Principles of Information Systems

Subject: Management
Pages: 6
Words: 1401
Reading time:
5 min
Study level: College


A management information system (MIS) refers to a system that an organization uses to provide information regarding its different operations and processes (Laudon & Laudon, 2002). The system stores information that an organization requires to make its management operations effective and efficient. Management information systems are usually computer systems that comprise five main components that include people, software, data, hardware, and procedures.

Their main role in organizations is to analyze and facilitate the execution of organizational strategies and operations (Laudon & Laudon, 2002). Types of MIS include transaction processing systems (PMS), management information systems (MIS), decision support systems (DSS), executive support systems (ESS), customer relationship management (CRM), supply chain management (SCM), and knowledge management systems (KMS) (Laudon & Laudon, 2002).

These systems provide information about different organizational processes and operations that contribute to the improvement of managerial operations. Middle managers use information systems to make non-routine decisions that are critical to their organizations.

Management information systems (MIS)

A management information system provides information obtained from reports on current organizational performance to help managers make crucial decisions (Lucey, 2005). These reports are developed using data obtained from various departments and divisions. These systems provide solutions to problems that are often encountered by employees because they have predefined procedures and guidelines that explain how certain activities and tasks should be executed (Lucey, 2005).

However, they have a managerial weakness because they cannot be used to conduct organizational analysis. However, they are very helpful to middle managers. They are usually aligned with organizational goals and objectives to help organizations gain competitive advantage and improve the efficiency of operations (Lucey, 2005).

Customer relationship management systems (CRMS)

Customer relationship management involves the organization of interactions between a company and its customers (O’Brien & Marakas, 2006). It enables businesses to increase sales, attract new customers, create customer loyalty, provide quality customer service, and understand the needs of different clients. A customer management system provides information that is necessary for the coordination of all business operations that deal with customers.

Examples of processes that are coordinated using CRMS include sales, marketing, and customer service (Lucey, 2005). They are very useful in the identification, attraction, and retention of profitable and loyal customers.

Finally, these systems provide information that helps companies to strategize and plan to provide the services and goods that customers want (O’Brien & Marakas, 2006). This is achieved through meticulous understanding of the likes, dislikes, needs, and wants of customers. The systems are vital components of businesses’ customer service strategies.

Supply chain management systems (SCM)

Supply chain management is one of the most important aspects of any business. Effective management of SCM systems is important because it reduces costs and increases revenue (Oz, 2009). Supply chain management systems provide information that aids in the management of an organization’s relationship with suppliers. The systems make great contributions that increase customer value and gain a competitive advantage for organizations (O’Brien & Marakas, 2006).

They aid in the management of the flow of goods between suppliers and organizations. Information provided by these systems includes inventory levels, production, movement of raw materials, pending and completed orders, and the delivery status of products and services (Oz, 2009). The main goal of an SCM system is to save time and cost during the delivery of goods and services by coordinating functions and strategies in the organization.

Supply chain activities that are common in many organizations include marketing, sales, finance, transportation, procurement, and operations (Oz, 2009). An important aspect of supply chain management is the ability to reduce business risks and attain organizational goals and objectives. Supply chain management systems are necessary to effectively deal with the rising complexity of supply chain activities.

Executive support systems (ESS)

These systems are mainly used by senior management personnel to handle various organizational processes. They help to make decisions that require evaluation, judgment, and insight (Stair & Reynolds, 2010). ESS uses information from both external and internal sources. Examples of external data include new sources of competition in the market and new tax legislation.

On the other hand, examples of internal data include information obtained from MIS and DSS (Stair & Reynolds, 2010). These systems encompass reports from different organizational departments that include staffing, billing, and cost accounting (Oz, 2009). An example of an executive support system is a digital dashboard that indicates a firm’s financial performance.

An ESS provides enterprise and departmental information that is used by managers to make decisions. Also, it provides easy access to information for all departments and enhances the analysis of projected outcomes.

Knowledge management systems (KMS)

A knowledge management system is used to support organizational processes that apply knowledge and skills in the execution of various tasks (Stair & Reynolds, 2010). For example, it contains information on how to produce and deliver certain products or services. The system collects knowledge and experience from employees within the organization and makes it available to other employees who lack such knowledge and expertise (Stair & Reynolds, 2010).

To improve its effectiveness, the system is usually linked with external sources that provide additional information. The system furnishes employees with information that is needed to solve various problems that they encounter within the organization (Lucey, 2005). Also, it contains facts and sources of organizational information. For example, an employee who works in a restaurant business and wants to know how to prepare a certain meal will use the firm’s knowledge management system to find that information.

The transaction processing system (TPS)

A transaction processing system is used to provide information that answers routine questions about the flow of organizational transactions (Lucey, 2005). Also, it performs and records all transactions that an organization needs to conduct business daily. This implies that the information must be accurate and up-to-date.

Managers use the system to monitor the progress of various business operations, as well as their linkage with external processes (Stair & Reynolds, 2010). Information retrieved from transaction processing systems is used to attain structured goals and make structured decisions. It is important for all businesses to establish this type of information system because they cannot operate without it.

Decision support systems (DSS)

A DSS refers to a computer system that provides managers with the necessary information that enables them to improve their managerial activities that facilitate the achievement of organizational goals (Lucey, 2005). These systems are so simple that managers can use them without the assistance of computer specialists. A DSS has three main components that include a database management system (DBMS), model-based management system, and dialog management system (DGMS).

These components play different roles. The DBMS stores data that is used to make decisions while the MBMS transforms data into forms that are comprehensible and usable in decision-making processes (Stair & Reynolds, 2010). Finally, a DGMS facilitates the use of a decision support system by users who do not have advanced computer knowledge and skills. The DSS stores information collected from internal and external sources.

Enterprise application

An enterprise application refers to software that organizations use to solve different types of enterprise problems (Laudon & Laudon, 2002). In an organization, enterprise applications integrate with the different types of information systems to lower costs and improve organizational productivity and output. Unlike other business applications, they are used for multiple business functions (Laudon & Laudon, 2002). For example, they solve the problems that business management systems present to managers.

Enterprise applications have several features that enable them to encompass different management information systems. They are easy to use, have the capacity to store large volumes of data, and have stringent security protocols that are aimed at protecting information. They are usually developed across different organizational platforms that include networks like intranets and the internet.


Management information systems (MIS) refer to the different systems that organizations use to avail information regarding different operations and processes. There are several types of MIS that serve different roles in organizations. These systems organize information and make it easily accessible to managers to improve decision-making processes.

Types of MIS include transaction processing systems (PMS), management information systems (MIS), decision support systems (DSS), executive support systems (ESS), customer relationship management (CRM), supply chain management (SCM), and knowledge management systems (KMS).

To encompass the roles and activities of these systems, organizations use enterprise applications. An enterprise application refers to complex software that companies use to solve enterprise problems. It has complex security protocols and possesses the capacity to store large volumes of data.


Laudon, K., & Laudon, J. (2002). Management Information Systems: Managing the Digital Firm. New York: Prentice Hall.

Lucey, T. (2005). Management Information Systems. New York: Cengage Learning EMEA.

O’Brien, J., & Marakas, G. (2006). Management Information Systems. New York: McGraw-Hill Companies, Incorporated.

Oz, E. (2009). Management Information Systems. New York: Cengage learning.

Stair, R., & Reynolds, G. (2010). Principles of Information Systems, 9th Edition: A managerial Approach. New York: Cengage Learning.