MIS and ERP are widely used in sales, marketing, finance, logistics and other industries to track business data and make weighted operational and management decisions. The difference between them is that MIS is the designation of systems that control any kind of information, and ERP is a specific type of information. That is, the first is a particular and / or element of the second.
In the article we will explain:
- What are MIS and ERP, and how do they work.
- Where are these systems used and what are their advantages and disadvantages.
- What is the difference between MIS and ERP (detail).
What is a Management Information System (MIS)
A centralized database that collects and stores information
about the company, its departments, finances, operations, personnel and work processes. The essence of the MIS concept is to process business data and submit it in the form of regular reports that provide information support in making management decisions.
The main reason for introducing such systems is to increase the income and profitability of the business. The decision on the implementation of MIS is made by the company's management and chief technology experts. Below are the main functions of MIS:
- Data collection. Typically, data is collected from company reporting, e-commerce sites, customer interaction points, social networks and external information resources related to the company’s activities. MIS collects data on sales, finance, personnel, accounting, manufacturing, market analysis, work processes, customer relationships and the like.
- Data storage. The collected information is stored in a centralized database on cloud servers and / or physical media (HDD, SDD, DVD).
- Data processing. Converting data into meaningful information, which is usually presented in the form of regular reports. How the data is processed depends on the specific MIS software.
- Data distribution. Distribution of relevant information at the right time to the right people (departments). Information may be in the form of a report, message, image, video, audio or file. To facilitate perception, data can be presented in the form of charts, tables or graphs.
- Forecasting. MIS software can use statistics and historical data to predict business processes. Methods depend on the specific software and business areas.
- Planning. Reports and predictive models can be used to plan tasks, for example, how many products to buy or sell.
- Control. Monitoring and tracking of work processes and operations, deviations between current indicators and operational plans.
MIS application area
is usually focused on a specific business, since each area of entrepreneurial activity has its own tasks and requirements for information systems. For example, if this is a restaurant business, then its tasks are: to plan a budget, buy and deliver products, prepare dishes and serve them to customers.
If the restaurant uses MIS, then such a system will be divided into three levels:
Restaurant business is not the only area that can benefit
- Strategic control. Restaurant owners use the system to determine the target markets, marketing policies and goals of the company, as well as to plan a budget sufficient to achieve these goals.
- Management control. The staff makes a menu on-site, analyzes customer reviews on the quality of food and service. If an order has been placed and then returned, MIS will save this data, including the reason for the refusal. This will help to respond quickly to quality deterioration and track customer wishes.
- Operational control. Here, MIS is responsible for processing work processes using appropriate technologies. For example, when the waiter takes the order and sends it to the kitchen using the terminal, or when the chef uses his terminal to notify “no products”. MIS brings this data together, which greatly simplifies and speeds up the efficiency of processes.
from the implementation of MIS. These systems are used where it is necessary to streamline and / or accelerate the flow of information: production, finance, sales, production, scientific research, eco-projects or the construction of an international space station. Therefore, any activity where data, workflows and operations can be represented in a “digital” format is a potential environment for the implementation of MIS.
Advantages and disadvantages of MIS
The advantages of management information systems include the following:
- Unified database. Ordinary employees, mid-level managers and management have access to a common database with all the information necessary to perform operational tasks. This makes workflows smoother. In addition, data collection methods can be standardized, for example, using sample questionnaires or forms.
- Prioritizing. Thanks to MIS, employees can focus on important tasks and not waste time collecting, organizing, analyzing, and distributing data manually. This saves labor and increases productivity.
- Effectiveness of solutions. Most MIS software has data processing tools that help in managing data, finance, work and material resources.
- Increased Responsibility. MIS monitors the actions of all users, so you can very quickly find the person responsible for a specific decision, action or change. That is, thanks to MIS, you can easily find out who made a mistake, and vice versa, who makes them less than others.
- Less paper documents. At MIS, employees get access to information from the company’s network without using paper documents. This not only speeds up the whole process, but also helps reduce the cost of paper, printers, ink, etc., and also has a positive impact on the environment.
- Understanding financial position. Management or relevant professionals can easily assess the financial condition of the company by checking the MIS performance reports.
MIS also has disadvantages:
- High cost. Since MIS is focused on a specific business and requires an individual approach, the development of such software can cost a fortune. Thus, MIS is the choice of medium and large companies that can afford large long-term investments.
- Compatibility issues. In order to use MIS, your business must have standardized methods for collecting, analyzing and distributing data, and this data must be of high quality. Business processes must also be standardized.
- Need to train staff. When implementing MIS, you need to spend some time and money on training employees on how to work with the new system.
What will happen if you do not take into account compatibility issues and neglect staff training, described in the article “ERP System Development Process: Key Tips
”: multimillion-dollar losses, lawsuits, loss of markets and reputation. Use the negative experiences of Nike, PG&E, HP, Woolworths and Target to avoid this development.
What is an enterprise resource planning system
ERP (Enterprise Resource Planning)
is a computer system responsible for managing production, sales, marketing, inventory, accounting, personnel and finance. Or, in other words, this is an management information system (MIS), which operates with data on company resources.