Impacts of Management Information System

Abstract

            The importance of the management information system in a company cannot be undermined. It has been found to be time saving, more efficient, better at storing and retrieving information and a close friend fro managers. The management information system has a variety of impacts on the company. First, it enables companies to save costs that would otherwise be used in locating information, storing information, the paperwork required and the errors that are associated with other forms of storage systems. The information system also helps the company to run much more effectively and to apply more ethical standards in it operations. Finally, companies that have embraced management information systems are often regarded as more moral in the way their workers operate since it is easier to manage each employee individually. However, the research also shows that some industries are hit negatively by poor information systems, poor monitoring and brute abuse of the system. Companies also need to keep track of their systems to avoid breakdown.

Key words: Impacts, Information technology, management systems, Management information systems, strategic management.

Introduction

Companies always use information to strategize towards the achievement of their business objectives. Most management teams can however testify that the information is never quite maximized by the systems on the ground. A management information system comes in to identify information that would be important for the growth of an organization and further assists in the exposure of this information to the different departmental managers of the organization. Business programs and systems are developed in such a way that they address well-defined goals, which will improve, either to the bottom-line directly or help the company move towards the right direction in terms of achieving its goals and objectives. The objectives of management information systems fall in one of three categories: effective and efficient service, cost avoidance and profit growth, and organizational responsibility ethically, legally, and morally. This paper strives to point out the importance of a management information system in a business.

Literature review

Management information systems are used in organizations for daily business operations (Kumar, 2011). It enables improved advancement in information technology through which an organization can easily achieve its goals and objectives. It also supports the decision making process, venture management, human and resource management,  and database retrieval application. It supports various business processes, strategies of competition and operations which impact on the performance of the workers in that organization. A company’s investment in a management information system supports its core proficiencies, helps its production process, improves records of human resources, financial records and controls and monitors the various company activities hence impacting growth and creates a solid foundation for a sound decision making process (Abernethy & Guthrie, 1994).

If implemented properly, it could help in improving the company on various dimensions. According to Aral (2010), these include the employees’ act which is supported through a better payment structure, control and organization of the workforce and over the activities of the entire organization. The entire management of the organization is best managed by the implementation of the information system tools. The potential of each and every department is also fully exploited. Aral also argues that the company activities are largely dependent on three things. These are the proper exhaustive use of company machinery, trained personnel and good organizational structure. These are then supported by a proper control and supervision system and a more conscious management information system. It should also be supported by trained IT specialist who run the financial and payroll systems of the organization with proper monitoring of all organization systems.

Significant productivity premium totally depend on the management information system from the organization. And also education and employees management is related to a great extent to help its employee’s motivation not enough for the complementarities but it should be explained through talent selection of employees (Olsson, 2010). He says that all the managers along with executives are afraid of various hazard analyses.

It may be from low produces, low out put, time prediction glitches (Jagolinzer, 2006). All these items can only be controlled when qualified employees with Technology, that is, management information system, for them to best exercise times that have effects on financial reporting and in addition improve the quotes and forecasting selections. The most important mechanisms to own employees’ performance in different organization is the actual technology development (Kumar, 2006). It is just a tool through which one organization motivates the employees and also tries to accomplish its stated targets and objectives. Through technological improvement, an organization is committed to achieve its long-term objectives and to choose future strategies. Jensen, (2006) stated in his research paper how the organization performance generally correlates with spending budget and system. If employees tend to be well trained, and the budget system is computerized then there might be possible change from the behavior of the actual staff. Employees can receive help from these types of new technological budgeting system and so they can execute every one of the activities of the organization if organizations find possible training to help workers.

Managers, researchers and strategy producers play very important role in the development of an organization. However, the role of IT for a company is a fundamental one (Ville, 2004) because IT makes links between the many departments and makes inter-relationship between the departments which often integrates every one of them into a single structure. The group performance is to great extent associated information technological know-how. Information technological know-how is precious for organization but the extent involving dimension is determined by various factors that may be internal or external. He figured the application of extensive technology is necessary for the performance of employees and their organization.

In his paper he investigated distinctive things, for example, work execution, work fulfillment and representatives training in occupation work place, he connected diverse instruments to measure the employment fulfillment and which systems build the workers execution, last he found that training is the main component in the work put through which workers could be propelled and its effect on the execution of the workers (Melanie K Jones, 2004).

Other researchers have exhibited in their research paper the relationship of venture in of production and the association execution, for examination reason they took hospitals to see the effect. (Devaraj and Kohi, 2003). They placed that the genuine utilization of the performance straightforwardly connected with the clinic incomes and quality. Campbell wrote in his paper that the association development and achievement is a two way relations one is reason and other is impact, all the more training in the field of MIS to workers will come about more effective execution of the specialists (Campbell, 2002). Since he further states in his paper that this tool is specifically connected with the association long term methodologies. The information management system can without much of a strain measure the worker’s execution and might be best directed and controlled with the assistance of this workstation production and the firm can undoubtedly amend the technique.

The reason impact relationship can not be conceivable by fitting execution and utilization of workstation innovation in the association. The estimation of IT for business is considerably more than its idea on the grounds that the extent of its business examination incorporates the hypothetical, coherent, reasonable, and trial studies (Dehning, Richardson, 2002). More financing in data innovation makes a decent part in focused area of the association. The utilization of data innovation all hands on deck affect the expense diminishment and item separation furthermore its application is helpful for rivalry (Belleflamme, 2001). The estimation of IT is additionally to business is less however not less application to information demonstrating and generation. Kauffman, (1996) has pointed out that all the administrations level executives ought to be propelled for the venture in engineering and to advertise the IT program in the association which thus enhance the general execution of the workers and the association will have the capacity to do all the exercises in impressive ways. Kauffman’s research reveals that legitimate MIS training to workers may make estimation of the association as well as it set and clear the unmeasured headings and measurement. He stressed on the more financing in the field of production that is Management information system.

From this review, it is evident that an information management system is not only important for the performance of the company but also for its production. It supports the idea that adoption of this system into any company could lead to profits and productivity. The system links the various departments of the company hence making it easier for the workforce to cooperate. It also helps in forecasting, planning in the long-term and the ability to store and retrieve useful information.

Methodology

This research was conducted on various grounds. First, the researcher intended to determine how massively various companies differed from each other in terms of the way they benefited from their management information systems. Second, the research also sought to understand how every company exploited its management information system and how the impacts differed. Finally, the research also sought to understand what the role of management information systems was in the various companies. With this in mind, the researcher sought different materials relating to the three categories of information.

The research considered peer reviewed journals more acceptable and sought to use them maximally. Other information that was considered reliable was information obtained from company websites regarding how the systems were used (Trimester, n.d.).

The research was carried out through a systematic review of the available resources. The review was however carried out in three major categories. First, the effect of management information systems on lowering costs and increasing profits, second, effects on ethical values of the company, and finally, the effects on improving the morals of the company employees and executives.

Cost dimension

Today’s economy, it is vital for companies to seek ways to improve their profitability. This explains why so many companies have given a lot of their attention to managing business expenses. This is because a higher retention of the revenue generated by a company translates to a positive impact on the company’s bottom-line and makes funds for other initiatives available. According to research, it has been noted that cost reduction is among the top five priorities of the executives of most businesses (Trimester, n.d.).

Most companies find it most effortless to reduce company expenses by lowering overtime and headcount or limiting travel, entertainment and other unnecessary expenses. However, many companies often find it difficult to identify hidden saving opportunities. Many companies often overlook costs associated with information management systems since they are always present in all departments and places. This way, they fail to identify these as possible cost saving opportunities. These opportunities are therefore not acted upon and hence there remains a saving gap in these companies that remains unidentified. Poor information management systems in this case work against the company’s goals causing unnecessary spending (Trimester, n.d.).

If information management systems are targeted, tremendous opportunities for saving could be unlocked. According to some researchers, when information cannot be found, it costs a company an average of $120 to trace it in the form of labor. It has also been determined that $14000 worth of labor is spent on locating information yearly. This amount of money if tapped could make a big impact on the company’s bottom-line (Jagolinzer, 2006).

There are various ways to maximize the potential of a management information system and make it bear positive fruits in this endeavor. First, an information management system should only contain necessary information. Unnecessary information often serves to increase the cost of storage. At the same time, it slows down the company by making the process of obtaining the right information and distributing this information more time consuming. If this is corrected, a lot of costs will be saved in the form of time and storage space. Secondly, organized data is easier to locate and therefore less time consuming. A good information management system seeks to identify a way to make information available for those who need without much of a hustle. Finally, a hierarchical form of information management system makes more informatyio0n available as you move up the ladder of leadership. This makes it hard for information to be misused while at the same time ensuring that information is available at all necessary levels. A subordinate who really needs information which is not accessible through his own system will only need to consult those above him for accessibility. An information management system of this kind is often easier to manage and save s costs further in terms of those people who would otherwise be used to locate the information if it were misplaced (Jagolinzer, 2006).

For such steps to be effectively taken, a company needs to implement policies that are applied to all information. By doing this, it implies that every company employee who needs information regarding any issue in the company knows if the information is available and where to get it. Without such policies, information may be deleted from the system while it is still useful to certain individuals within the company. The company also avoids taxes and penalties that are often associated with poor information systems in terms of too much or too little stored information.

The MIS is designed in such a way that it provides the basic information of every system. As this information grows, the problem of overloading the executives becomes real. To resolve this issue, it is often necessary for them to be created in such a way that an executive only information that is relevant to certain scenarios. This way, the executive is not overloaded by the task to comb through the entire information material to get what he requires.

Performance

            Once information is easily available for executives and their subordinates, several situations arise. These work jointly to ensure that the company becomes more productive and hence higher returns.

            First, employees have access to important information. Accessibility of information makes it possible for employees to identify their weaknesses and try to work on it. Information provides employees with an improved capacity to get in the shoes of their executives and make changes to the business through decision making. Lack of information or poorly organized information, on the other hand, burdens the executives with the role of making even simple decisions (Jagolinzer, 2006).

Management information systems also help companies to summarize and organize information. This often saves the time that would otherwise be allocated to the workforce to do the same job. The calculations that would be done by humans would often contain more mistakes from errors and misunderstandings made during analysis. The time and labor used to do these calculations is saved and utilized in doing other things. Often too, these calculations are done in real time hence making departments more productive and efficient.

According to Mithas, Ramasubbu and Sambamurthy (2011), Information management systems enable process management capability. If effective, Information management systems could minimize the rate at which information changes within an industry. This helps to provide a common blueprint on the way all personnel perform their duties. A uniform method of reaction, in turn, improves organizational performance. The accuracy of data is important for ensuring that proper forecasting is done and swift supply chain management processes are designed.

Mithas, Ramasubbu and Sambamurthy (2011), argue that information management competence provides the connectivity and access to design and management systems that link the firm with its suppliers, consumers and other significant business partners. Moreover, improved information management capability enables companies to design metrics and analytics that provide real time information on the performance of processes, integration of various processes and prediction which provides warnings of degradation in various processes before the situation gets out of hand. Furthermore, availability of high level and accurate information enables the company to redesign reconfigure processes effectively in response to changing business conditions.

Moral dimension

Information management systems are often associated with improving the morals associated with a company. Morality in this case would imply accountability, responsibility and lack of corruption (Abernethy & Guthrie, 1994).

The ability of an information management system to identify major discrepancies in data is often an advantage in this regard. Many companies without an information management system have to frequently deal with employees who have robbed the companies for years without being discovered. The availability of an information management system takes care of this issue by making information available to the executive before it is too late. This information comes in the form of inflated prices of goods, unallocated funds and much more. Identification of such ills at an early stage prevents future errors and protects the company (Jagolinzer, 2006).

The presence of a management information system also makes it possible to identify departments that are not performing. When identified, such departments and individuals are cautioned or alerted hence prompting more activity within the department. It also helps personnel to monitor their own progress. This way, they are able to tell how far they are from achieving their departmental goals. It has been discovered that those people who are able to monitor their progress especially in competitive environments are able to perform much better than those who cannot especially in competitive environments (Abernethy & Guthrie, 1994).

Finally, accountability is enhanced by information systems at every level. Once information concerning the performance of every department is obtained, department heads are required to account for losses, deficits and drops in performance. This way, departmental heads are pushed to perform better than their counterparts and provide better results. Departmental heads on the other hand are able to identify where their problems are coming from hence enabling those units to account for the issues. This way, a culture of accountability is generated. Accountability helps to improve performance and profits (Jagolinzer, 2006).

In summary, the use of information management systems promotes morality within a company. Individuals understand that they are under close assessment and are therefore conscious to avoid mischief. The departmental heads on the other hand see the need to push every one to be more productive. The systems also enable comparison between departments hence introducing competition which often improves production in the company as a whole Abernethy & Guthrie, 1994).

Ethics

There are many ways in which companies can regulate their ethical standards within a company. The systems provide information regarding all sorts of ethical issues. For food industries, they will provide data regarding the percentages of the various food nutrients. This way, companies are able to observe healthy standards that often lead to a healthy society. In other industries, information systems may be used to determine the expected environmental destruction levels hence enabling the company to know what adjustments to make in their industrial systems. They may opt to adopt other industrial processes that are more environment friendly. This way, the companies serve to contribute towards the society which is an ethical practice (Jagolinzer, 2006).

Internally, it being possible to observe the performance of various individuals, it is often possible to tell if certain individuals are being exploited. Exploitation may arise in the form of more working hours for certain individuals, lower pays, and so on. This may result from systems within specific departments and may be determined by obtaining from the system statistics like the most productive hours and which personnel are usually present during those hours; the most frequent workers in departments and sometimes even the individual performances (Okoroafor, 2012).

By providing such information, the system checks the possibility of unethical behaviors within the company. It would often be probable to have workers who are exploited for years because they cannot speak out for themselves. The system works hand in hand with the executives to ensure that every individual works within his abilities without being exploited within his department (Abernethy & Guthrie, 1994).

Consumers are also better served using information systems. Information systems can be integrated into the company in such a way that they serve to assist clients on where to get their services. Information could also be provided on how things are done within the company. This way, consumers are better served in the company (Jagolinzer, 2006).

Negative impacts of information systems

Information systems are often regarded as highly beneficial systems in every company. Indeed they are. People however fail to see the kind of losses that arise from their adoption, maintenance and usage. The information systems should be managed in such a way that the effect of the negative impacts is least felt. The negative impacts are diverse and step on various departments of the company. It is however the IT experts who carry the entire weight of the matter (Okoroafor, 2012).

First, upon adoption, they require the employees to be trained on their usage. This often costs the company a lot of money and in some cases the employees do not fully understand the concepts of the new system. The company is then forced to make changes in the employee system to ensure that those who have direct access to the system are able to use it. For the executives who cannot use the systems on their own, it takes more than just reallocation, new vacancies are created. This often results in additional costs to the company (Jagolinzer, 2006).

Secondly, system collapse often results in heavy losses. If the system crashes in the course of transactions, the company is left in a dilemma of how to deal with the situation. Consumers are unable to understand how a system collapse of a company should cause inconvenience. This, if repeated could result in customer fall off. Customer fall-off results in reduced profits and may be worse if the customer spreads the word (Abernethy & Guthrie, 1994).

Information systems often result in dependence. In case of a collapse as mentioned above, there is hardly any back-up information. This results in work stagnation in all departments in which information is required. Consumers are also not served and again this may cause lost sales. In cases where produce is likely to get destroyed with time, the losses are immense. If there is a backup method of dealing with the situation, it is usually far slower than that already in use and so consumers are not completely kept happy (Jagolinzer, 2006).

Once a system breaks down, the repair costs are high. Simple maintenance is also an added cost on the company. To reduce the risk of breakdown, these costs have to be covered once in a while and the systems updated and repaired (Okoroafor, 2012).

There are also possibilities of errant information getting into the system. If this happens, depending on which area of the system is affected, it may lead to losses in the long run. If employee payments are involved, both the company and the employee may be affected. If, for example, the employee is underpaid as a result of errant information, he needs to file a complaint before he is compensated. The process often takes a lot of time and as a result hurts both the company in terms of labor hours and the employee in terms of late payments. On the other hand, the information system will cause a lot of effort to charge an employee who has been overpaid. In some cases, the employee may be deemed to be unfaithful hence causing him his job. On the other hand, the company loses a lot of money in the process. If the employee is required to repay while it is already too late, the process may take many years and may even have negative effects on the motivation behind his job (Abernethy & Guthrie, 1994).

Finally, some people are in a position to take advantage of the system and feed wrong information. Corrupt individuals may find ways of taking advantage of having a system to monitor them and feed wrong information into the system. Information may regard payments and allowances, losses and company expenses. When such individuals exist in a company, it is very easy for those monitoring the system to oversee such errors and hence cause losses in the company.

Recommendations

An information management system is as important and as good as the information put into it. Wrong information often results in errors that may cost the company in terms of money, work hours and even worker motivation. It is therefore necessary for companies to ensure a proper vetting of information before and after it has been entered into the systems.

The company should also employ enough personnel to monitor the systems. This would incur more costs but the costs should be allowed so as to reduce the risk of losses on the company. Errors in the systems should be reported as soon as they are identified. This would often require adoption of a culture of honesty and accountability. The company should also implement policies that strive to reduce dishonesty and corruption in the company. Corrective measures should be as harsh as is allowed by the law. Policies would also be effective if those who work towards the correction of errant information are well compensated (Abernethy & Guthrie, 1994).

The company should also generate back-up measures in the company to help during times of crisis. This way, the company will stand better prepared for such times and to run at least minimally during those times. Such measures will help to reduce losses and customer fall out.

Information assessment on the other hand should be a continuous process and should always be done carefully. If mistakes are discovered, their root should be identified and urgently corrected. Often, mistakes are either intentional or unintentional. They should be corrected early enough to ensure that company resources are not misused. To identify them, the IT personnel should be familiar with the system to identify mistakes early enough (Abernethy & Guthrie, 1994).

Conclusion

Information system management is vital for most companies. It helps in the generation, transfer and storage of information using the data that is fed into it. It plays a very important role in the running of the company and companies that are used to it can almost not do without. It has many impacts in the performance, production and everyday running of the company. If this information is neglected, huge losses could arise in the company.

On the other hand, its role cannot be ignored in the management human resources and in maintain other resources in the company. It also helps to increase the efficiency of a company through a faster more effective means data analysis and transfer of information. Every company that uses this system maximally and closely registers moral improvement of those who are responsible in the various company departments.

In conclusion, while it contains a few challenges, the role of a management information system cannot be undermined. It should therefore be adopted and closely monitored. Companies will then be able to deliver better in such cases. The work of the managers and supervisors will also be largely reduced hence enabling to participate in other development endeavors.

References

Abernethy, M., & Guthrie, C. (1994). An empirical assessment of the “fit” between strategy and management information system design. Accounting \& Finance, 34(2), 49–66.

Aral, S. (2010), Assessing Three-Way Complementarities: Performance Pay, Monitoring and Information Technology, Sloan School of Management.

Campbell, D. (2002), Using the Balanced Scorecard as a Control System for Monitoring and Revising Corporate Strategy, Harvard Business School.

Dehning B, and Richardson. (2002) Return of Investment Technology: A Research Synthesis, Journal of Information System, 16, 1, pp. 7 -30.

Harsh, B. “MANAGEMENT INFORMATION SYSTEMS.” N.p., Web. July 3. http://departments.agri.huji.ac.il/economics/gelb-manag-4.pdf

Kauffman, R. J., (1996), Information Technology Investment and Price Recovery Effects in International Banking, NYU working Paper.

Kumar, M. (2008). Management information system, M S Rahmaiah Institute of Technology Bangalore, Faculty member. www.slideshare.net/himanshulove3/management-information-system-1176769

Kumar, V. (2006), Performance Measurement System in Hotel Industry: An Empirical Study of Select Indian Companies, HBTI.

Okoroafor, S. (2012). MANAGEMENT INFORMATION SYSTEM. Xulon Press.

Olsson, E. B., (2010), Assessing Three-Way Complementarities: Performance Pay, Monitoring and Information Technology: NBER.

Trimester, I. (n.d.). MANAGEMENT INFORMATION SYSTEM. KS Rangasamy College Of Technology-Autonomous Regulation.

Turoff, M., Chumer, M., de Walle, B., & Yao, X. (2004). The design of a dynamic emergency response management information system (DERMIS). Journal Of Information Technology Theory And Application (JITTA), 5(4), 3.