Very large companies began to use of computers in the 1960s. The first applications were for wages and salaries processing, the production of sales invoices and receivables ledger accounting. These applications automated existing operations allowing greater accuracy, more speed and cheaper processing. At this time the IT operations would have been called ‘data processing’.
Once transactions are processed by computer it is easy to analyse those transactions to produce information that could be useful for management. For example, once the sales ledger is computerised it is easy to produce aged receivables listings. These additional management reports became common in the 1970s (and are still important) and IT operations became known as ‘management information systems’ (MIS). The systems could also be programmed to make simple decisions such as comparing inventory levels to production plans to enable automatic stock ordering. The simple decisions are known as programmable or structured decisions, meaning that there is a well-defined way of getting to the correct answer. MIS primarily allows companies to keep their costs down, helping them to move towards cost leadership, through a combination of automation and rationalisation.
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