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MIS: Definition, Purpose, Objectives

An Information System is a system that gathers data and disseminates information with the sole
purpose of providing information to its users.

The main object of an information system is to provide information to its users. Information
systems vary according to the type of users who use the system.

A Management Information System is an information system that evaluates, analyzes, and

processes an organization’s data to produce meaningful and useful information based on which
the management can take right decisions to ensure future growth of the organization.

Information Definition

According to Wikipedia −

“Information can be recorded as signs, or transmitted as signals. Information is any kind of event
that affects the state of a dynamic system that can interpret the information.

Conceptually, information is the message (utterance or expression) being conveyed. Therefore,

in a general sense, information is “Knowledge communicated or received, concerning a
particular fact or circumstance”. Information cannot be predicted and resolves uncertainty.”

Information Vs Data

Data can be described as unprocessed facts and figures. Plain collected data as raw facts cannot
help in decision-making. However, data is the raw material that is organized, structured, and
interpreted to create useful information systems.

Data is defined as ‘groups of non-random symbols in the form of text, images, voice representing
quantities, action and objects’.

Information is interpreted data; created from organized, structured, and processed data in a
particular context.

According to Davis and Olson −

“Information is a data that has been processed into a form that is meaningful to recipient and is
of real or perceived value in the current or the prospective action or decision of recipient.”
Information processing beyond doubt is the dominant industry of the present century. Following
factors states few common factors that reflect on the needs and objectives of the information
processing −

 Increasing impact of information processing for organizational decision

making.
 Dependency of services sector including banking, financial organization, health
care, entertainment, tourism and travel, education and numerous others on
information.
 Changing employment scene world over, shifting base from manual
agricultural to machine-based manufacturing and other industry related jobs.
 Information revolution and the overall development scenario.
 Growth of IT industry and its strategic importance.
 Strong growth of information services fuelled by increasing competition and
reduced product life cycle.
 Need for sustainable development and quality life.
 Improvement in communication and transportation brought in by use of
information processing.
 Use of information processing in reduction of energy consumption, reduction in
pollution and a better ecological balance in future.
 Use of information processing in land record managements, legal delivery
system, educational institutions, natural resource planning, customer relation
management and so on.

In a nutshell −

 Information is needed to survive in the modern competitive world.

 Information is needed to create strong information systems and keep these
systems up to date.

Implications of Information in Business

Information processing has transformed our society in numerous ways. From a business
perspective, there has been a huge shift towards increasingly automated business processes and
communication. Access to information and capability of information processing has helped in
achieving greater efficiency in accounting and other business processes.
A complete business information system, accomplishes the following functionalities −

 Collection and storage of data.

 Transform these data into business information useful for decision making.
 Provide controls to safeguard data.
 Automate and streamline reporting.

The following list summarizes the five main uses of information by businesses and other
organizations −

 Planning− At the planning stage, information is the most important ingredient

in decision making. Information at planning stage includes that of business
resources, assets, liabilities, plants and machineries, properties, suppliers,
customers, competitors, market and market dynamics, fiscal policy changes of
the Government, emerging technologies, etc.
 Recording− Business processing these days involves recording information
about each transaction or event. This information collected, stored and updated
regularly at the operational level.
 Controlling− A business need to set up an information filter, so that only
filtered data is presented to the middle and top management. This ensures
efficiency at the operational level and effectiveness at the tactical and strategic
level.
 Measuring− A business measures its performance metrics by collecting and
analyzing sales data, cost of manufacturing, and profit earned.
 Decision-making− MIS is primarily concerned with managerial decision-
making, theory of organizational behavior, and underlying human behavior in
organizational context. Decision-making information includes the socio-
economic impact of competition, globalization, democratization, and the effects
of all these factors on an organizational structure.

In short, this multi-dimensional information evolves from the following logical foundations −

 Operations research and management science

 Theory of organizational behavior
 Computer science −
 Data and file structure
 Data theory design and implementation
 Computer networking
 Expert systems and artificial intelligence
 Information theory
Following factors arising as an outcome of information processing help speed up of business
events and achieves greater efficiency −

 Directly and immediate linkage to the system

 Faster communication of an order
 Electronic transfer of funds for faster payment
 Electronically solicited pricing (helps in determining the best price)

MIS Need for Information Systems

Managers make decisions. Decision-making generally takes a four-fold path −

 Understanding the need for decision or the opportunity,

 Preparing alternative course of actions,
 Evaluating all alternative course of actions,
 Deciding the right path for implementation.

MIS is an information system that provides information in the form of standardized reports and
displays for the managers. MIS is a broad class of information systems designed to provide
information needed for effective decision making.

Data and information created from an accounting information system and the reports generated
thereon are used to provide accurate, timely and relevant information needed for effective
decision making by managers.

Management information systems provide information to support management decision making,

with the following goals −

 Pre-specified and preplanned reporting to managers.

 Interactive and ad-hoc support for decision making.
 Critical information for top management.

MIS is of vital importance to any organization, because −

 It emphasizes on the management decision making, not only processing of data

generated by business operations.
 It emphasizes on the systems framework that should be used for organizing
information systems applications.
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Role of MIS in Business Organization
Simply MIS stand For Management Information System. For Simply Understanding
Management Information System (MIS) we can divide in to three Word and Understand Part by
part

1. Management:- “Management is function to do the work at the Right time, by

the right Person, For the Right Job.”
2. Information:- “Information is the Collection of Organized data which plays a
Vital Role for decision making.”
3. System:- “System Consist for a set of elements which Provides a Framework
to convert Unorganized (Data) into Organized Information.”

Management information system refers to such system which provides accurate information to
the entire level of management for decision making process. For right job at the right time, by
the right person.
Management information system (MIS) has become Very Necessary due to Emergence of
high complexity in Business Organization. It is all to know that without information no
Organization can take even one step properly regarding the decision making process. Because it
is matter of fact that in an organization decision plays an essential role for the achievement of its
objectives and we know that every decision is based upon information. If gathered information
are irrelevant than decision will also incorrect and Organization may face big loss & lots of
Difficulties in Surviving as well.

 Helps in Decision making: Management Information System (MIS) plays a

significant Role in Decision making Process of any Organization. Because in
Any organization decision is made on the basis of relevant Information and
relevant information can only be Retrieving from the MSI.
 Helps in Coordination among the Department: Management information
System is also help in establishing a sound Relationship among the every
persons of department to department through proper exchanging of
Information’s.
 Helps in Finding out Problems: As we know that MIS provides relevant
information about the every aspect of activities. Hence, If any mistake is made
by the management then Management Information Systems (MIS) Information
helps in Finding out the Solution of that Problem.
 Helps in Comparison of Business Performance: MIS store all Past Data and
information in its Database. That why management information system is very
useful to compare Business organization Performance. With the help of
Management information system (MIS) Organization can analyze his
Performance means whatever they do last year or Previous Years and whatever
 business performance in this year and also measures organization Development
and Growth.

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Pre-requisites for effective MIS
(i) Qualified System and Management Staff: The prerequisite of an effective MIS is that it
should be managed by qualified officers. These officers should have a mutual understanding
about the roles and responsibilities of each other and be understand clearly the view of their
fellow officers. For this, each organization should have two categories of officers:

 (a) System and Computer Experts who in addition to their expertise in their subject area, they
should also be capable of understanding management concepts to facilitate the understanding of
problems asked by concern. They should also be clear about the process of decision making
and information requirements for planning.

(b) Management experts who should also understand quiteclearly the concepts and operations
of a computer. This basic knowledge of computer will be useful will place them in a comfortable
position, while working with systems, technicians in designing or other wise, of the information
system.

(ii) Futuristic Perspective: An effective MIS should be capable of meeting the future

requirements of its executives as well. This capability can be achieved by regular monitoring and
updating the MIS.

(iii) Support of Top Management: For a management information system to be effective, it

must receive the full support of top management. The Reasons for this are:

(a) Subordinate managers are usually lethargic about activities which do not receive the support
of their superiors.
(b) The resources involved in computer based information system are larger and are growing
larger and larger in view of importance gained by management information system.

(iv) Common Database: It is an integrated collection of data and information which is utilized

by several information subsystems of an organization. A common database may be defined as a
super file which consolidates and integrates data records formerly stored in a separate data file.
Such a database can be organized as an integrated collection of data records into a single super
file or it can be organized as an integrated collection of several data file.

(v) Control and maintenance of MIS: Control of the MIS means the operation of the system as
it was designed to operate. Some times, users develop their own procedures or short cut methods
to use the system which reduces its effectiveness.
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Components of MIS
A management information system is made up of five major components namely people,
business processes, data, hardware, and software. All of these components must work together to
achieve business objects.

People – these are the users who use the information system to record the day to day business
transactions. The users are usually qualified professionals such as accountants, human resource
managers, etc. The ICT department usually has the support staff who ensure that the system is
running properly.

Business Procedures: these are agreed upon best practices that guide the users and all other
components on how to work efficiently. Business procedures are developed by the people i.e.
users, consultants, etc.

Data: the recorded day to day business transactions. For a bank, data is collected from activities
such as deposits, withdrawals, etc.

Hardware: hardware is made up of the computers, printers, networking devices, etc. The

hardware provides the computing power for processing data. It also provides networking and
printing capabilities. The hardware speeds up the processing of data into information.

Software: these are programs that run on the hardware. The software is broken down into two
major categories namely system software and applications software. System software refers to
the operating system i.e. Windows, Mac OS, and Ubuntu, etc. Applications software refers to
specialized software for accomplishing business tasks such as a Payroll program, banking
system, point of sale system, etc.
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MIS Applications in Business
The role of the MIS in an organization can be compared to the role of heart in the body. The
information is the blood and MIS is the heart. In the body the heart plays the role of supplying
pure blood to all the elements of the body including the brain. The heart work faster and supplies
more blood when needed. It regulates and controls the incoming impure blood, processed it and
sends it to the destination in the quantity needed. It fulfills the needs of blood supply to human
body in normal course and also in crisis.

The MIS plays exactly the same role in the organization. The system ensures that an appropriate
data is collected from the various sources, processed and send further to all the needy
destinations. The system is expected to fulfill the information needs of an individual, a group of
individuals, the management functionaries: the managers and top management.

Here are some of the important roles of the MIS:

1. The MIS satisfies the diverse needs through variety of systems such as query
system, analysis system, modeling system and decision support system.
2. The MIS helps in strategic planning, management control, operational control
and transaction processing. The MIS helps in the clerical personal in the
transaction processing and answers the queries on the data pertaining to the
transaction, the status of a particular record and reference on a variety of
documents.

iii. The MIS helps the junior management personnel by providing the operational data for
planning, scheduling and control , and helps them further in decision-making at the operation
level to correct an out of control situation.

1. The MIS helps the middle management in short term planning, target setting
and controlling the business functions. It is supported by the use of the
management tools of planning and control.
2. The MIS helps the top level management in goal setting, strategic planning and
evolving the business plans and their implementation.
3. The MIS plays the role of information generation, communication, problem
identification and helps in the process of decision-making. The MIS, therefore,
plays a vital role in the management, administration and operation of an
organization.
IMPACT OF THE MANAGEMENT INFORMATION SYSTEM

MIS plays a very important role in the organization; it creates an impact on the organization’s
functions, performance and productivity.

The impact of MIS on the functions is in its management with a good MIS supports the
management of marketing, finance, production and personnel becomes more efficient. The
tracking and monitoring of the functional targets becomes easy. The functional managers are
informed about the progress, achievements and shortfalls in the activity and the targets. The
manager is kept alert by providing certain information indicating and probable trends in the
various aspects of business. This helps in forecasting and long-term perspective planning. The
manager’s attention is bought to a situation which is expected in nature, inducing him to take an
action or a decision in the matter. Disciplined information reporting system creates structure
database and a knowledge base for all the people in the organization. The information is
available in such a form that it can be used straight away by blending and analysis, saving the
manager’s valuable time.

The MIS creates another impact in the organization which relates to the understanding of the
business itself. The MIS begins with the definition of data, entity and its attributes. It uses a
dictionary of data, entity and attributes, respectively, designed for information generation in the
organization. Since all the information systems use the dictionary, there is common
understanding of terms and terminology in the organization bringing clarity in the
communication and a similar understanding of an event in the organization.

The MIS calls for a systematization of the business operations for an effective system design.
This leads to streaming of the operations which complicates the system design. It improves the
administration of the business by bringing a discipline in its operations as everybody is required
to follow and use systems and procedures. This process brings a high degree of professionalism
in the business operations.

The goals and objectives of the MIS are the products of business goals and objectives. It helps
indirectly to pull the entire organization in one direction towards the corporate goals and
objectives by providing the relevant information to the organization.

A well designed system with a focus on the manager makes an impact on the managerial
efficiency. The fund of information motivates an enlightened manager to use a variety of tools of
the management. It helps him to resort to such exercises as experimentation and modeling. The
use of computers enables him to use the tools and techniques which are impossible to use
manually. The ready-made packages make this task simple. The impact is on the managerial
ability to perform. It improves decision-making ability considerably high.

Since, the MIS work on the basic system such as transaction processing and database, the
drudgery of the clerical work is transferred to the computerized system, relieving the human
mind for better work. It will be observed that lot of manpower is engaged in this activity in the
organization. Seventy (70) percent of the time is spent in recording, searching, processing and
communicating. This MIS has a direct impact on this overhead. It creates information –based
working culture in the organization.

IMPORTANCE OF MIS

It goes without saying that all managerial functions are performed through decision-making; for
taking rational decision, timely and reliable information is essential and is procured through a
logical and well structured method of information collecting, processing and disseminating to
decision makers. Such a method in the field of management is widely known as MIS. In today’s
world of ever increasing complexities of business as well as business organization, in order to
service and grow , must have a properly planned, analyzed, designed and maintained MIS so that
it provides timely, reliable and useful information to enable the management to take speedy and
rational decisions.

MIS has assumed all the more important role in today’s environment because a manager has to
take decisions under two main challenges:

First, because of the liberalization and globalization, in which organizations are required to
compete not locally but globally, a manager has to take quick decisions, otherwise his business
will be taken away by his competitors. This has further enhanced the necessity for such a system.

Second, in this information age wherein information is doubling up every two or three years, a
manager has to process a large voluminous data; failing which he may end up taking a strong
decision that may prove to be very costly to the company.

In such a situation managers must be equipped with some tools or a system, which can assist
them in their challenging role of decision-making. It is because of the above cited reasons, that
today MIS is considered to be of permanent importance, sometimes regarded as the name centre
of an organization. Such system assist decision makers in organizations by providing information
at various stages of decision making and thus greatly help the organizations to achieve their
predetermined goals and objectives. On the other hand, the MIS which is not adequately planned
for analyzed, designed, implemented or is poorly maintained may provide developed inaccurate,
irrelevant or obsolete information which may prove fatal for the organization. In other words,
organizations today just cannot survive and grow without properly planned, designed,
implemented and maintained MIS. It has been well understood that MIS enables even small
organizations to more than offset the economies of scale enjoyed by their bigger competitors and
thus helps in providing a competitive edge over other organizations.
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Information in Decision Making: Meaning and
Importance
Decision support systems (DSS) are interactive software-based systems intended to help
managers in decision-making by accessing large volumes of information generated from various
related information systems involved in organizational business processes, such as office
automation system, transaction processing system, etc.

DSS uses the summary information, exceptions, patterns, and trends using the analytical models.
A decision support system helps in decision-making but does not necessarily give a decision
itself. The decision makers compile useful information from raw data, documents, personal
knowledge, and/or business models to identify and solve problems and make decisions.

Programmed and Non-programmed Decisions

Programmed decisions are basically automated processes, general routine work, where

 These decisions have been taken several times.

  These decisions follow some guidelines or rules.

For example, selecting a reorder level for inventories, is a programmed decision.

Non-programmed decisions occur in unusual and non-addressed situations, so:

 It would be a new decision.

 There will not be any rules to follow.
 These decisions are made based on the available information.
 These decisions are based on the manger’s discretion, instinct, perception and
judgment.

For example, investing in a new technology is a non-programmed decision.

Decision support systems generally involve non-programmed decisions. Therefore, there will be
no exact report, content, or format for these systems. Reports are generated on the fly.

Attributes of a DSS

 Adaptability and flexibility

 High level of Interactivity
 Ease of use
 Efficiency and effectiveness
 Complete control by decision-makers
 Ease of development
 Extendibility
 Support for modeling and analysis
 Support for data access
 Standalone, integrated, and Web-based

Characteristics of a DSS

 Support for decision-makers in semi-structured and unstructured problems.

 Support for managers at various managerial levels, ranging from top executive
to line managers.
 Support for individuals and groups. Less structured problems often requires the
involvement of several individuals from different departments and organization
level.
 Support for interdependent or sequential decisions.
 Support for intelligence, design, choice, and implementation.
  Support for variety of decision processes and styles.
 DSSs are adaptive over time.

Benefits of DSS

 Improves efficiency and speed of decision-making activities.

 Increases the control, competitiveness and capability of futuristic decision-
making of the organization.
 Facilitates interpersonal communication.
 Encourages learning or training.
 Since it is mostly used in non-programmed decisions, it reveals new approaches
and sets up new evidences for an unusual decision.
 Helps automate managerial processes.

Components of a DSS

Following are the components of the Decision Support System −

 Database Management System (DBMS)− To solve a problem the necessary

data may come from internal or external database. In an organization, internal
data are generated by a system such as TPS and MIS. External data come from
a variety of sources such as newspapers, online data services, databases
(financial, marketing, human resources).
 Model Management System− It stores and accesses models that managers use
to make decisions. Such models are used for designing manufacturing facility,
analyzing the financial health of an organization, forecasting demand of a
product or service, etc.

Support Tools − Support tools like online help; pulls down menus, user interfaces, graphical
analysis, error correction mechanism, facilitates the user interactions with the system.

Classification of DSS

There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows

 Text Oriented DSS− It contains textually represented information that could

have a bearing on decision. It allows documents to be electronically created,
revised and viewed as needed.
 Database Oriented DSS− Database plays a major role here; it contains
organized and highly structured data.
  Spreadsheet Oriented DSS− It contains information in spread sheets that
allows create, view, modify procedural knowledge and also instructs the system
to execute self-contained instructions. The most popular tool is Excel and Lotus
1-2-3.
 Solver Oriented DSS− It is based on a solver, which is an algorithm or
procedure written for performing certain calculations and particular program
type.
 Rules Oriented DSS− It follows certain procedures adopted as rules.
 Rules Oriented DSS− Procedures are adopted in rules oriented DSS. Export
system is the example.
 Compound DSS− It is built by using two or more of the five structures
explained above.

Types of DSS

 Status Inquiry System− It helps in taking operational, management level, or

middle level management decisions, for example daily schedules of jobs to
machines or machines to operators.
 Data Analysis System− It needs comparative analysis and makes use of
formula or an algorithm, for example cash flow analysis, inventory analysis etc.
 Information Analysis System− In this system data is analyzed and the
information report is generated. For example, sales analysis, accounts
receivable systems, market analysis etc.
 Accounting System− It keeps track of accounting and finance related
information, for example, final account, accounts receivables, accounts
payables, etc. that keep track of the major aspects of the business.
 Model Based System− Simulation models or optimization models used for
decision-making are used infrequently and creates general guidelines for
operation or management.
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MIS: Sources and Types of Information
Information/Data Collection Techniques

The most popular data collection techniques include:

 Surveys: A questionnaires is prepared to collect the data from the field.

 Secondary data sources or archival data: Data is collected through old
records, magazines, company website etc.
 Objective measures or tests: An experimental test is conducted on the subject
and the data is collected.
 Interviews: Data is collected by the system analyst by following a rigid
procedure and collecting the answers to a set of pre-conceived questions
through personal interviews.

Classification by Characteristic

Based on Anthony’s classification of Management, information used in business for decision-

making is generally categorized into three types −

 Strategic Information: Strategic information is concerned with long term

policy decisions that defines the objectives of a business and checks how well
these objectives are met. For example, acquiring a new plant, a new product,
diversification of business etc, comes under strategic information.
 Tactical Information: Tactical information is concerned with the information
needed for exercising control over business resources, like budgeting, quality
control, service level, inventory level, productivity level etc.
 Operational Information: Operational information is concerned with
plant/business level information and is used to ensure proper conduction of
specific operational tasks as planned/intended. Various operator specific,
machine specific and shift specific jobs for quality control checks comes under
this category.

Classification by Application

In terms of applications, information can be categorized as −

  Planning Information: These are the information needed for establishing standard
norms and specifications in an organization. This information is used in strategic, tactical,
and operation planning of any activity. Examples of such information are time standards,
design standards.
 Control Information: This information is needed for establishing control over all
business activities through feedback mechanism. This information is used for controlling
attainment, nature and utilization of important processes in a system. When such
information reflects a deviation from the established standards, the system should induce
a decision or an action leading to control.
 Knowledge Information: Knowledge is defined as “information about information”.
Knowledge information is acquired through experience and learning, and collected from
archival data and research studies.
 Organizational Information: Organizational information deals with an organization’s
environment, culture in the light of its objectives. Karl Weick’s Organizational
Information Theory emphasizes that an organization reduces its equivocality or
uncertainty by collecting, managing and using these information prudently. This
information is used by everybody in the organization; examples of such information are
employee and payroll information.
 Functional/Operational Information: This is operation specific information. For
example, daily schedules in a manufacturing plant that refers to the detailed assignment
of jobs to machines or machines to operators. In a service oriented business, it would be
the duty roster of various personnel. This information is mostly internal to the
organization.
 Database Information: Database information construes large quantities of information
that has multiple usage and application. Such information is stored, retrieved and
managed to create databases. For example, material specification or supplier information
is stored for multiple users.

Information is a vital resource for the success of any organization. Future of an organization lies in using
and disseminating information wisely. Good quality information placed in right context in right time tells
us about opportunities and problems well in advance.

Good quality information − Quality is a value that would vary according to the users and uses of the
information.

According to Wang and Strong, following are the dimensions or elements of Information Quality −

 Intrinsic− Accuracy, Objectivity, Believability, Reputation

 Contextual− Relevancy, Value-Added, Timeliness, Completeness, Amount of
information
 Representational− Interpretability, Format, Coherence, Compatibility
 Accessibility− Accessibility, Access security

Various authors propose various lists of metrics for assessing the quality of information. Let us generate a
list of the most essential characteristic features for information quality
  Reliability− It should be verifiable and dependable.
 Timely− It must be current and it must reach the users well in time, so that
important decisions can be made in time.
 Relevant− It should be current and valid information and it should reduce
uncertainties.
 Accurate− It should be free of errors and mistakes, true, and not deceptive.
 Sufficient− It should be adequate in quantity, so that decisions can be made on
its basis.
 Unambiguous− It should be expressed in clear terms. In other words, in should
be comprehensive.
 Complete− It should meet all the needs in the current context.
 Unbiased− It should be impartial, free from any bias. In other words, it should
have integrity.
 Explicit− It should not need any further explanation.
 Comparable− It should be of uniform collection, analysis, content, and format.
 Reproducible− It could be used by documented methods on the same data set
to achieve a consistent result.

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Information Requirement in Management
The common thread of activity in all the management functions is information management.
Every manager today has to manage loads of information some for the purpose of reporting and
some for taking actionable decisions. A marketing manager trying to fine-tune a sales strategy
would be doing it only after analyzing a lot of relevant information about the market, the
customer profile, the product profile and competitor’s pricing strategy.

Similarly, a human resource manager trying to recruit someone for the organization would do a
lot of information analysis regarding the job profile, suitability of the candidate for the job, the
job market dynamics, etc. The competitive environment that exists in today’s time makes this
task of management even more challenging. Decisions have to be taken very fast and after
analyzing a lot of data.
It is precisely due to these reasons that more and more information technology (IT) intervention
is being used in modern management functions. However, Information management using
technology has itself transformed dramatically over the years. From being just a support function
it has become a key resource for gaining competitive advantage.

More and more corporations are investing in acquiring the latest management information
system tools like enterprise (wide) resource planning (ERP), customer relationship management
(CRM), knowledge management (KM), decision support system (055), business intelligence (81)
suites data warehouse (OW) facility as they are convinced of the benefits of such huge
investments.

Information Needs for the Different Levels of Management

Even though the broad objectives of management as an entity may be same, like increasing
shareholder value, it is by no means a monolithic entity. As has already been discussed, there are
different levels of management and each performs its specific purpose. The top level deals with
strategy, the middle level with tactical issues and the bottom level with operational issues. The
top level that deals with strategy will be taking strategic decisions, middle level will take tactical
decisions and entry level will take operational decisions. Now in order to take such decisions,
contextual information will need to be provided.

                            Information Needs of Different Levels of Management

Levels of
Problems handled/ Decisions made Type of information required
Management

Top level Unstructured problems. Strategic information from within the org
outside.
Decisions are based on situations not/rarely
  handled in the past. Information about likely scenarios. Inf
can be analyzed in different ways.
  Decision-making variable not clearly
defined. Exception reports
Middle level
Semi structured/structured problems. Regular summarized reports.
 
Decisions on regular issues. Information that can be drilled deeper
 
Decisions on tactical issues. Information to help find out exception
  can be reported to top management
Structured problems
  

  Operational information
Structured decision-making

Operational Rule based information, guidelines, ha

Decision-making on the basis of set rules
level information

A manager at the top level who is deciding on the location of a new factory of the organization
has strategic consideration like the labor costs of the location, proximity of the location to the
market and long-term growth prospects in mind. He/she is not bothered about the shop floor
level operational details like the reason for absence of a worker. He/she will have a strategic
view and would need only such information that helps him to take correct decisions. Information
is only a resource to him if it can help him to improve the quality of his strategic decision-
making. Similarly for other tiers, information is only a resource if one can derive value from it.

Information Management

The business of information which is today a multibillion dollar industry first started when a firm
called Bloomberg started compiling important information about US companies and their
balance sheets and selling them to stock brokers. This was the first open trade in information as a
resource in modern times. From then on, information (external) has been regarded as a resource
that is traded10 sometimes freely and openly as in published literature and sometimes
clandestinely in the form of corporate intelligence reports. Also, internal information is seen as
equally valuable and every effort is made to derive more value from it and to ensure that this
internal information does not find its way outside the organization.

The idea of information management is based on the fundamental premise that information is a
resource that is valuable for an organization. The entire subject of information management is
about how to derive more and more value from this precious resource. However, unlike most
other resources that have to be procured from the outside environment, most information
resource is available within the organization if an effort has been made for its safekeeping.
Detailed logs of transactions of an organization with its external and internal customers over a
period mostly form the basic ingredient of a good quality information resource. This basic
information repository is then drilled and analyzed for actionable information, this is one aspect
of information management in which strategies are used to derive greater value from the internal
repository of data and information. The other aspect of information management is to ensure that
this internal information is not ‘leaked’ to the outside world of competitors.
9
Relevance of Information in Decision Making
Management information systems combine hardware, software and network products in an
integrated solution that provides managers with data in a format suitable for analysis,
monitoring, decision-making and reporting. The system collects data, stores it in a database and
makes it available to users over a secure network.

Information Access

Managers need rapid access to information to make decisions about strategic, financial,
marketing and operational issues. Companies collect vast amounts of information, including
customer records, sales data, market research, financial records, manufacturing and inventory
data, and human resource records. However, much of that information is held in separate
departmental databases, making it difficult for decision makers to access data quickly. A
management information system simplifies and speeds up information retrieval by storing data in
a central location that is accessible via a network. The result is decisions that are quicker and
more accurate.

Data Collection

Management information systems bring together data from inside and outside the organization.
By setting up a network that links a central database to retail outlets, distributors and members of
a supply chain, companies can collect sales and production data daily, or more frequently, and
make decisions based on the latest information.
Collaboration

In situations where decision-making involves groups, as well as individuals, management

information systems make it easy for teams to make collaborative decisions. In a project team,
for example, management information systems enable all members to access the same essential
data, even if they are working in different locations.

Interpretation

Management information systems help decision-makers understand the implications of their

decisions. The systems collate raw data into reports in a format that enables decision-makers to
quickly identify patterns and trends that would not have been obvious in the raw data. Decision-
makers can also use management information systems to understand the potential effect of
change. A sales manager, for example, can make predictions about the effect of a price change
on sales by running simulations within the system and asking a number of “what if the price
was” questions.

Presentation

The reporting tools within management information systems enable decision-makers to tailor
reports to the information needs of other parties. If a decision requires approval by a senior
executive, the decision-maker can create a brief executive summary for review. If managers want
to share the detailed findings of a report with colleagues, they can create full reports and provide
different levels of supplementary data.