Thursday, June 9, 2011

CONCEPT OF INFORMATION, CLASSIFICATION OF INFORMATION, VALUE OF INFORMATION, MIS AND INFORMATION CONCEPTS

In MIS, information has a precise meaning and it is different from data. The information has a value in decision-making while data does not have. Information brings clarity and creates an intelligent human response in the mind.
In MIS a clear distinction is made between data and information. Data is like raw materials while the information is equivalent to the finished goods produced after processing the raw material. In other words, information is the processed data. Information has certain characteristics, these are: information
·         Improves representation of an entity
·         Updates the level of knowledge
·         Has a surprise value
·         Reduces uncertainty
·         Aids in decision-making
The quality of information could be called good or bad depends on the mix of these characteristics.
Information is a data that has been processed into a form that is meaningful to the recipient and is of real or perceived value in the current or the prospective actions or decisions of the recipient. Data is defined as groups of non-random symbols in the form of text, images or voice representing quantities, actions and object.
Whether an entity is a data or information, it must be transferred through communication from the source to the ‘destination’ without loss of the content. The general model is given in the figure below:
The above model of communication is used in the MIS, the MIS is equivalent to the transmitter which provides information and tends through reports (channel) to the various receivers, which is decoded or interpreted by the receiver at the destination. The poor quality of information due to various factors would create confusion and misunderstanding, which is equivalent to a noise and a distortion in the communication model as good MIS communicates the information without noise and distortion to the user.
MANAGERIAL EFFECTIVENESS AND INFORMATION
No one can deny that a manager is responsible for effectiveness and efficiency in performance, thus, it is that a manager is associated with his prime functions which he is supposed to discharge thus a manager can work efficiently and effectively if he knows:
         I.            The goals to be achieved
        II.            His role in the organization
      III.            Problem that may upset his operational working
      IV.            That is committed to achieve the objectives
       V.            Know the work-in-progress
      VI.            That he is the final man for result
Thus, to have a co0mmand over all the above aspects the manager should understand the environment: internal and external which effect his action.
Tools of information technology can help a manager keeping him aware of the environment. As intense competition and pressure on pricing are becoming standard elements of an operating environment, perfect information regarding the market and role of various forces that influence the market are becoming critical for survival of a business enterprises.
INFORMATION NEEDS AT DIFFERENT LEVEL OF MANAGEMENT
Every manager in an organization performs various functions for which he requires information to facilitate decision-making in relation to each are of his responsibility. No doubt, there are different types of users of information available to a business unit; the manager is the main most frequent user of corporate information resource. Therefore, the main focus of the information generation process should be on the information needs of the manager.
The different level of management needs different source of information, to explain it:
Top management: the top level management is associated with business planning and policy training and has no role in routine working.
Middle or lower-level management: this level of management is associated with the responsibility of execution on the plans and policies as suggested by top management. Decision-making is, however, control to the job profile of manager. On each level of management information are needed on the top-level needs external environment information. The middle order level needs summarized form of external environment information. On the other hand; information with regard to internal environment that is information about activities and events with the organization.
It is generally accepted that internal information should be increasingly summarized for the successive levels of management for which it is prepared. The figure shown below illustrates sources and degree of summarization of information for different level of management.


DIFFERENT TYPES OF INFORMATION
The type of decision needs different types of information. Information which is needed at different level of management can be:
         I.            Operational information
        II.            Tactical information
      III.            Strategic information

1.       Operational information:
Operational information’s are such information which refers to the everyday needs for control over business activities these is known as routine activity or repetitive in nature. These activities are controlled at lower level managements. The information regarding the cash position or day-to-day basis is monitored and controlled at the lower levels of management. Similarly, in marketing function, daily and weekly sales information is used by lower level manager to monitor the performance of the sales force.
2.       Tactical information:
Tactical information helps middle level managers allocating resources and establishing controls to implement the top level plans and policies of the organization. For example (1) information regarding the alternative sources of funds and their uses in the short run, (2) opportunities for deployment of surplus funds in short term securities, etc. the tactical information is generally predictive, focusing on short-term trends of the business unit. It may be partly current and partly historical, and may come from internal as well as external source.
3.       Strategic information:
Of course the operational information is needed to find out how the given activity can be performed better, strategic information is needed for making alternative choices among the business options. The strategic information helps in identifying and evaluating these options so that a manager makes informed choices which are different from the competitors and the limitations of what the rivals are doing or planning to do. Such choices are made by managers to define goals and priorities, initiate new programs and develop plans and policies for acquisition and use of firm’s resources such as information regarding the long-term needs of fund for on-going and future projects of the company may be used by top level managers in taking decision regarding going public or approaching financial institutions for long-terms loan. Strategic information is predictive in nature, relies heavily on external sources of data has a long-term perspective. It is believed that strategic information is basically information regarding the external environment. However, it is now well recognized that the internal factors are equally responsible for success or information is also required for strategic decision-making.

Figure below represents the types of information required at different levels of managerial hierarchy.
CONCLUSION: it may be noted that each type of information has its role to play in managerial effectiveness. Each type of information is needed with varying degree by the managers at all levels. Thus, a part of operational information may be used even by the chief executive officer of a company. The differences lie in the proportion of each type of information in the total information in the total information needs of managers at different levels of managerial hierarchy.
GENERATION OF INFORMATION
The process of generation of information involves a series of activities, which are as follows:
A.       Data acquisition: data are facts expressed with the help of symbols such as alphabets, digits, graphs, diagrams, pictures, etc. Data may describe an event or it may represent status of an element of the environment. Whatever may be the sources of data; it may be initially recorded and later verified for accuracy and authority. This activity is called data captured.
Most of the data captured for business information systems are organized in data files. Each files contains records relating to various data element (fields) expressed with the help of different symbols (characters).
B.       Data transformation: data transformation may be done by performing any of the following operations on data:
·         Re-arranging: rearranging data in some specific order is a very common data processing activity.
·         Classifying: data may be classified on the basis of the selected variables/factors.
·         Calculating: data is processed only by calculating.
·         Summarizing:  it is a process of aggregating various data elements, reducing the bulk of data to a more meaningful form.
C.       Management of information: once acquisition or transformation is done the processed data may either communicated to and user may be stored for future use. When the information is to be communicated to the user, the format for the reporting may include simple, columnar, tabular format or visual formats, such as charts, diagrams, graphs, etc. In case the information generated is to be used in future it may be stored on some mass storage medium. Such activities of communicating and storing information may be termed as managing information.
CLASSIFICATION OF INFORMATION
The information can be classified in a number of ways providing a better understanding. Information is classified in the following manner:-
ACTION VERSUS NON-ACTION INFORMATION
The information which includes action is called action information. The information which communicated only the status of a situation is non-action information. ‘No stock’ reports calling a purchase action is action information but the stock ledger showing the store transactions and the stock balances is non-action information.
RECURRING VERSUS NON-RECURRING ACTION
 The information generated at regular intervals is recurring information. The monthly sales reports, the stock statements, the trial balance, etc. are recurring information. The financial analysis or the report on the market research study is non-recurring information.
INTERNAL VERSUS EXTERNAL INFORMATION
The information generated through the internal sources of the organization is termed as internal information, while the information generated through the government reports, the industry surveys, etc. is termed as external information, as the sources of the data are outside the organization.
The action information, the recurring information and the internal information are the prime area for computerization and they contribute qualitatively to the MIS.
The timing and accuracy of the action information is usually important. The mix of the internal and external information changes, depending on the level of the management decisions. At the top-level of the management, the stress is more on the external information and at the operational and the middle level. The stress is more on the internal information. Figure shown below shows the source and kind of information required by different levels of management in the organization.
                                                             ORGANISTION AND INFORMATION
The information can also be classified as under, in terms of its application.
A.       Planning information: Certain standards, norms and specifications are used in the planning of any activity. Hence, such information is called the planning information. The time standards, the operational standard, the design standards are the examples of the planning information.
B.       Control information: Reporting the status of an activity through a feedback mechanism is called the control information. When such information shows a deviation from the goal or the objective, it will include a decision or an action leading to control.
VALUE OF INFORMATION
The decision theory suggests the method of solving the problem of decision-making situation is of certainty when the decision maker has full knowledge about the alternatives and its outcomes. This is possible when the perfect information is available. Therefore, the information has a perceived value in terms of decision-making. The decision maker feels more secured when additional information is received in case of decision-making under an uncertainty or risk completely. However, perfect information is a myth.
The decision theory stipulates that the value of the additional information is the value of the change in the decision behavior resulted by the information, less the cost of obtaining the information. If the additional information does not cause any change in the decision behavior then the value of additional value of additional information is zero.
A manager is faced with the problem of decision-making under uncertainty or risk situations, if he does not know the perfect information about the decision situation. Further, his ability to generate decision alternatives owing to the imperfect information of the situation is limited. In decisions, a decision maker will select one on the basis of the available information. If the new information causes a change in the decision, then the value of the new information is the difference in the value between the outcome of the old decision and that of new decision, less the cost of obtaining the new information.
It may be noted that the information has a value only to those who have the capability to use it in a decision. The experienced manager generally uses the information most effectively but he may need less information as experienced has already reduced uncertainty for him when compared to a less experienced manager.
In MIS, the concept of the value of information is used to find out the value is significantly high, the system should provide it. If the value is insignificant, it would not be worth collecting the additional information. The decision at the operational and the middle management level are such that the value of the additional or new information is low, while at the higher levels of the management, the decision being mainly strategic and tactical in nature, the value of information is very high.
Apart from the monetary value of information, it has a value which is to be measured as strength in promoting the functions of the management. Some information has to think in the futuristic terms. Some information has the strength of confirming the belief or understanding the business process. It also reinforces the right and wrong of a decision-making process that the manager is following.
Understanding of information concept is very important and relevant to the system designer and the information user. The concepts of information are summarized as follows:-
Filtering: the system designer should provide appropriate filtering mechanism so that the information is not suppressed and related to the frame of reference of the user. Care should be taken in the process that certain valid information does not get blocked or over emphasized. A filtering process is used to select and suppress the information.
Simon model and its application: the designer should attempt to provide such information that it clearly defines the problem space and also take cognizance of the user’s knowledge the design of the system should be such that an appropriate mix of these sources should yield a decision leading to a solution of the problem.
         I.            Codes and representation:  the system designer should evolve such coding system that is easy for the users of the code to interpret, secondly, the designer should report the data in such a manner that the user can grasp it quickly.
        II.            Highlighting: the designer should provide the information in such a way that the significant differences between the targets and the achievements, the standards and performance, the budgets and the actual are highlighted, so that they become easily noticeably by the user without search.
      III.            Statistical analysis: the designer should provide the information in such a way that the information not only represents something meaningfully but also aids in the statistical analysis by the user. The information should provide the additional results such as variance, correlation, coefficients, and futuristic estimates and give a measure of statistical significance for the user to consider during decision-making.
      IV.            Format: the designer should present the information in the form or format which is complete in all aspects and in which all data is processed as the frame of reference of the user. The user should not be required to do additional processing with other data set through the computer systems or mentally by using the data set from the memory.
       V.            Referencing and adjustment: the designer should evolve a system in such a way that it covers the valid system boundaries and provides a reference to an acceptable point, giving a facility to make an adjustment to results or status which the information provides.
      VI.            Cognitive style: each user has his own style of resolving or reconciling his internal view and an understanding of the problem or environment versus the actually perceived or seen or as it exists. In line with his individual style, he also evolves a process of the decision-making which is personal to him. The designer of the system should provide the information in such a manner that these individual styles are accommodated fully.
    VII.            Learning theory: the designer should appreciate that the user inadvertently is learning through the information and is building his knowledge set. Hence the information should be such that the user is not over headed with the supply of information which is already known to him.
   VIII.            Feedback loop: the designer should provide the information feedback loop, so that the user understands that the process of decision implementation is smooth and the results are evaluated with reference to the norms or the expectations, giving the user a sufficient motivation to change, amend or act.
      IX.            Perceived value of data: some data or information may not have a value or an importance in the current operations of the business. But same data or information may have a value in context of further requirements. The designer would keep this data out of the current processing and reporting. However, the designer should provide a system whereby user can have access to this unused data, if required.
       X.            Information absorption: the designer should provide only that amount of information which the user is able to grasp and use. Any additional information, beyond the ability of the user is absorption, will be ignored or go unnoticed without any response.
      XI.            Individual differences: the information needs of different manager will differ based on individual’s sets and processing ability and cognitive style. The designer needs effectively by making the separate information reports.
The concepts discussed here are very important and the system designer should take care of them while designing the MIS would call for a thorough understanding of the business environment, the management process, the strength and weakness of the organization, the abilities of the management in planning and decision-making, the organization structure and the individual differences of managers and their cognitive styles of solving the problem.
The system designer has several choices of designs starting from a rigid system design meeting the individual presences to a flexible design, meeting all the needs together. The risk of choosing a design from the extreme ends is very high, but at the same time designing a system which considers the best of both ends in complex.
The system designer’s managerial ability of the MIS development and a good relationship with the users of the information will help him steer through the system development task.
KNOWLEDGE
Knowledge is the ability of a person to predict, sense, understood a situation and react to it’s effectively. Knowledge could be implicit or explicit. Implicit knowledge is difficult to codify, transfer and share. The difference between information and knowledge can be understood better by an example:
Ø  Data: facts and figures
Ø  Information: data with context/ processed data
Ø  Knowledge: analytical information
MIS AND THE INFORMATION
The goal of the MIS should be to provide the information which has a surprise value and which reduces the uncertainty. It should simultaneously build the data obtained from different ways. The designer of the MIS should take care of the data problems knowing that it may contain bias and error by introduction of high level validations, checking and controlling the procedures in the manual and computerized system. While designing the MIS, due regard should be given to the communication theory of transmitting the information from the source to the destination.
A special care should be taken to handle a noise and distortion on the way to destination. The presentation of information plays a significant role in controlling the noise and distortion which might interrupt, while communicating information to the various destinations. The principles of summarization and classification should be carefully applied giving regard to the levels of management. Care should be taken in the process that no information is suppressed or overemphasized.
The utility of information increases if the MIS ensures that the information process the necessary attributes. The redundancy of the data and the information is inevitable on a limited scale. MIS should use the redundancy as a measure to control the error in communication.
The information is a quality product for the organization. The quality of information as an outgoing product can be measured four dimensions, which are, the utility, the satisfaction, the error and the bias. The MIS should provide specific attention to these quality parameters. A failure to do so would result in a wasteful expenditure in the development of the MIS and poor usage of investment in hardware and software.
The quality can be ensured if the inputs to the MIS are controlled on the factors of impartiality, validity, reliability, consistency and age.
MIS should make distinction between the different kinds of information for the purpose of communication. An action, a decision-oriented information should be distinguished from a non-action/ knowledge-oriented information. The information could be of recurring type or an ad-hoc type. The MIS also needs to give performance control and knowledge database. A distinction between these factors will help make the decisions of communications, storage and also the frequency of reporting.
Since the decision maker is a human, it requires recognizing some aspects of human capabilities in the MIS design. These human capabilities differ from manager to manager and the designer has to skillfully deal with them. The difference in the capabilities arise on account of the perception in accessing the focus of the management control, the faith and the confidence in the information versus knowledge, the risk propensity, the tolerance and ambiguity, the manipulative intelligence, the experience in decision-making and the management style.
The MIS design should be such that it meets the needs of the total organization. For design consideration and for the operational convenience, the organization is divided into four levels, which are, the top, the middle, the supervisory and the operational. The top management uses the MIS to know the status by calling information of the current period in detail where the perceived value of information is the lowest and it usually insists on getting the information in a fixed format.
The MIS design, therefore, should ensure the input data quality by controlling the data for the factors, which are, impartiality, validity, reliability, consistency and age. The data processing and the analysis thereof are further reported to the various levels and individuals with due regard to the differences in the individual management style and human capabilities.
Recognizing that the information may be misused if it falls into wrong hands, the MIS design should have the features of filtering, blocking, suppression and delayed delivery.
Since, the MIS satisfies the information needs of the people in a particular organization, the design of the MIS cannot be common or universal for all the organizations. The principles of design does not change but when it comes to the applications, the design has to give a regard to the organization structure, the culture , the attitudes and the beliefs of the people and the strengths and the weakness of the organization.
MIS till the end of nineties played a role of providing information to organizations for decision-making with a rise in competition, organization that used MIS for driving the business, did better in competition. With globalization of business, and internet and web technology making inroads in business operations, work culture in the organization changed rapidly. The traditional business model ‘make and sale’ changed to ‘sense and respond’ as customer became more knowledgeable and started demanding more and more requirements. In other words, business became customer centric and organization must sense customer expectations well in advance and fulfill them to survive and grow. For sense and respond model only information is not adequate, what is required is knowledge, an ability to forecast the probable expectations of the customers and sense them into deliverables of perceived value by the customer.
Modern MIS not only should provide information but also support management by providing knowledge necessary at all levels of critical decision. Knowledge is a result of putting different information sets together and analyzing them, and viewing them in particular manner. Information has a ‘surprise value’ while knowledge provides a vision to solve the problem.


5 comments:

  1. Dear Sir,

    what are the contents of the MIS plan?what is the purpose of each of them?

    ReplyDelete
  2. what are different levels of processing required to meet the information needs ? How are they dependent on each other?

    ReplyDelete
  3. Dear Sir,
    What is the difference between verification and validation? Even though data is correct, transaction may not be valid.illustrate the above statement with examples.

    ReplyDelete
  4. Dear Sir,
    Explain the concept of database. What is the difference between data file, data bank and base?

    What is simulation?why and when is it used in problem solving?What are the assumption and limitations of using the simulation model is DSS?

    ReplyDelete
  5. Hello sir help me
    what is an ERP architecture? What is a solution architecture? What is the difference between the two?

    what care should be taken while selecting ERP package?

    ReplyDelete