MANAGEMENT INFORMATION SYSTEMS

What are management information systems? A simple answer would be that management information systems are systems that are used to deliver management information. It could also be said that these systems might or might not be implemented by means of computing technology. They might be very formalized (i.e., explicit) or more informal (i.e., implicit). The real problem in understanding management information systems comes with what is defined as management information, as well as the particular view taken on how managers actually go about engaging with this information and these systems in doing managerial work on a day-to-day basis. Generally, the controversy with these systems is not about what they are but rather about why they are necessary or not and how they are actually used or not. It is in addressing these questions that a particular view of management information systems will tend to come to the fore.

Most contemporary authors would agree that it is useful to define management information as essential information extracted or filtered from the transactional or primary organizational activities to support management in identifying and solving problems as well as in making decisions to ensure the efficient and effective management of the organization. Again, this seems quite easy and intuitive to understand. It may be this intuitive need and the possibilities presented by computing technology that made H. Igor Ansoff claim, in his 1965 paper "The Firm of the Future" that "man-computer decision making is potentially the most powerful competitive tool which will be available to the firm of tomorrow." Was it? Is it still? The answer must be yes and no. The history of management information systems, especially formalized computer-based systems, has been rather disappointing. Many of the promises of efficient and effective decision making and problem solving through real-time and accurate information has not materialized. Managers continue to talk of information abundance, even overload, but argue they often lack what is really relevant—this is mostly expressed by the phrase, "we are drowning in data but we are starving for information."

Is it that these systems are not real-time enough, or that they are collecting the wrong data, or perhaps that they are presenting it in inappropriate ways? All of these may be possibilities. However, it may also be more fundamental. If a look is taken back to the 1960s and early 1970s, it is seen that controversy surrounded the idea of computer-based management information systems from its inception. The two most prominent detractors were Russell Ackoff, with his paper "Management Misinformation Systems" (1967), and John Dearden, with his paper "MIS Is a Mirage" (1972). Both of these authors felt that the management decision-making processes were much more complex than suggested by the proponents of computer-based management information systems. They also argued that the proponents did not have an adequate understanding of the way in which managers used information in actual decision-making processes. The extensive studies by Henry Mintzberg in the early 1980s of managerial work seemed to confirm that managers were indeed much less structured, informal, and intuitive in their use of information in decision-making processes. By the end of the 1980s and in the beginning of the 1990s, it became evident that management information systems were not the "grand solution" to the management problem its proponents thought it would be. Nevertheless, there were many benefits indirectly derived from these efforts, especially an understanding of how mangers actually go about making decisions and solving problems.

Historical Roots

The logic that would make management information systems a self-evident need in the second half of the twentieth century started long before the first computer was applied in a business context. In fact, one could trace the origin of this logic back to the very inception of the modern period and the work of the seventeenth-century philosopher René Descartes. Descartes, considered the father of the modern worldview, was struck by the large number of competing, and often contradictory, systems of knowledge about the world that had been presented to him as part of his education. He believed that humanity will only progress if they establish an absolutely certain basis to separate true statements from false statements—that is, to secure knowledge on a trustworthy foundation. This principle forms the implicit basis from which the father of modern management, Frederick Winslow Taylor, two hundred years later shaped its essence.

Taylor, akin to Descartes, was struck by the unsystematic manner in which factory work was being conducted and the lack of systematic knowledge on how to achieve results with a required degree of certainty. With this in mind, Taylor developed standardized techniques and methods to measure work. Tasks were divided into the smallest possible unit—the rational division of labor. Every unit was then rationalized according to available knowledge provided by detailed study of workers' movements, actions, and techniques for executing work. Every unnecessary technique, movement, or action was illuminated until only that which can no longer be doubted remained. A similar procedure was then applied to the workers themselves. The optimized work and worker were then placed under detailed monitoring to ensure compliance and to provide feedback for improving the work process. The improvements that Taylor achieved were phenomenal—even for very basic work such as shoveling things. He reported improvements of hundreds, and sometimes even thousands, of percent.

There is no doubt that Taylor's scientific management (often referred to as "Taylorism") was spectacularly successful. It was rapidly adopted by many factories and became the self-evident model for managing work in that organizational setting. However, this success masked the implicit outcome of the scientific management logic. This outcome must be carefully considered because it helps reveal the logic for management information systems and shows why management information systems never realized the potential that was anticipated by its original proponents.

The important implicit outcome of scientific management was the separation of cognition and action—in other words, "thinking about work" and "doing the work" became separated. Thinking was transferred from the worker to the management function or process. Thus, through scientific management, thinking and worker action became separated for the sake of absolute efficiency, and the need for an information system to act as a bridge for this gap came about—initially messengers and telephones, later computer-based information systems.

In Taylorism, management becomes conceived of as the brain that moves the body (work processes) in a planned and coordinated way. The information system becomes viewed as the system that connects the brain with the body—the nervous system as it were. From this separation of work and thought about work, established by scientific management, management information systems emerged as a self-evident need. As organizations grew in size and complexity, this need became more and more acute. Likewise, the problem of allocating resources—workers, machines, material, and so on—could no longer simply be solved on "diagrams and maps," which acted as models for the reality. As organizations became more complex than can be represented on diagrams and maps, more sophisticated models were needed to act as representations of reality, where different possible allocations, or scenarios, could be developed and evaluated. Thus emerged the need for decision-support systems. Likewise, more and more detailed information about work in progress and work completed were needed so that the planning horizon could be up to date.

Evolving Role

It is therefore not surprising that Henri Fayol, in his seminal work General and Industrial Management (1949), concluded that the essential management activities were planning, organizing, controlling, and leading. These activities flow logically from the way management became articulated in scientific management. As these management activities became more clearly articulated, they became supported by an increasingly complex set of techniques for gathering data and reporting results. In this regard, the development of managerial accounting was significant, with the first work on budgeting appearing in 1922 and the development of "responsibility accounting" in the early 1950s. However, the development of computer-based management information systems to support management activities was not yet evident, as the first electrical computers, the ENIAC (1946) and the UNIVAC 1 (1951), were seen as primarily mathematical machines.

In 1954, the UNIVAC 1 was installed at General Electric as a business application to do payroll processing. The business community rapidly appropriated the computer as a business tool, with its use growing to 100,000 business computers by 1974. In its first decade of application, the computer was essentially used as a more efficient technology for automating work that involved laborious calculation, such as payroll calculations. The focus was on its speed and accuracy as a mathematical tool. However, it soon became evident that the capturing or recording of data required for the calculations could also be used to create reports for managers. As such, computer-based management information became an unintended consequence of the automation of calculating operations.

The automation of more and more work processes generated increasing amounts of data for the manager to consider. Herbert Simon, the Nobel laureate, realized that managers would need systematic methods to use this, now increasingly abundant, data. Simon produced the first systematic account of managerial decision making in his seminal work The New Science of Management Decisions (1960), wherein he makes the distinction between structured and unstructured decisions. In a structured decision, the nature of the problem and the data required to consider a solution for the problem are known in advance. In an unstructured decision, the problem needs to be structured before it can be considered. It is therefore not possible to know in advance exactly what information will be required. Together with this work, a number of other works started to appear that had a particular influence on the way management information systems was conceived.

Framework for Definition

The most widely used, and undoubtedly the most influential, framework for management information systems was the framework presented by Anthony Gorry and Michael Scott Morton in 1971. This framework rapidly became the blueprint for the development of management information systems and is still used in most textbooks as the basis for discussing management information systems.

Gorry and Scott Morton proposed that the type of decisions and, therefore, information needs would vary according to the level of management control. Based on this idea, they suggested a framework for identifying the type of information required by each level of management. They concluded that operational management needed largely internal information, which is well defined, detailed, and narrow in scope. Furthermore, their information need tends to be current, usually referring to the most recent period—day, week, or month. They normally require a high level of accuracy and a structured and well-defined format of presentation. Typical examples of these would be the daily sales or production reports that provide detailed functional information such as sales per units, sales per salesperson, or sales per region. On the other end of the spectrum, they concluded that strategic management required general information that is broad and far-reaching in scope—mostly from external sources. Their information tended to be aggregated and summarized with an emphasis on forecasting, prediction, and future scenarios. The presentation of their information often varied to accommodate the diversity of formats used by the variety of sources—both internal and external. Typical examples of these would be internal strategy documents, government and central bank economic forecasts, market analyst commentaries, and share price predictions. From this initial framework, they proposed different types of systems to support the three management levels in the organization. The operational control process—first line or supervisory management—tend to be supported by frequent, detailed reports on the most recent work completed or in progress. The systems implemented to automate the basic operational business activities (e.g., payroll systems)— referred to as transaction processing systems— provide the data for this management reporting. The management control level—referred to as middle management or tactical management level—is supported by some form of decision-support system. These systems implement the decision process as defined by Simon, using modeling techniques that were developed by the emerging management science field—as explained by Ralph Sprague and Eric Carlson (1982) and, more recently, by George Marakas (1999).

Management science field emerged out of the operations research field of study, where mathematical models were being developed to solve complex resource allocation problems. (Operations research was itself an outcome of resource allocation problems encountered in World War II.) It was only in the latter half of the 1980s that the concept of an executive information system for strategic planning emerged. As the organizational hierarchies increased, the senior managers felt increasingly isolated from the basic business operations; the management separation of scientific management affected them the most. Thus, one had a contradiction in which the operational managers had the direct experience and knowledge of the business and the senior managers had the authority to allocate resources but not the knowledge to do so effectively. The executive information system was seen as the solution to this problem. Robert Thierauf (1991) proposes that an executive information system would provide the executive access to information about the operations in an easy to use, aggregate format with the ability to "drill down" and look at the detail data behind the aggregate presentations. With the coming of the executive information systems, the three management levels were associated with three distinct types of systems: management reporting systems, decision-support systems, and executive information systems. These systems are best summarized in the following manner. Operational managers are mostly supported by management reporting systems that provide specific, detailed, and current information about operations in the form of regular management reports. These systems act as the essential feedback for operational control and short-term problem solving. Middle managers are mostly supported by decision support systems. They are interactive computer-based systems intended to help decision-makers use data and mathematical models (such as cash flow or scheduling models) to identify and solve unprogrammed, semistructured problems. The system supports, rather than replaces, managerial judgment. Its objective is to improve the effectiveness of the decisions and not necessarily the efficiency with which decisions are being made. Strategic managers are supported by a variety of internal and external sources. One such internal source is the executive information system. It provides, in a useful and navigable format, direct online access to relevant, timely, accurate, and actionable information about aspects of an organization that are of particular interest to the senior managers. It allows the senior managers to identify broad strategic issues and then explore the information through increasing layers of detail, until they are able to explore the root causes of the issues.

From this discussion, it is evident why management information became viewed as essential information filtered from the transaction processing systems or primary organizational activities and processed, or structured, by the management information system to support management—in an appropriate manner for each level of management—in identifying and solving problems or making decisions to ensure the efficient and effective management of the organization. Gordon Davis and Margrethe H. Olsen, in the second edition of the influential text Management Information Systems: Conceptual Foundations, Structure, and Development (1985, p. 6), define management information systems as follows: "Management information systems are integrated, user-machine systems for providing information to support operations, management, and decision-making functions in an [organization]."

Unrealized Promise

These conceptual frameworks are useful to think through how management information systems could and ought to be designed and developed, but what about the actual implementation of these systems in organizations? With these conceptual models in mind, and based on the expected value of management information systems, organizations proceeded to invest huge amounts of resources in their design, development, and implementation. The management information systems project was the major concern for organizations in the 1970s and the 1980s. Even the functional unit responsible for information systems in the organizations was often referred to as the "Management Information Systems Department." Management reporting systems quickly became the backbone to support operational control in organizations—and could be said to be the most successful and enduring element of management information systems. Data capturing became more real-time (at the moment when it happens) and end users became more proficient at creating their own reports, queries, and so on. Decision-support systems have been relatively successful in small and specific areas of application. However, it has become evident that modeling organizational processes is much more complex than anticipated and that the most important factors considered by managers in decision making are often part of their tacit and intuitive understanding of the particular situation at hand. The field of decision support systems has grown to include support for group decision making, embedding artificial intelligence technology into these systems. However, effective decision support in areas that really matter still remains elusive. Relatively recent developments include data warehousing and online analytical processing. Executive information systems also have been moderately successful and continue to be used to a lesser or greater degree.

As with decision-support systems, the intuitive and unstructured nature of executive work remains the Achilles' heel of executive information systems. Neither decision-support systems nor executive information systems have become pervasive in any sense of the word. There appears to be a consensus that management information systems have not quite delivered on the promises heralded in the early 1970s. Studies of the investment in this technology have shown high levels of investments with rather low, or even negative, returns on investment, as reported by Paul Strassman in his book The Business Value of Computers (1990).

Management information systems have become much less of a concern for organizations—as reflected in research agendas, development priorities, and general business discourse. Some of the concerns about management information have shifted to other areas, such as enterprise resource planning systems. The most important factor for this change in emphasis is the shift in organizational thinking and development. By the second half of the 1980s and the early 1990s, organizational theorists and practicing managers realized that the standardized and stable production processes assumed by scientific management were simply no longer feasible. Organizations needed to be more flexible and able to respond to the increasingly sophisticated, interconnected, and dynamic environment. The only way to gain this flexibility was to reconnect "thinking about work" with "doing work"—thereby reversing the ill effects of scientific management. This attempt has led to the development of new models for managing organizations. To name but a few, these new models include learning organizations (where employees are encouraged to think about and improve their own work), quality circles (where quality problems are solved through collaborative consultation), empowerment of workers (through authority and resources), and multiskilling (where the widening of the skill base of all employees is encouraged). The design of computer-based information systems has responded to these changes. Thus the development of information technology to support learning, collaboration, and sharing of knowledge occurred, rather than the development of technologies for management control. The new technologies included initiatives such as computer-supported cooperative work systems in the form of groupware (to support collaboration), intranets (i.e., Internet technology that is available to an organization for sharing data on an internal basis), and knowledge repositories (to share knowledge through the organization).

Although management information systems will undoubtedly remain in some form as an integral part of the information systems infrastructure of organizations, it will not perform the central role that was once envisaged by its early proponents. In the new (i.e., postscientific management) organizational climate, new technological solutions are needed and are being developed. There is no doubt that they will also disappoint, because the problem of information and information systems is always, in the final analysis, a social problem rather than merely a technical one.

See also:Artificial Intelligence; Chief Information Officers; Group Communication; Group Communication, Decision Making and; Knowledge Management; Knowledge Management, Careers in; Organizational Communication; Systems Designers.

Bibliography

Ackoff, Russell L. (1967). "Management Misinformation Systems." Management Science 14:147-156.

Ansoff, H. Igor. (1965). "The Firm of the Future." Harvard Business Review 43(5):162-178.

Davis, Gordon B., and Olsen, Margrethe H. (1985). Management Information Systems: Conceptual Foundations, Structure, and Development. London: McGraw-Hill.

Dearden, John. (1972). "MIS Is a Mirage." Harvard Business Review 50(1):90-99.

Fayol, Henri. (1949). General and Industrial Management. London: Pitman.

Gorry, G. Anthony, and Scott Morton, Michael S. (1971). "A Framework for Management Information Systems." Sloan Management Review 13(1):55-70.

Introna, Lucas D. (1997). Management, Information and Power: A Narrative of the Involved Manager. Basingstoke, Eng.: Macmillan.

Marakas, George M. (1999). Decision Support Technology for the 21st Century. Englewood Cliffs, NJ: Prentice-Hall.

Mintzberg, Henry. (1980). The Nature of Managerial Work. Englewood Cliffs, NJ: Prentice-Hall.

Simon, Hubert A. (1960). The New Science of Management Decision. New York: Harper & Row.

Sprague, Ralph H., and Carlson, Eric D. (1982). Building Effective Decision Support Systems. Englewood Cliffs, NJ: Prentice-Hall.

Strassman, Paul. (1990). The Business Value of Computers. New Canaan, CT: Information Economics Press.

Taylor, Federick W. (1914). The Principles of Scientific Management. London: Harper & Row.

Thierauf, Robert J. (1991). Executive Information Systems: A Guide for Senior Management and MIS Professionals. New York: Quorum.

Lucas D. Introna