps harm other firms linked to it. Imagine what would happen to UPS if its package tracking system were not working! What would the airlines do without their computerized reservation system?” (C. Laudon, P. Laudon, 2003: 41).
Information helps to increase profit and performance of organizations which is a good reason for organizations to move from data processing to management information systems which helps their strategic decision makings. Chaffey and Wood (2005: 10) stated that: By utilizing information resources performance of the organization can be improved to deliver better quality products or services more profitably. This can be done by providing more relevant data to employees to supports the decisions they are making.
By recognizing importance of information by the IT governance Institute COBIT (Control Objectives for Information and related Technology) framework has been developed, Regarding importance of managing information, Chaffey and Wood (2005: 10) suggests that:
Critically importance to the survival and success of an organization is effective management of information and related Information Technology (IT).
By Software improvements and lowering costs, organizations can use enterprise resource planning [ERP] systems to support their business processes such as marketing, sales, logistics and manufacturers. ERP provides a single solution to achieve all these functions. SAP, BAAN, Peoplesoft and Oracle are examples of ERP system suppliers.
One of the reasons which holds the small businesses to move to management information systems was the costs of the software in the past, Chaffey and Wood (2005: 63) stated that: When concept of ERP was introduced in the late 1980s and early 1990s, small organizations could’t afford it because it were cost millions of pounds. However today it is easy to implement lower-cost ERP solutions or consider open-source software option which saves money for organizations.
Internet has significant change on traditional organizations to innovate them to use new technologies. Boddy, Boonstra and Kennedy (2005: 32) stated that: The rise of internet since the mid-1990s challenges traditional organizations to innovate and integrate their processes with suppliers and customers.
“This clearly leads to corporate transformation, reinvention of value chains and new ways of doing business.” (Boddy, Boonstra and Kennedy 2005: 32)
Internet also helps organizations by implementing online inventory systems to make it possible to reduce inventory levels and its associated costs. Bobby, Boonstra and Kennedy (2005: 77) stated that:
“The internet enables large companies to transfer their purchasing operations to the Web. Secure websites connect suppliers, business partners and customers all over the world”.
Decision support systems (DSS) helps managers to make decisions, If organization is using TPS, they can only use their internal information in their DSS, however if they move to Management Information Systems, the DSS can use information from external sources as well such as stock prices and product prices by competitors. This gives a better option for managers to make decisions so its another advantage for them to move from TPS to MIS.
In the past transaction processing systems were used to store the data on mainframe computers, an example would be airline reservation systems, banking systems or accounting systems. One of the biggest issues in these systems was need to handle multiple simultaneous users.
Management information systems have changed different rules and provides new capabilities. Bidgoli (1999: 295) suggests that: “Information systems helps to deliver information simultaneously in as many places as needed”.
Employees can retrieve all the information quickly and communicate with suppliers and customers. Image processing technologies can help to for faster information delivery by reducing paper processing. Another capability is to use GroupWares to allow decision makers to function more effectively.
Bidgoli (1999: 297) suggests that: “Using Electronic mail, computer conferencing, video conferencing, computer-assisted telephone interviewing (CATI) and other related technologies can make it possible for remote groups of people to function effectively”. These are part of information system applications which all speed up processes by removing boundaries.
Management information systems let managers to get weekly, monthly and yearly reports which can help them to make strategic decisions based on these reports easier. Reports will be more efficient comparing to old transaction processing systems.
C. Laudon, P. Laudon (2003: 44) stated that: “MIS summarize and report on the company’s basic operations. The basic transaction data from TPS are compressed and are usually presented in long reports that are produced on a regular schedule”.
Since the sub-systems will be distributed in the management information systems, it gives possibility to run it in different locations and provide accessibility to suppliers and customers from any physical location.
Rule of CIO
Chief information officer is a job title given to the most senior executive in an enterprise organization. CIO reports to chief executive officer, chief operations office and chief financial officer. By growing information technology, role of CIO become move important and many organizations considering a CIO role as the key contributor for their strategic goals. CIO is responsible to increase information accessibility and integrated systems management.
“Managers need to pay attention to business processes because they determine how well the organization can execute, and thus are a potential source of strategic success or failure” (C. Laudon, P. Laudon 2003: 65)
CIO is also in charge to make sure information systems functions correctly in the firm. In new Management information systems, CIO is manager of all the information rather than being an IT manager which take cares of the hardware or software issues. CIO is responsible for information availability for all managers in the system.
Implementation of management information systems may impact different employees depending on their age and experiences. By implementing the MIS, employees needs to get training for how the use the new system. Managers should learn how to use decision support systems and getting timely reports whenever they are required.
If companies are going to migrate their old transactional proceedings systems to the new management information systems, they should have skills to transfer their existing data into the new system (or someone who is responsible for this purpose).
CIO requires to have knowledge on how to use the new system and also decide on how to provide information between managers in the company.
There are 3 major information systems including: Transaction processing systems, Management information systems and decision support systems. TPS provides less strategic planning for business and more focuses on operational control. In the past, organizations were using TPS to store, retrieve and process their data which has disadvantages to MIS such as accessing multiple users from different locations to the data and lack on providing information for decisions and using external data sources.
Expensive price of Management information systems has limited small organizations to implement such systems since those systems were very costly. Currently there are different suppliers which provide management information systems a lot cheaper and also companies can consider using open-source as an alternative to expensive MIS solutions.
Using MIS provides many advantages which lead to save money for companies and increase profit as well. Managers can use MIS for helping their decision making to manage organizations more efficiently. Management information systems makes it possible for managers to access information from different physical locations and also allowing customers and suppliers to connect to the system as well.
CHAFFEY, D. and WOOD, S. 2005. Business Information Management: Improving Performance using Information Systems. Harlow: Pearson Education Limited.
Boddy, D., Boonstra, A. and Kennedy, G. (2005), Managing Information Systems: An organization Prespective, Pearson Education Limited, Britain
Bidgoli, H. (1999) Handbook of Management information systems: a managerial perspective, Academic Press
Laudon, Kenneth C. and Laudon, Jane P. (2003 ). Essentials of management information systems (5th ed.) Prentice Hall
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