Information Systems Management

Information in Decision Making

UNIT I - CHAPTER-4

-Ms. Palak Gupta

 Chapter Preview
In this chapter, we will study about :
– Data , Information, Knowledge, Decision Making
– Sources of Information
– Types of Information
– Information requirements at different Managerial
Levels
– Relevance of Information in Decision Making
 Data Vs Information
•Data are raw facts while Information is processed and
meaningful 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.
•Data is like raw materials while the information is equivalent to
the finished goods produced after processing the raw material.
•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.
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
Theconversion of facts into meaningful information is known as
processing. It is the execution of systematic sequence of
operations upon data to transform it into information.
performed

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
 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

middl Internal

e
lowe
r 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

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
Analytical Tools Alternative Strategies
Forecast Possible

Choose alternatives
Alternative
Scenario Selection best
alternative

Feedback and Review

follow up Monitoring
 Assessing Information Needs
of the Organization

Information Needs
Depends On

Type of Business Type of Business

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

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

• Top level (Strategic planning)

Type Of • Middle level (Tactical planning)
Business • Supervisory level( Operational planning)
Manager
 Assessing Information Needs
It is important to find out about the people who will use the resource
centre. This includes finding out what information they need, what
information is provided by other organizations, and how far their needs
for information are being met. This is known as carrying out a needs
assessment.
After the resource centre has been established, a needs assessment
should be carried out every one or two years, to ensure that the
resource centre continues to meet the information needs of its users.
A needs assessment looks at:
1. Who the users will be
Their age, sex, educational level, literacy level and type of work they do
2. What their information needs are
•What main subjects they need information about
•What other subjects they need information about
•What they will use the materials in the resource centre for (in order of
priority)
•Which activities the materials will be most useful for
•How important local/national/regional/international information is
•What formats of materials will be useful:
❖articles (for writing reports and getting new ideas for activities)
books and other documents (for getting a comprehensive picture of
a topic)
❖personal advice (to help plan activities)
❖training manuals (to assist with a training activity) videos (for
training and health education)
❖abstracts of published articles (to keep up-to-date on new
❖developments and know what to follow up)
❖newsletters (to find out what new developments are taking place in
the subject area, and what other organisations are doing)
 3. What materials are available
•What other sources of published and unpublished
materials exist
•How much materials cost, and whether health
workers can afford to buy them
•What gaps there are (in terms of subject, type of
material, such as training manual, reference
material), language, format (such as book,
audiovisual), and educational level
•What other sources of information exist:
❖government services and departments
non-governmental organisations (NGOs)
❖mass media (newspapers, radio, television) e-mail
and Internet services
4. How information can be disseminated

•What methods for disseminating information would best suit resource centre
users (such as resource lists, current awareness bulletins or document supply
services)
•How feasible these methods are
•A needs assessment can be carried out by interviewing people individually,
organising a focus group discussion (a structured discussion with a small group
of potential users) or by asking potential users to complete a questionnaire.
•Interviews and discussions are better, as they provide an opportunity to meet
people and discuss their needs. If a questionnaire is used, it should be made
easy for people to complete. This can be done by listing the most likely
answers, so that people only need to tick a box or circle a word.
•It is important to collect only essential information. Too much information can
be confusing.
•As well as assessing users’ information needs, it is important to find out what
information is provided by other organisations. This will help to ensure that
the resource centre will fill a gap and not duplicate the work of others.
•It will also provide an opportunity to contact other organisations working in
related areas, which could be useful for future work. Staff of other
organisations can be either interviewed or asked to complete a questionnaire
Difference between Data Processing
and Information Processing
Data Processing : Data Processing is a process that
converts data into information or knowledge.
Because data are most useful when well-presented
and actually informative, data-processing systems are
often referred to as information systems to
emphasize their practicality.
Information Processing : Information processing is the
change or processing of information in any manner
detectable by an observer.
 Methods of Data and Information
Collection:
Following are the methods of data collection :
i. Observation
ii. Experiment
iii. Survey
iv. Subjective Estimation
v. Transaction Processing
vi. Purchase from Outside
vii. Publication
viii. Government Agencies
 Information Requirement at Different
Managerial Levels
(i) Corporate (Top Level Information) : At the top level corporate
information that is useful for the whole organization. Examples of
corporate information include policies and procedures, HR
information, online forms, phone directory, etc.
(ii) Team, division, business unit (Middle level) : The middle level is
perhaps the most important, as it covers all the information
shared within teams, divisions, business units, etc. This
information may be critical to the day-to-day activities of the
group, but of little interest to the rest of the organization.
Examples include project documentation, business unit specific
content, meeting minutes, etc.
(iii) Individual (Low Level) : At the lowest level the personal
information need of staff exists throughout the organization.
Examples include correspondence, reports and spreadsheets.
 Categories of Information
Strategic Information- relates to ling range planning policies that are
direct interest to upper management and for long range goals.
For example- population growth, trends in financial investment,
human resources. This information is achieved with the aid of
DSS.
Managerial Information- It is of direct use to middle management and
department heads for implementation and control. For example-
sales analysis, cash flow projections, and annual financial
statements. This information is of use in short and intermediate
range planning- i.e. months rather than years. It is maintained
with the help of MIS.
 Categories of Information
Operational Information- It is short term, daily information used to
operate departments and to enforce the day to day rules and
regulations of the business. For example- daily employee absence
sheets, overdue purchase orders, current stock. This information
is achieved with the aid of TPS.
• It is established by data processing systems. Informal Information
Systems
• It is an employee based system designed to meet personnel and
vocational needs and to help solve,
work related problems.
• It relies on computer for handling business applications.
THANK YOU