A management information system is the series of processes and actions involved in capturing raw data, processing the data into usable information, and disseminating the information to users in the form needed.

An MIS is not simply a computer program, and it involves more than just calculating numbers. Information management is first and foremost people communicating with one another about events that affect the work of their organization. The chart of accounts, all the forms used by an institution—from receipts to staff vacation requests—meetings, reports, policies and procedures, the staffing structure, job descriptions, the planning process, and, yes, the computer software—all these and more influence the flow of information in an institution and so, together, make up the management information system. Historically such systems have evolved, been refined and adapted, in particular in relation to new technologies. Thanks to the development of computers and the software applications that run on them, much of the work can now be automated and the information more readily accessed.

Note the distinction between data and information in the definition of an MIS. Data are unprocessed facts that give no insight by themselves. We are often awash in data but lacking good information. Information is processed or transformed data that helps someone make a decision or gain insight. In a micro-finance organisation a single payment transaction, for example, does not show whether the payment was on time or shed light on the loan’s status; whereas, comparing actual payments with scheduled installments reveals the status of a loan and can assist in decision making.

Why is information so important?
All organizations have an information system of some kind. Many might see a minimal system as sufficient—say, a manual accounting system that produces reports three months late. Why undertake the massive effort and cost to improve an information system? Because having good information is essential for an organisation to perform efficiently and effectively—the better its information, the better it can manage its resources. In a competitive environment the institution with better information has a distinct advantage.

Of course information also comes at a cost. Therefore we can say that the value of information is equal to the value of any change that it brings about in decision making behaviour, less the cost of providing that information.

Value of Information = (Value of change in decision behaviour – Cost of Information)