Importance and Development of Management Information System

The turn of the XX-XXI centuries was marked by active informatization of all spheres of human activity. The rapid development of information and communication technologies has radically transformed requirements for the management of modern organizations. Information systems in management are essentially set of technical, software, and organizational support of management processes, such as organization, goal-setting, delegation, control, planning, communication, motivation, and others. Therefore, they are designed to provide entities of management with appropriate information and improve the efficiency of decision-making. The development of management information systems creates conditions for the effective conduct of business, its creation, and maintenance. Today, management information systems represent a sufficiently wide sector of the economy with numerous innovation-oriented activities. In addition, a new information and communication environment creates preconditions for the emergence of new forms of business. In such a way, the study of information management systems of the organization, analysis of factors affecting their development, and identification of trends and inherent characteristics operating in this sector take into account specific features of the present stage of socio-economic development, which makes it a complex, independent scientific problem. The purpose of the current paper is to examine the development, modern conditions, and the importance of management information system.

Modern economy is characterized by formation of a new type of relationship, which is caused by active penetration of information technology in all socio-economic processes. According to the author of the book Management Information Systems Effy Oz (2009), “IT is no longer the sole domain of IT professional” (p. 7). Virtually every person enjoys advantages of information technology. Nowadays, it is assumed that information is one of the factors of production complementing the traditional factors. A new information environment of doing business gives rise to a number of positive socio-economic effects. Thus, with the help of the Internet and other information and communication technologies, adequate information on the market is available in real time. This fact improves the competitiveness of companies since it allows them to provide timely accounting of the management of their development. Information and communication technologies blur the boundaries between regional markets and eliminate geographical barriers in the movement of information about goods and services. As a result, the global market, being an abstract category of economics before, now becomes a reality. Globalization has a significant impact on the competitive situation. It penetrates the field of information and communication technologies the fastest, resulting in the formation of a single information space of doing business where national regulatory institutions significantly weaken and priority goes to international institutions. In such a way, it is undeniable that the introduction of new management methods involves the use of information technology.

In this connection, a management system, in which the important role is played by modern working methods and tools with management information, is called management information system. In his book Management Information System, Bagad (2009) proves that “the management information system (MIS) provides the required information for effecting functioning of the business organization” (p. 1). It can be defined as a system of management processes that uses a complex set of interacting elements and their connections for the collection, processing, storage, and provision of information to achieve the stated objectives. These days, the business environment is changing rapidly as external and internal relations of companies are expanding and the speed of business processes is rising. Requirements for information technology are increasing. In turn, this fact contributes to the rapid development of systems. In the upshot, IT is becoming one of the most important management tools creating new business models at the same time.

Management information system is a system based on the constantly evolving concept of using information. The first system of such kind appeared in the 50s (Goyal, 2014). During those years, it was designed to handle the accounts and payroll. It was implemented on electromechanical accounting computers. It led to some reduction in costs and time spent on preparation of paper documents. Such systems were called transaction processing systems. Transactions included the following operations: invoices, billing, payroll, and others. In the 60s, the means of computer technology were further developed (Goyal, 2014). The operating systems and a disk technology were introduced. Moreover, programming languages significantly improved. The development of computer technology gave rise to new opportunities in automation of various activities, such as preparation of reporting documentation. The attitude to information systems also changed. Information obtained with their help began to be used for periodic reporting on many parameters. There were systems management accounts oriented to managers and decision-makers. In the 70s, information systems continued to develop rapidly (Goyal, 2014). At that time, there were invented the first microprocessors, interactive display devices, database technologies, and user-friendly software. These achievements created conditions for the emergence of decision support systems. In contrast to the systems of management reports that provide information on the pre-established forms of reporting, decision support systems provide it as the need arises.

There are three stages of decision-making. They include information, design, and selection (Goyal, 2014). At the stage of information, environment is investigated, and events and conditions that require decisions are determined. At the stage of design, possible courses of action (alternatives) are developed and evaluated. At the selection stage, a certain alternative is substantiated and selected, and monitoring of its implementation is organized. Decision support systems use hardware, software, data base models, and management work to support all stages of decision-making by direct users-managers in the process of analytical modeling based on the provided set of technologies. These systems meet the individual needs of users for information (Goyal, 2014). The most important goal of decision support systems is to ensure the formation of information technology, as well as technological support of decision-making in general.

In the 70-80ss, offices started using a variety of computer and telecommunication technologies, which expanded the scope of the information systems (Goyal, 2014). These technologies included word processing, desktop publishing, e-mail, and others. The integration of those technologies into one office was called the office information system. It started to be widely used as a tool for management control, supporting, and accelerating the decision-making process. 1980s are characterized by the fact that information technologies began to lay claim to a new role in the organization (Goyal, 2014). The company discovered that the information systems were a strategic weapon. Information systems of that period, providing the necessary information in time, helped the organization succeed in its activities, create new products and services, find new markets, ensure a decent partner, and organize production output at low cost. That period was marked by the rapid development of information systems. Besides, modern management information systems were actively applied.

It should be noted that nowadays, each enterprise has management information system regardless of its level of automation. At the same time, the efficiency of the entire organization is often directly dependent on the efficiency of its management information system. This statement refers to those enterprises that have passed the stage of the struggle for survival and come to grips with the issues of development, improvement of management, and optimization of business processes.

It is important to note that there are many areas of management information systems, such as strategic planning, data resources, telecommunications systems, development of software, portfolios, and applications. Among all the areas, it is necessary to distinguish strategic planning. This area maintains a high priority for many years. Strategic planning is a long-term planning process undertaken by an organization to set goals and identify ways to achieve these goals. There is also tactical and operational planning. Strategic planning improves the work of the highest management team, developing a general strategy, long-term objectives, and tasks of the organization, as well as monitoring the implementation of the strategy and its adjustment (Bagad, 2009). Tactical planning ensures proper work of middle management team, which develops short- and medium-term plans, estimates, and sub-goals. It disaggregates a strategy for units attracting and placing resources and controlling the work of subordinate organizational units (Bagad, 2009). Operative management develops short-term plans and programs, controls the use of resources and the implementation of set tasks in specific working groups.

Management information system has a great positive affect on many of the characteristics of the organization. alone of them is productivity. It is related to the speed, cost, and quality of performed tasks. To increase productivity, organizations use transaction processing system. Functional efficiency can be improved through the use of DSS. For example, American Express producing credit cards improves the effectiveness of functions of credit authorization system with the application of artificial intelligence (Goyal, 2014). These systems combine the skills of the best managers of the loan. The quality of customer service is another positive service. An example is the use of bank machines (ATMs). Normal ATM operates 24 hours a day seven days a week. It allows a person to take cash from the account at any time. Another great influence is creation and improvement of production. Generally, there are two kinds of products – information-intensive and traditional. Information-intensive products are manufactured in the banking, insurance, and financial services. The information-intensive products can be developed and improved on the basis of modern information technologies. MIS opens before the company the ability to change the foundations of the competition. For example, in the 70s, one major distributor of magazines and newspapers began to record information about the weekly supply and return of printed products from each seller (Goyal, 2014). Then, he used a program that determined the income from each unit area for every edition of the seller. After that, he compared the results by grouping them into economically and ethnically similar areas. Then, the distributor informed each of the sellers range publications optimum for the district. It increased the income of distributors and retailers. One more positive aspect includes securing clients. Information systems of competitive advantages serve the strategic needs of the organization. They provide instant and easy access to information about the most important factors affecting the achievement of the objectives by the company. Nonetheless, the important thing is that information systems of competitive advantages produce such information products and services that contribute to attract customers to the company at the expense of competitor customers (Goyal, 2014). It is seen that management information system has a great number of positive advantages that make it extremely attractive for modern companies.

Today, a new level of management of the enterprise cannot be performed without the development of the most comprehensive management information systems. Therefore, as one of the main conditions to improve the enterprise management system should be considered the development of its management information system (Bagad, 2009). The development strategy of management information system for each company is independent and is determined by objectives of its operation, as well as existing opportunities and constraints of the enterprise. These objectives, opportunities, and constraints underlie the development strategy of the enterprise. Thus, the business strategy and the strategy of the development of management information system are interdependent and complementary tools of enterprise management.

Management of the development process of the enterprise can be performed in two interconnected forms such as strategies including legal component changes and programs that are sets of projects or individual projects. The enterprise development strategy sets out the main goals, objectives, and directions of development, as well as methods and ways of building the management system and operation (Bagad, 2009). Therefore, it establishes rules of the game and its participants. Programs and projects allow implementing all management functions in relation to the problems of development of the enterprise both in the development stage and in the process of implementation of the strategy.

Creation of management information system of the enterprise should be considered as one of the most important enterprise development programs consisting of a chain of interrelated projects, the results of each of which are necessary for the following ones. The development strategy of management information system should answer four basic questions: “Why?”, “What is missing now?”, “How”, and “What are the expected results?”. It is necessary to examine these issues in detail. They will help understand the development strategy of management information system and its relationship with the strategy of development of the enterprise as a whole, or in other words, with the business strategy.

The first question is “Why”? A business strategy with the mission, goals, and objectives of the enterprise should directly serve as the answer to the question. A professionally and comprehensively developed business strategy will determine the place of management information system and formalize targeted indicators of the strategy. A place of management information system is expressed in how it can affect the success and effectiveness of the objectives within the business strategy, as well as in the assessment of this impact on the enterprise development. In addition to issues of governance, works in the field of the development strategy of management information system should also cover such areas as the issues of using application systems and infrastructure issues.

The next question is “What is missing now?”. The answer to this question allows evaluating the state of existing resources and predicting the need for additional resources for the development of management information strategy. As resources, it is necessary to consider time and budget, as well as human and technical resources. Another question is “How?”. To answer this question, it is necessary to formalize the requirements for resources that will be used for the development and operation of management information system, as well as choose the most optimal variant of the development. Under the version of the development of management information system, the author Siau Keng (2007) primarily involve possible scenarios for the use of a particular type of management software to support the present and projected or desired level of management.

The last question is “What are the expected results?”. This question should be set with the aim of identifying and formalizing a clear effect from the development of MIS, eligible costs and risks. It is necessary to consider the administrative, social and economic effects in the complex while developing qualitative and quantitative performance indicators. These indicators should be interlinked with the indicators developed for the business strategy. In the process of development of the strategy of management information system, the foundation should be laid for the optimization of all planned expenses. In addition, the risks for further development of preventive measures should be formalized. In such a way, it is highly important to set these four questions for the successful development of MIS.

As a rule, formation of the interest to the strategy of management information system development occurs under certain conditions. In other words, there may be several reasons for the development of the strategy. First of all, it is vision. It means that the development of the business strategy is successfully completed. Management begins to consider MIS as a management tool and there are successes of other companies in IT-projects. The second reason is financial resources (Oz, 2009). IT costs become significant for the budget. The current level of management information system becomes a hindrance for business development. Large investments in computerization are planned or have been already made. The last reason includes authorities. The status of the IT manager is upgraded to vice-president or another senior position. In function services, there are units responsible for the development of resources of management information system. Thus, the main bases of the development strategy of MIS should be considered several important aspects (Oz, 2009). The first one is a starting point meaning the current situation both in management and operation spheres and in the usage of IT. In the book Information System Management it is noted that “the design of the management information systems has to take into consideration the latest trends in information technology, as well as the anticipated changes in the information technology that are likely to take place in the near future” (Singh, 2007, p. 195). The second aspect includes desired horizons. It is a business strategy of the company. The last aspect is available tools for the motion from the starting point to the desired horizons. These are general trends in industry and technology in the usage of IT. Integrated use of these bases makes it possible to obtain three components of the strategy of development of MIS. The first component is positioning and the role of IT in the enterprise is coordinated with the business strategy. Another component is a strategic plan to achieve the development goals of MIS balancing resources and projects such as implementation of business applications, infrastructure development, life cycle management of IT, and others. The third component includes technical architecture such as hardware and software platforms, shared services, integration of the components, methodologies, and standards (Oz, 2009). The most important thing in the development of the strategy management information system is to achieve consistency between the predicted and desired level of development of business and necessary IT development for this level.

The technological revolution that widely unfolded in the second half of the XX century gave rise to hopes that with the help of new scientific disciplines and new equipment, difficult problems and contradictions of human life will be resolved. Automation and information systems are currently one of the most demanding areas of activity of man-made society. One of the reasons for active development of this area is that automation forms the basis of a radical change in management processes, which play an important role in social and human activities. Thus, there are management systems, the effect of which is aimed at maintaining or improving the operation of the object using the management device. There are many types of information systems. Management information system is of the great importance. MIS includes any systems that provide people with data of information about operations conducted in the organization. It is used in the activities of employees, owners, customers, and other key people in the organizational environment.