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The first step in learning how to apply information technology to solve problems is to get a broader picture of what is meant by the term management information system. You probably have some experience with using computers and various software packages. Yet, computers are only one component of a management information system.

A management information system (MIS), or computer information system (CIS), consists of five related components: hardware, software, people, procedures, and collections of data. The term information technology (IT) represents the various types of hardware and software used in an information system, including computers and networking equipment. The goal of MIS is to enable managers to make decisions by providing quality information.

The physical equipment used in computing is called hardware. The set of instructions that controls the hardware is known as software. In the early days of computers, the people directly involved in MIS tended to be programmers, design analysts, and a few external users. Today, almost everyone in the firm is involved with the information system. Procedures are instructions that help people use the systems.

They include items such as user manuals, documentation, and procedures to ensure that backups are made regularly. Data-bases are collections of related data that can be retrieved easily and processed by the computers. As you will see in the cases throughout the book, all of these components are vital to creating an effective information system.

So what is information? One way to answer that question is to examine the use of information technology on three levels: (1) data management, (2) information systems, and (3) knowledge bases. Data consists of factual elements (or opinions or comments) that describe some object or event. Data can be thought of as raw numbers or text.

Data management systems focus on data collection and providing basic reports. Information represents data that has been processed, organized, and integrated to provide more insight. Information systems are designed to help managers analyze data and make decisions.

From a decision maker’s standpoint, the challenge is that you might not know ahead of time which information you need, so it is hard to determine what data you need to collect. Knowledge represents a higher level of understanding, including rules, patterns, and decisions.

Knowledge-based systems are built to automatically analyze data, identify patterns, and recommend decisions. Humans are also capable of wisdom, where they put knowledge, experience, and analytical skills to work to create new knowledge and adapt to changing situations. To date no computer system has attained the properties of wisdom.

To create an effective information system, you need to do more than simply purchase the various components. Quality is an important issue in business today, particularly as it relates to information systems. The quality of an information system is measured by its ability to provide exactly the information needed by managers in a timely manner.

The information must be accurate and up-to-date. Users should be able to receive the information in a variety of formats: tables of data, graphs, summary statistics, or even pictures or sound. Users have different perspectives and different requirements, and a good information system must have the flexibility to present information in diverse forms for each user.

Personal Productivity

An enormous amount of data is available to managers—generated internally and externally. It is impossible to deal with this volume of data without information technology. The era of “pure” managers who simply direct other people is gone. Managers today must be capable of performing the tasks within their area of expertise.

For example, accounting managers still practice accounting, lawyers handle cases, and financial managers still track investments. In other words, managers do two jobs: perform basic day-to-day functions, as well as plan, organize, and communicate.

Firms are increasingly required to improve productivity, which means that each year managers must increase production without increasing the number of workers. Information technology is critical to this improvement process, enabling employees to perform more tasks, getting work done faster at lower cost.

Teamwork and Communication

It is tempting to believe that once you learn how to use a word processor, a spreadsheet program, and a Web browser, you have all the computer knowledge needed to solve business problems.

In fact, these are powerful tools that will help you solve business problems that arise at a personal level. But businesses have many more levels of problems, such as data collection, departmental teamwork, information shared throughout the corporation, and uses of if that help the business gain a competitive advantage.

You also need to understand database, groupware, and enterprise tools that give you access to data across the company and help you share it with team members around the world. Most companies are in a continual race to get products and services to customers faster than the competition.

Moving communication away from paper to electronic messages and online meetings can significantly reduce the time required to coordinate a group and make decisions—speeding up the overall process.

Business Operations and Strategy

Information technology is increasingly critical to the daily operations of a business. Obviously, online businesses cannot live without technology, but neither can the local grocery stores, bank, or many other businesses. Computers process sales, handle payments, and place new orders.

They also analyze the sales data and help set prices and predict trends. Information technology is also used to create new products and services or to provide unique features to existing products. These new features can give your company a strategic advantage and help the company grow.

Traditional Management and Observations

To create useful information systems, it is helpful to examine the various roles of management. Traditional concepts of management focus on organizing, planning, and control.

However, when observed at their jobs, managers appear to spend most of their time in meetings, talking on the phone, reading or preparing reports, discussing projects with their colleagues, explaining procedures, and participating in other activities that are difficult to fit into the traditional framework.

Henry Mintzberg, a psychologist who studies management, classifies managerial tasks into three categories: (1) interpersonal, (2) informational, and (3) decisional. Interpersonal roles refer to teaching and leading employees.

Informational tasks are based on the transfer of information throughout the organization, such as relaying information to subordinates or summarizing information for executives. Decisions involve evaluating alternatives and choosing directions that benefit the firm.

Other researchers have studied managers and developed alternative classifications. Fred Luthans uses three classifications of management activities. He indicates that approximately 50 percent of a manager’s time is spent on traditional management activities (planning, organizing, etc.), 30 percent in formal communications, and 20 percent in informal networking.

Formal communications include attending meetings and creating reports and memos. Informal networking consists of contacts with colleagues and workers that tend to be social in nature but often involve discussions regarding business and jobs.

Making Decisions

In many ways managers expend a lot of their effort in making decisions or contributing information so others can make decisions. When you look at courses offered for future managers you will find a focus on administration, human behavior, quantitative modeling and problem solving, decision theory, and elements of business ethics and globalization.

Typically, these courses are designed to help managers solve problems and make decisions. However, if you ask managers how much time they spend making decisions, they are likely to say that they seldom make decisions. That seems like a contradiction. If managers and executives do not make decisions, who does?

In many organizations, day-to-day decisions are embodied in the methodology, rules, or philosophy of the company. Managers are encouraged to collect data and follow the decisions that have resulted from experience. In this situation and in many others, the managers are directly involved in the decision process, even though they may not think they are making the final choice.

The broader decision process involves collecting data, identifying problems, and making choices. One more step is often involved: persuading others to accept a decision and implement a solution. With this broader definition, many of the tasks performed by managers are actually steps in the decision process.

Meetings, phone calls, and discussions with colleagues are used to collect data, identify problems, and persuade others to choose a course of action. Each of these steps may be so gradual that the participants do not think they are actually making decisions.

Questions for Discussion