Management Information System (MIS) Applications

Management Information System (MIS)

• Processes nonfinancial transactions that traditional AIS does not normally process
• Examples of MIS application in functional areas include:
  • Human resource management: employee database, payroll processing, and performance evaluation
  • Marketing and sales: market research, customer database, and sales forecasting
  • Financial management: budgeting, financial forecasting, and cash flow management

The General Model for AIS

• Depicts the relationship between key elements that constitute an AIS application:
  • End users: external and internal users
  • Data sources: financial transactions from internal and external sources
  • Data collection: gathering of data from various sources
  • Data processing: processing of data into useful information
  • Database management: storage and management of data
  • Information generation: production of useful information
  • Feedback: feedback loop to ensure accuracy and relevance of information

End Users

• Divided into two general groups:
  • External users: creditors, stockholders, potential investors, regulatory agencies, tax authorities, suppliers, and customers
  • Internal users: management at all levels of the organization, as well as operations personnel

Data Sources

• Financial transactions from internal and external sources:
  • External financial transactions: economic exchanges with other business entities and individuals outside the firm
  • Financial transactions: economic events measured in monetary terms, which affect the assets and equities of the organization
  • Nonfinancial transactions: events that do not meet the narrow definition of financial transactions

Accounting Information System (AIS)

• Processes financial and nonfinancial transactions that directly affect the processing of financial transactions
• Three major subsystems:
  • Transaction Processing Systems (TPS): supports daily business operations with numerous reports, documents, and messages for users throughout the organization
  • General Ledger/Financial Reporting System (GL/FRS): produces traditional financial statements, such as income statements, balance sheets, and cash flow statements
  • Management Reporting System (MRS): provides internal management with special-purpose financial reports and information needed for decision-making

The Information Environment

• Information is considered an enterprise's business resource in an AIS environment
• Information flows out from the organization to external users, such as customers, suppliers, and stakeholders interested in the firm
• The pyramid shows that the business organization is divided horizontally into several activity levels:
  • Business operations: product-oriented work of the business organization
  • Operations management: directly responsible for day-to-day operations
  • Middle management: accountable for short-term planning and coordination of activities
  • Top management: responsible for longer-term planning and setting organizational objectives