VALUE OF INFORMATION

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 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 from 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 the 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 the new decision, less the cost of obtaining the new information.

It may be noted that the information has 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 overemphasized. 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 takes 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 the 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 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.            The perceived value of data: some data or information may not have a value or importance in the current operations of the business. But same data or information may have a value in the 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 the 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 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 the 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, understanding 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 example:

Ø  Data: facts and figures

Ø  Information: data with context/ processed data
Ø  Knowledge: analytical information