It is very important for a business owner to know their financial numbers. It is rightly said that if the owner doesn’t know the numbers, they don’t know their business. Nevertheless, what does it mean to “know the numbers”?
It is not like simply looking at the balance sheet and income statement once in a month, or just looking at the numbers of profit and loss, and cash flow statement. It is very complicated to “know the numbers” as it needs to have error free management reports and KPIs which helps in decision making.
When the untested financial data is transformed into a data based on which important decisions and business strategy can be made is called “knowing the number”. This process of knowing the number is known as MIS process. MIS plays an important role in the organization which are as follows:
- Diverse needs of various systems like analysis system, query system, decision support system and modelling system are satisfied by MIS.
- MIS assists in management control, strategic planning, transaction processing and operational control. It also helps the clerks in answering the queries related to data of transaction processing, reference of various documents and position of specific records.
- Junior management workforce is benefited by MIS in the way that it provides functional data with regards to planning, organizing, controlling, and it also helps in making decisions at ground level to mitigate difficult solutions.
- It also helps mid-level management in various ways like short term planning, goal setting, managing the business purpose with the help of administration tools.
- In the ways like objective setting, calculative planning, developing, and implementing business plans, MIS helps the top-level management.
Importance of MIS:
- Decision making is a very important part to perform managerial functions. So, to make a judicious decision it is important to have well timed and authentic information that is acquired through a reasonable and well-organized technique of data collection, clarification, and distribution to the decision creator. In the management field this technique is known as MIS. Also, if MIS is not properly designed and maintained, it may lead to giving you incorrect, and irrelevant information which is disastrous for the organization.
- MIS helps in saving administrative costs which are incurred in filing tools, office space, and personnel required to keep a well-maintained filing system.
- In current times where complexity in business and organization is rapidly increasing, to execute the business and grow, an organization needs to have an accurately planned, scrutinized, created, and maintained MIS. This will help the organization to get prompt, authentic and helpful information which helps them in taking immediate and logical decisions.
- Due to globalisation and liberalisation, where companies must prove their competency not only at local level but also at the global level, managers must make impromptu decisions to secure its business from getting acquired by the competitors. This has increased the necessity of the MIS system.
- In Present time, which is also known as the information age, data is getting doubled in two to three years. Due to which managers must store huge amounts of data, which company must bear a great loss. So, MIS helps in storing a huge chunk of data and save a company from facing a loss.
- The important information provided by MIS can be utilized in formulating goals and strategy of the company. The performance of the business can be assessed with the help of MIS reports. Thus, MIS plays a vital role in increasing the efficiency of the company.
So, it can be said that in the present situation, organization cannot sustain and expand without accurately organizing, creating, executing, and maintaining MIS. It also helps the smaller organization to achieve economies of scale which is enjoyed by the bigger organization and provides a cut-throat edge above other company.