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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 anoise 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 informations 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 firms 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 users 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
individuals 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 designers 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 its
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:

Data: facts and figures


Information: data with context/ processed data
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.

http://www.mbaofficial.com/mba-courses/management-information-system/what-is-
system-in-mis/
http://www.managementstudyguide.com/impact-of-internet-revolution-in-
business.htm

https://www.tutorialspoint.com/management_information_system/classification_of_in
formation.htm

http://ecomputernotes.com/mis/structure-and-classification/explain-mis-
classification