MIS

Data

Data are raw facts about a business and its business transactions. Data are
objective measurement of attributes of entities (such as people, place, thing
or event). 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 in any
decision making process in an organization. Information reduces uncertainty
and trigger action.
Definition of Information

Data that has been processed into a form that is meaningful to the recipient
and is of 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. It is the execution of systematic sequence of operations
performed upon data to transform it into information.

DATA Processing Information

Characteristics of useful / good Information

1. Timeliness : an information to be useful must be made available to the

recipient on appropriate time. The appropriate time is one when the
recipient wants to initiate some actions.

2. Adequacy: To be useful, an information must be adequate so that desired

actions can be initiated. In measuring the adequacy of information,
following aspects should be taken into consideration.

i. Information should be complete as possible

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
3. Form: for making an information useful. It should be made available in a
form which suits the recipient most. Information may be communicated in
visual, written or verbal form.
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.
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
top

middle Internal

lower
Sources of information and Managerial Level
Types of Information

1. Action versus no-action information: information which induces action is

called action information. The information which communicates only the
status of a situation is a non-action information. For e.g. “No Stock” report
calling a purchase action is an action information but the stock ledge
showing is No-action information.

2. Recurring versus non-recurring information: information generated at

regular interval is a recurring information. E.g. monthly sales, stock
statements etc. the information that are not generated at regular interval
and generated only when required is called non-recurring information. E.g.
financial analysis or the report on the market research.

3. Internal versus External information: information generated within the

boundaries of business is known as internal information. Whereas the
information generated from outside the boundaries of business is known as
external information.
Information can also be classified as under, in terms of it’s application

1. Planning information: certain standards, norms and specifications are

used in the planning of any activity. Hence such information is called
planning information.

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 library

reports and the resea4rch studies to build up a knowledge base as a
information source for decision making is known as knowledge
information.
Classification of information on the basis of usage

1. Organization information: when the information is used by everybody in

the organization

2. Database information: when the information has a multiple use and

application

3. Functional information: when the information is used in the operation of a

business .
Relevance of Information in Decision Making

Decision theory suggests the methods of solving the problems of decision

making under Certainty, Risk And Uncertainty.

Decision Making Under Certainty is possible when decision maker has full
knowledge about the alternatives and its outcomes (known as Perfect
information).

In Uncertain Situations, the decision maker requires additional information to

take more accurate decisions. If this additional information wipes out
uncertainty or risk completely then it is called perfect information.
In organization, Managers play a key role in decision making for this information
system have become the main tool.
Information Required at Decision Making
each stage Stages
Status Report Business Intelligence
Trend Report Data Collection
Data Processing

Design Strategy
Statistical Model
Alternative Strategies
Analytical Tools
Forecast Possible

Choose alternatives
Alternatives
Selection best
Scenario
alternative

Feedback and Review

follow up Monitoring
Cost Benefit Analysis

Any system in the organization must produce more benefits as compared to

tits costs for the organization to survive and grow.

Identification of cost Evaluation of costs

Choice of system
and benefit and benefits

Process of cost / benefit analysis

Identification of Costs and Benefits

In this step, the different cost and benefit associated with the information system
are identified.

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 will
cost lose of deposit and human resource
Intangible 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 loan

Fixed 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.
Direct and Indirect Costs and Benefits

Direct Cost: that are associated directly to an operation

Direct 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.
Evaluation of Costs and Benefits

Capital Budgeting is planning the deployment of available capital for the

purpose 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 from
investment ) are discounted to make these comparable with present day
investment.

2. Non-Discounted Cash flow criteria: no such discounted is made.

Discounted cash flow criteria

1. Net present value

2. Internal rate of return
3. Profitability index
4. Discounted payback period

Non-Discounted

1. Simple payback period

2. Accounting rate of return
 Quantitative and Qualitative cost benefit analysis

In Quantitative cost benefit comparison which expresses all costs and benefits
in monetary terms, compares costs and benefits by summarizing the ratio of
benefits by 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 can be 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
 Assessing Information Needs of the Organization

Information Needs
Depends On

Type of Business Type of Business

Type of Business
Decision Manager
 • Marketing
Business Functions • Finance
• Production
• HR

• Structured Decision
Business Decision
• Semi-structured decision
• Unstructured decision

• Top level (Strategic planning)

Type Of Business
• Middle level (Tactical planning)
Manager • Supervisory level( Operational planning)