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7/30/2019 Managemnt Information System notes (MIS)
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Arham Shamsi
by Arham Shamsi 1
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Data
Data are raw facts about a business and its business transactions. Data areobjective measurement of attributes of entities (such as people, place, thing orevent). These measurement are usually represented by symbol such as numbers,codes, words, alpha numeric, images, audio and video etc.
Data is the collection of facts, which is unorganized but can be organized into
useful information.
Information
Information has to be generated from data, which acts as a raw material that
needs some processing. Information is a necessary and vital input I any decisionmaking process in an organization. Information reduces uncertainty and triggeraction.
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DATA Processing Information
Definition of Information
Data that has been processed into a form that is meaningful to the recipient and isof real or perceived value in current or prospective actions or decisions.
Data Processing
The conversion of facts into meaningful information is know as data processing. Itis the execution of systematic sequence of operations performed upon data totransform it into information.
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Characteristics of useful / good Information
1. Timeliness : an information to be useful must be made available to the recipienton appropriate time. The appropriate time is one when the recipient wants toinitiate some actions that are meant to achieve organizational objectives.
2. Adequacy: To be useful, an information must be adequate so that desired actionscan be initiated. In measuring the adequacy of information, following aspects
should be taken into consideration.
i. Information should be complete as possible so that it reflects the true
picture of an issue.
ii. Information should be reliable.iii. Information should be valid to the purpose for which it will be used.
iv. Appropriate level of quality of information should be maintain.
v. Data redundancy should be avoided
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3. Form: for making an information useful. It should be made available in a form whichsuits the recipient most. Information may be communicated in visual, written or verbal
form. Following aspects of useful information are
i. Often a combination of different forms can be used.
ii. Information should be provided in right format.
iii. Data should be classified into those categories which are relevant for takingactions.
iv. Format should be simple
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Sources of Information
The sources of information can be divided into types
1. Internal Source: the internal information is that information which has been
generated from the operations of the organization at various functional areas like
sales , production, HR and finance etc. it is generally required by middle and
lower level of management for making routine and regular decisions. Internal
information is collected from within the boundary of the business organization.
E.g. balance sheet, sales forecast, budge allocation and utilization reports.
Internal reports are generally generated weekly, monthly, quarterly and yearly.
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External Source: External information is collected from the external environment of
the business organization in which it operates. External information is considered to
affect the organizational performance from outside the organization. External
information is generally required by the top level of management for making strategic
decisions. E.g. government policies, economic trends, competitors activities, market
trends, surveys.
External
Internal
top
middle
lower
Sources of information and Managerial Leverby Arham Shamsi 7
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Types of Information
1. Action versus no-action information: information which induces action is calledaction information. The information which communicates only the status of asituation is a non-action information. For e.g. No Stock report calling apurchase action is an action information but the stock ledge showing is No-action information.
2. Recurring versus non-recurring information: information generated at regularinterval is a recurring information. E.g. monthly sales, stock statements etc. theinformation that are not generated at regular interval and generated only whenrequired is called non-recurring information. E.g. financial analysis or thereport on the market research.
3. Internal versus External information: information generated within theboundaries of business is known as internal information. Whereas theinformation generated from outside the boundaries of business is known asexternal information.
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Information can also be classified as under, in terms of its application
1. Planning information: certain standards, norms and specifications are used inthe planning of any activity. Hence such information is called planninginformation.
2. Control information: reporting the status of an activity through feedback
mechanism is called the control information.
3. Knowledge information: a collection of information through the libraryreports and the resea4rch studies to build up a knowledge base as ainformation source for decision making is known as knowledge information.
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Classification of information on the basis of usage
1. Organization information: when the information is used by everybody in theorganization
2. Database information: when the information has a multiple use andapplication
3. Functional information: when the information is used in the operation of abusiness .
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Status ReportTrend Report
Statistical Model
Analytical Tools
AlternativesScenario
Feedback and
follow up
ReviewMonitoring
Choose alternativesSelection best
alternative
Design StrategyAlternative StrategiesForecast Possible
Business IntelligenceData CollectionData Processing
Information Requiredat each stage
Decision MakingStages
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Cost Benefit Analysis
Any system in the organization must produce more benefits as compared to titscosts for the organization to survive and grow.
Identification of costand benefit
Evaluation of costsand benefits
Choice of system
Process of cost / benefit analysis
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Identification of Costs and Benefits
In this step, the different cost and benefit associated with the information system.
Tangible and Intangible Costs and Benefits:
Tangible Cost: Payment of Cash like hardware/software purchase
Tangible Benefit: Reduced time in preparing a report
Intangible Cost: Cost of breakdown of an on-line system during banking hours willcost lose of deposit and human resourceIntangible Benefit: Higher customer satisfaction or improved business image.
Fixed and Variable Costs and Benefits
Fixed Cost: remain same irrespective of volume e.g. interest on loanFixed Benefit: benefit from reduced number of employees
Variable cost:vary in proportion to the volume of activities of the system.
Variable Benefit: are realized on a regular basis.by Arham Shamsi 14
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Direct and Indirect Costs and Benefits
Direct Cost: that are associated directly to an operationDirect Benefit: are specifically attached to a given operation e.g. save in time.
Indirect Cost: are not directly related to an operation e.g. insurance cost,maintenance cost
Indirect Benefit: are realized as a by-product of another operation.
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Evaluation of Costs and Benefits
Capital Budgeting is planning the deployment of available capital for thepurpose of maximizing the long term profitability of an organization.
It is of two types
1. Discounted cash flow criteria: in this future cash inflows (earning frominvestment ) are discounted to make these comparable with present dayinvestment.
2. Non-Discounted Cash flow criteria: no such discounted is made.
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Discounted cash f low criteria
1. Net present value2. Internal rate of return3. Profitability index4. Discounted payback period
Non-Discounted
1. Simple payback period2. Accounting rate of return
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Quantitative and Qualitative cost benefit analysis
In Quantitative cost benefit comparison which expresses all costs and benefits inmonetary terms, compares costs and benefits by summarizing the ratio of benefitsby summarizing the ratio of benefits to costs.
In Qualitative cost benefit analysis differs from quantitative cost benefit analysis in
drawing on a range of evidence of costs and benefits, not all cost and benefits canbe converted to monetary value.
Quantitative Benefits are: Reduced costs, reduced staff, increase productivity
Qualitative Benefits: Improved public performance, increased work satisfaction,
improved management, better time management
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Assessing Information Needs of the Organization
InformationNeeds Depends
On
Type ofBusiness
Type ofBusinessDecision
Type ofBusinessManager
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Marketing
Finance
Production
HR
BusinessFunctions
Structured Decision
Semi-structured decision Unstructured decision
BusinessDecision
Top level (Strategic planning)
Middle level (Tactical planning) Supervisory level( Operational planning)
Type ofbusinessmanager
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