The difference between MIS and ERP

If you believe the research from Panorama, now about 83% of companies are abandoning outdated sales, marketing, staffing and financial management systems. Modern MIS and ERP systems are helping, with the main function of improving data management and business decision-making.

Today, MIS and ERP are widely used in sales, marketing, finance, logistics, and other industries to track business data and make informed operational and management decisions. However, there is a very significant difference between them: MIS is a designation for systems that manage any kind of information, while ERP is a specific type of information. That is, the latter is a particularity and/or element of the former. And don`t forget that you can always turn to IT dev erp development company.

This article will answer the questions:

1. What MIS and ERP are and how they work.
2. Where these systems are used and what are their advantages and disadvantages.
3. What is the difference between MIS and ERP (in detail).

What is the Management Information System?

MIS (Management Information System) is a consolidated information base that stores all available data on finances, operations, personnel and work processes of the company.

The main task of MIS is to process business data and present it in the form of regular reports or graphs that provide information support for management decisions.

The main reason for implementing such systems is to increase revenue and profitability of the business. The decision to implement MIS is made by company management and chief technology officers. The following are the main functions of MIS:

1. Data collection and storage. Usually data is collected from company reports, e-commerce sites, customer interaction points, social networks and external information resources related to company activities. This system accumulates all the information: document flow, communication with clients, the work of all departments and, moreover, each specific employee, the effectiveness of sales and marketing, accounting, dynamics and production volumes. The collected information is stored in a centralized database on cloud servers and/or physical media (HDD, SDD, DVD).
2. Data processing. The main task of the system in this aspect is to structure and regularly provide information in a convenient form (tests, infographics, etc.). How the data is processed depends on the specific MIS software.
3. Distribution and dissemination of data. Distribution of meaningful information at the right time to the right people (departments). The information can be in the form of a report, message, image, video, audio, or file. Data can be presented in the form of charts, tables, or graphs to make it easier to understand.
4. Forecasting. MIS software can use statistical and historical data to analyze and then forecast business processes. The methods depend on the specific software and business area.
5. Planning. Reports and predictive models can be used for plans for purchasing, production, etc.
6. Monitoring. Monitoring and tracking of business processes and operations, deviations between current performance and operational plans.

Advantages and disadvantages of MIS

The advantages of information management systems include the following:

1. Centralized information base. Absolutely everyone, from employees to managers, has access to a common database that contains all the information needed to perform daily and strategic tasks. This makes work processes smoother because all the data you need is always at your fingertips. It is also possible to standardize data collection methods by means of standardized templates, e.g. using standard questionnaires or questionnaires.
2. Prioritization. Thanks to MIS employees can concentrate on important tasks and not waste time on manual collection, ordering, analysis and distribution of data. As a result the company saves on labor costs and employees get more space for productive work.
3. An advanced decision-making algorithm. Most of the MIS software has data processing tools that generate reports based on data entered from multiple sources, which greatly simplifies the management of material flows, workloads, etc.
4. Increased personal accountability. MIS has a set of tools for monitoring activities of all users, so you can quickly find out who is responsible for a particular decision, action or change, to analyze the effectiveness of staff in terms of time and making specific decisions. That is, thanks to MIS, you can easily find out who made a mistake and vice versa, whose productivity is higher than that of the others.
5. Minimization of paperwork. With MIS employees can access information from the company's network without using paper documents. This not only speeds up the whole process, but also helps to reduce costs on paper, printers, ink, etc., and has a positive effect on the environment, which certainly works not only for the internal well-being of the company, but also for its positive image in the eyes of customers and regulatory bodies.
6. Correct financial positioning. Management or relevant professionals can easily assess the financial condition of the company by checking MIS performance reporting.
7. Increased competitiveness. Data storage and processing with MIS is much faster and easier than with more traditional solutions. Customer inquiries are handled faster, which helps improve user retention.  Employees are relieved of routine tasks and receive more motivation to work.  In this way, companies achieve better results in the two most important areas of work at once.

There are also minuses in MIS:

1. Expensive. Because MIS is business-specific and requires a customized approach, the development of such software can cost a fortune. Thus, MIS is the choice of medium to large companies that can afford large long-term investments.
2. Limited functionality. Ready-made solutions do not always contain all the necessary functions and can include a lot of unnecessary, i.e. unused functions. There is no way to pay solely for the necessary and useful functionality. MIS will digitize and standardize business processes in your company, with all their peculiarities and nuances.  For the development and implementation of a unique software requires highly skilled professionals, whose work is very expensive.
3. The need for specialized training of staff. When implementing MIS need to spend some time and money to train employees how to work with the new system, because it requires specific knowledge and skills, but in the end all the investments will pay off, so this drawback is quite controversial.

MIS applications

MIS solutions are most often used to streamline and accelerate the exchange of information between accounting, marketing, sales, production, etc. The system with SAP (data processing systems, applications and products) is useful for almost any enterprise where there is a need to digitize and organize data according to production needs.

The development or integration of MIS is tailored to the needs of a specific type of enterprise.  For example, for manufacturing, the key functions are:

• The development or integration of MIS is tailored to the needs of a specific type of enterprise.
•  For example, for manufacturing, the key functions are:

Such a system provides three main segments of management:

• Strategic ─ The highest level of management. Collection and analysis of data on the main sales markets, marketing tools and sales channels; budget planning.
• Managerial ─ middle management level. Effective control of personnel workflow, production volumes, and scrap.
• Operational ─ lower level staff. Collection and analysis of data at all stages of production allows to optimize low level workflows and automate management.

Extensive functionality has caused the emergence of individual solutions that are clearly focused on certain capabilities, in particular, ERP (Enterprise Resource Planning), which will be discussed below, as well as less well-known DSS (decision support system), OAS (office automation platform), SCM (supply chain management system), CRM (customer relationship management system), KMS (knowledge management system).

What is an enterprise resource planning system?

ERP (Enterprise resource planning) is a special software solution for planning operations with existing and prospective resources, and more precisely, it is an operational process management system that operates with information about the company's resources. As a rule, ERP

- is part of a larger management information system that is at the forefront of simplifying routine operations, providing managers with analytical information and tools to facilitate critical internal business processes.

At the moment, this component has among large and small businesses is even more popular than the classic MIS, since it is tailored for more specialized tasks.

The main functions of ERP systems:

1. Accounting. Collect data and manage invoices receivable and payable, tax payments, payroll calculations, and time tracking. ERP systems use special tools to track the status and manage accounting, which are usually created for a specific jurisdiction.
2. Manufacturing. A common centralized interface for managing production processes: purchasing, budgeting, forecasting and planning. It facilitates work with suppliers and customers.
3. Business Intelligence. Collection, storage and analysis of data that are generated when the company operates to make better management decisions.
4. Communication. A common database helps speed up work processes and improve employee discipline.

ERP application area

Who uses ERP systems?

Panorama's research has shown that most businesses (over 80%) are either in the process of implementing or are already using ERP systems, as the core solution is always a priority over the general one. Basically, these are businesses in retail, logistics, manufacturing, distribution, finance, real estate, and information technology. ERP solutions based on distributed registries have recently become popular: blockchain, Tangle, Hashgraph.

Depending on the scope of ERP covers the following:

1. Finance: ledger, fixed assets, accounts payable and receivable, payments, financial consolidation, cash management, and miscellaneous collections.
2. Personnel: recruitment, rostering, training, payroll, pension contributions, benefits, diversity management, retirement.
3. Production: equipment, bill of materials, production processes and facilities, operational process management, production and product quality control, product lifecycle management, etc.
4. Sales: pricing, order entry and fulfillment, customer balance checks, ability to communicate, reporting, sales analysis, commissioning.
5. Supply chains: planning, O2C, product configurator, purchasing, inventory, warehousing, claims handling, (receiving, storage, picking, packaging).
6. Projects: project planning and resource utilization, costing, work breakdown, time and cost, billing, performance units and activity management.
7. CRM: marketing, sales, service, commissions, customer contacts, support.
8. Data transfer: "self-service" interfaces for company employees (with different roles), suppliers and customers.
9. Accounting: cost management, budgeting, costing.

Advantages and disadvantages of ERP

The advantages of ERP-systems on the background of similar software solutions are considered:

1. Simplified reporting. ERP solutions usually have a built-in template for creating reports or employees can create custom reports.
2. Planning upgrade: The software has the capabilities to prepare the right inventories of materials, raw materials, and warehouse occupancy control.
3. Increased efficiency. Like MIS, ERP software reduces repetitive manual processes and the team can focus on more important tasks.
4. Data protection. These systems have several tools to protect data: first, different levels of access, second, data is stored in the same database rather than in different sources, making it easier to protect the system, and third, ERP creates backups of important data.
5. Improved business processes. Resource planning systems ensure timely access to data.
6. Improved supply chain management. Improvements that ERP can offer include minimizing order processing times, more on-time deliveries, and automating much of the workflow.
7. Scalability. If a company plans to open a new branch, expand its customer base, or launch a new project, it's almost always possible to scale an ERP system for different organizational sizes, flexibly adjusting to specific needs.
8. Unified network. The platform controls all departments simultaneously. Efficiency of the company will not decrease even if all employees start to work on one file.
9. Data control. The system contains, controls and helps to handle information on company personnel, suppliers and customers.

Disadvantages of ERP systems:

1. Cost of an ERP system. Most of these systems are distributed on a subscription basis, which involves paying for both the features that are needed there and all the others. In addition, if you don't make the payment, all or almost all ERP features will be blocked, which creates a lot of problems.
2. Complexity. You need specific skills to put in place, which immediately leads management to find the right people and implement an additional cost item in the business plan.
3. High requirements to the working equipment. Without reliable servers and reliable storage software it is meaningless to count on the quality work of the system.
4. The need for additional data protection. Information in the cloud is vulnerable, as well as any other, to theft, spoofing and banal damage. Options "out of the box" are not much better by their reliability: if an intruder is on-site, he can still break into the system, which leads to the need for qualified protection against hacker attacks.
5. Power dependence. This is a problem with all such systems. Any failure in the system of power supply and power consumption in the long term can lead to loss of data or rollback to previous levels...

Implementation Features

The process of implementing ERP class systems is far from simple. First there is the integration of the most important blocks, which encapsulate the basis of the company's activities. As a rule, these are such parts of the architecture as the platform (the base with minimal capabilities, i.e. the environment) and "control over the money", where the database is stored, the methods of storing and processing arrays are considered, there are "working" tools, as well as software to work with them. Then are built in the rest, which relate to individual units, not so essential.

Bottom line: the main differences between MIS and ERP

To summarize, the following differences can be highlighted. First of all, as already stated at the beginning, MIS is a more general notion of information, to put it more precisely - a whole class of management systems, a special case of which is ERP as information specifically about resources.

The consequence of this is a certain difference in the specifics of interaction with the data.

The task of MIS appears primarily to work with reporting, that is, collecting, storing and processing information from certain sources. ERP aims to automate business processes and accounting, which are related to the management of company resources. In addition, ERP has the functions of tracking the current state of the business, analysis and forecasting of future activities and development.