The organization as an information processing entity

There is one feature that all organizations have in common: they must acquire and analyze information and take action based on their interpretation of information. Every organization needs to process information, whether it manufactures a product or sells a service. Most businesses need to have information on markets, sales, competitors and costs. In addition to the above information, manufacturing firms need information on manufacturing process itself. Government agencies are also confronted with substantial information processing requirements.

The organization collects data from a number of sources, including its own internal operations and customers. Most organizations also attempt to gather the data on their competition and on other phenomena external to the organization, such as the economy. Many government prepared statistics are used by organizations, and these data are classified as externally derived.

The organization must process all these data and the output may take many forms, such as tabular reports or graphic displays. It is likely that the output is interpreted and action is taken on the basis of information. For example, a bank might offer a new service based on the information derived from its market research study.

Most of this interpreted information is disseminated within the organization for use by its members; production control, accounting and budgeting information fall into this category. Many banks must make information available to the public, depositors as well, for example, to stock holders.

Though processing information clearly is not the ultimate goal of most organizations, it is one vital component of their operations. Individuals who are or will become the members of organizations need to understand the importance of information. In a modern organization, the processing of information contributes significantly to the success of the enterprise and managers should be knowledgeable about information processing tools, techniques and concepts.

Decision-making including the process leading up to the decision can be termed as planning, and management can be defined as the planning and control of the physical and human resources of the company in order to achieve the objectives of the company. Referring back to the MIS definition, we can simplify it by saying that “MIS is a system that aids management in performing its jobs.�

The term MIS is well conceived in that if one understands the three words that comprise it, one can have a basic understanding of the whole