Essay On Impact Of Management Information System On Business Productivity
You are required to write an essay on the following topic:
How do management information systems influence the productivity of a business? Support your arguments with at least two examples from different industrial sectors.
Management Information System is a data-based information system, that provides the data based relevant information to the owner and leaders of any organization to make great decisions. According to Nascimento etal., (2018), Management Information System helps the decision makers to coordinate, control, analyze and finally to visualize the given information.
As stated by Islam (2018), Management Information System provides data, background and trend analysis to create innovative and informed decisions that can bring sustainable competitive success to an organization or to a company.
This essay will focus on how the Management Information System influences the productivity of business in different industries such as banking industry and retail industry. In order to process informed data, Management Information System deals with Information System (IS), Information Technology (IT), Informatics and Electrical Engineering and Computer Engineering which will be also discussed over here. The report is also going to provide an overview of different types of Information Systems which are commonly used in today’s business organization. It is also discussed over here, that how IT Application is used to develop Information System (IS).
How Management Information System Influence the Productivity of a Business
Any business organization or a company uses Management Information System constructively which includes four major steps. These basic steps are managing business data, informing business decisions, analyzing business trends and examining strategy and scenarios.
[Refer to Appendix 1]
Managing Business Data
Management Information System keeps, maintains and updates the required informed data of an organization and it provides the access of key data of particular department to the relevant manager or leader. According to Jamieson etal., (2020), Managers access these organized data when the business owner or the leaders need to be informed about the overall business operation of the company to take responsible decisions when the right time comes. Management Information System is considered to be the great source of informed data while the managers are in need of data-based information for regulatory purposes. For instance, Amazon.com uses Management Information System to maintain and to organize their huge volume of data into coherent reports (Lorne and Gogireddy, 2021).
On the other hand, according to Jamieson etal., (2020), Management Information System creates a possibility for fraud as electronically stored data-based information can be manipulated by the software hackers, which leads the organizations to face a devastating loss. For instance, in order to avoid such security threats banking industry additionally use Secure Server Technology (SST), yet there have been a number of cases of cyber security breach for using Management Information System. Therefore, in order to maintain online security, banks like NatWest, Nationwide do not use current web technologies to perform online transaction
Forming Business Decisions
As stated by Islam (2018), Management Information System is designed with the combination of Information System (IS), Information Technology (IT), Informatics, Electrical engineering and Computer Engineering. Therefore, Management Information System is able to provide accurate, error-free, timely, relevant, organized and complete data. Self-checking and cross-checking features are also implanted in this system in order to reduce errors. As the validity of decisions are based on accurate information, therefore, Management Information System is the best solution for any business organization to make decisions (Alkatheeri etal., 2020). For instance, Wal-Mart uses Management Information System, SAP HANA for its business intelligence and makes strategic business decision accordingly.
The companies or business organizations make sure that all of their managers are accessing same set of data, so that they can make better ratio quality decisions that are made of identical data-based information. Often upgraded Management Information System offers basic recommendations based on the system analyzed situation that leads to great decision making in a business organization.
On contrary, according to Zhang etal., (2020), besides being highly sensitive and expensive, Management Information System requires constant monitoring as this system also needs manual input of data. It can also cause loss of data or service due to computer outage or power cut. For instance, there are a number of cases where banks such as HSBC, Standard Chartered lost many important financial data which creates security threats for both bank and its customers.
Analyzing Business Trends
As stated by Grover etal., (2018), in order to prepare a data-based forecast for making strategic business planning, it is the key responsibility of the business management to study the past data regarding business structure, production, sales and customer experiences. Management Information System contains all these fundamental data and also maintains the data regarding revenue, expenses, investments and financial graph. Business owners or management leaders can study this information and can understand the current trend by the past performance patterns that are projected in Management Information System. This system also contains technology based mathematical analysis tools that can analyze, calculate and evaluate probable future business trends. For instance, Flipkart uses Management Information System to predict the inventory levels.
In contrary, Nuskiya (2018), stated it would generate more accurate forecast if the leaders or managers do the market research manually or physically instead of relying on a technology-based management system, because it can create difficulties while producing a tailored accounting result. Though HSBC Holdings uses IT based systems to maintain dividend information, investor presentations and stock exchange announcements, however, the bank needs to monitor the system activity constantly.
Examining Strategy and Scenarios
Management Information System provides future trends based on the analyzed data-based information that are aligned with the past business patterns. According to Grover etal., (2018), often owners and leaders want to change those provided scenarios by the Management Information System. For such cases, there are feature, where the leaders can manually change the scenarios such as by increasing budgets or reducing staff levels to get different business possibilities. For instance, Wal-Mart processes almost half a trillion records of its transaction by using SAP HANA Management Information System.
On the other hand, Nuskiya (2018), stated, though the company can change the provided evolving situation in the information system, yet Management Information System is not able to produce all the probable possibilities. For instance, Management Information System is not capable to collect every single data from various sources such as from customers to analyze and to create future corporate strategy.
Encourages Smoother Communications within Organizations
An effective Management Information System facilitates smoother communications and encourages better teamwork. Therefore, employees of the organizations can find mutually profitable solutions for the betterment of the business.
According to Uddin etal., (2020), Enterprise Resource Planning (ERP) System is considered to be the best business information system. Enterprise Resource Planning System deals with enterprise transaction, customer feedback and data-based information to generated integrated production.
However, there are mainly five types of information systems that are commonly used in present day’s business organizations. These information systems are transaction processing system, office automation system, management information system, decision support system and executive support system.
[Refer to Appendix 2]
Transaction Processing System
A transaction processing system makes sure that all the confidential data such as transactional, customer relationship data and important contractual data are stored in a secured as well as in an accessible location. For instance, Amazon.co uses transaction processing system to store their huge amount of data regarding various sectors (Gupta and Sadoghi, 2021). Though Sanusi and Johl, (2021), stated, there is always a lack of reliability and accuracy in the data as a result of human error, because all the data are manually inputted.
Office Automation Systems
In order to conduct managerial or clerical tasks such as mailing, printing documents and maintaining organizational calendar, office automation system is used in many business organizations. Murthy and AjaySaiKiran, (2018), stated, such automated managerial works need constant monitoring to avoid mistakes that can affect the business organizations. Specially in banking industry, small data-based mistakes can lead to a great monetary loss of the customers. NatWest, Nationwide, Lioyds bank do not completely rely on such technology-based system.
Management Information Systems
According to Velikorossov etal., (2020), management information system collects transactional data from transactional processing system, analyzes those data and finally helps the organization in decision making. Wal-Mart uses this process to generate business reports and this retail chain got positive impact of using this information system.
Decision Support Systems
Decision support system allows the organizations to process stored data and assists the decision makers to make effective managerial decisions. On contrary, Sanusi and Johl, (2021), stated, leaders should not completely rely on the decisions tailored by the technology-based system.
Executive Support System
Executive support system works similarly as decision support system; however, it is used only for the organizational leaders and owners to make final decisions.
IT Applications have major contribution in making and developing information systems. IT applications build major fundamental relations between facts, form and functionality. Ahmar and Jefri, (2018), stated, IT applications manage facts and forms through computer-based functionality, which is basically created by software engineering process or computer programming. Several techniques and methods are followed to control these engineering process so that the information system can generate accurate results. Instead of offering traditional multimedia production, IT application is developing future multimedia information systems.
Management Information System is used by many business organizations of various industries like retail, automobile or banking industry. It helps the organization to store and manage data-based information, to analyze these data, to get a future business trend and finally helps to make strategic business decisions. There are various types of Management Information System that help the organizations to perform various duties. Though there are many drawbacks of Management Information System as data are inputted manually. Therefore, there are chances of data loss, manipulation of data and lack of accuracy.
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