Data Vs Information

Data: Data is a raw and unorganized fact that required to be processed to make it meaningful.
Generally, data comprises facts, observations, perceptions, numbers, characters, symbols,
image, etc.

Information: Information is a set of data which is processed in a meaningful way according

to the given requirement. It is processed, structured, or presented in a given context to make it
meaningful and useful. Information is the processed data on which decisions and actions are
based.

According to Davis and Olson, “Information is the data that has been processed into that
meaningful to the recipient and is of real or perceived value in current or prospective actions
or decisions.”

This implies that information is:

 Processed data
 It has a form
 It is meaningful to the recipient
 It has a value
 It is useful in current or prospective actions or decisions.

Difference between Data and Information

Data Information
raw facts that need processing It is processed.
raw material Finished product
doesn’t depend on information Depends on data.
May not have a form Will have a form
limited use Extensive use
May not make sense to users Highly Sensible
All data will not become information All information comes from data

Information – Characteristics

 Information improves representation of an entity

  It corrects or confirms previous information
 It has a surprise element or news value
 It reduces uncertainty
 It has value in decision making
 It is reusable

Management Information – Types

Strategic Tactical Operational

Top level Managers Middle level Managers Lower level Managers
For Long term planning Short term planning Immediate Use
From External sources Internal, slightly External From Internal sources
Affects whole organisation Only a dept Ltd area of operation
Not much Accuracy Medium level of Accuracy Very high Accuracy
Futuristic Intermediate Historic

Information – Quality

It is fitness for use or reliability. Attributes of information which influences the quality of
information are

 Time-related attributes
 Content-related attributes
 Form-related attributes

Information – Age

The length of time that spans from the occurrence of the event and the use of information
about the event is the age of that information

Quality decreases with age

Information – Value

Gain - cost of information = value

*Gain from the use of information depends on change in performance with provision of fresh
information.
*Cost for its acquisition and maintenance

Management Information System (MIS)

Management Information System (MIS) is a planned system of collecting, storing, and

disseminating data in the form of information needed to carry out the functions of
management.

The three components of MIS provide a complete and focused definition, where System
suggests integration and holistic view, Information stands for processed data, and
Management is the ultimate user, the decision makers.

Thus MIS means a system for processing data in order to give proper information to the
management for performing its functions.

Scope of MIS

Functions of MIS

 Capturing data
  Processing data
 Information Storage
 Information Retrieval
 Disseminating management information

Characteristics of MIS

 Management oriented
 Business oriented
 Subsystem concept
 Integrated System
 Common Data flow
 Heavy Planning
 Common Database
 Flexibility and ease of use
 Information as a resource

Objectives of MIS

 Helps to achieve a higher level of efficiency: Managers have the information needed
to identify a company's strengths and weaknesses.
  Improves the quality of decisions: Better availability of information reduces
uncertainty and lets managers make more rational decisions based on reliable data.
 Promotes better communications between departments in a workplace: When
managers, department heads and employees are sharing the same information, there is
better communication between them to identify problem areas and find mutually
agreeable solutions.
 Improves employee productivity: Employees are more productive because they don't
have to spend time gathering the data that management wants. A well-designed MIS
will gather all the data without any more input from employees.
 Strengthens a company's competitive advantage: Running a more efficient business
by reducing and eliminating weaknesses and non-performing areas increases a
company's competitive advantage over its rivals.
 Reveals more data about customers: With more data about the needs of customers,
management is better able to improve customer service and design more effective
marketing and promotional campaigns.

MIS Structure - Based On Organisational Functions

The structure of MIS can also be described in terms of organizational functions which make
use of information. The term organizational function information systems is used to describe
a variety of information system that support an organizational function such as accounting,
finance, production, marketing, human resource management etc. Each of these functions has
its own information needs.

MIS is a typically an integrated combination of functional information systems that is

designed to meet the info requirements of the functional subdivisions of an organization.
Each of these functions is considered as a subsystem. These subsystems have info application
related to that function only. In addition there are common programs applicable to all
functional subsystems. With in each of these functional subsystems, there will be application
for transaction processing, operation control, managerial control and strategic planning.

Functional Subsystems

The important functional subsystems are the following.

1. Production Subsystem
Production info system support the production function which includes all activities
concerned with the planning & control of the processes that produce goods or service. In the
production subsystem there are transaction processing, operation control, managerial control
& strategic planning. The typical info required at the transaction processing level is
production orders. The production order is generally based on the sales orders required by the
company.

At the same time operational control level requires detailed reports comparing actual
performance with the production schedule & identifies the weak areas. However mgt control
requires a summary report which compares the overall performance to actual performance.
Strategic planning is concerned with simplifying, automating ,integrating many of the
activities needed to produce goods.

2. Marketing Subsystem

Marketing is another important function of an organization. The success of an organization

depends on the efficiency of marketing. The marketing function of an organization is
concerned with the planning, promotion & sale of existing products in existing markets & the
development of new products & new markets to satisfy existing & potential customers. Thus
mkting performs a vital function in the operation of the business enterprise.

MIS help analyze dd for different products in different regions. It’s mainly concerned with
the marketing right product to target customers. Marketing info system provides info for
planning, control & transaction processing in the mkt function. Strategic & operational info
system assists mkting managers in product planning, pricing decisions & advertising & sales
promotion strategies. MIS provides info that helps mgt to decide the number of sales
executives to assign specific products in specific geographical areas.

The basic transaction is to be processed at transaction processing level is customer’s orders &
prepares invoice & bills. The operational control activity includes the day to day scheduling
of sales & promotional activities. Managerial control level is concerned with comparison of
overall performance with the mkting plan. They require info relating to customers,
competitors etc. consideration of new mkts & new product mkting strategies are the issues
dealt at the strategic planning level.

3. Human Resource Subsystem

The HRM function is concerned with the recruitment, placement, compensation &
development of employees in an organization. It mainly helps in record keeping & employee
evaluation. Every organization must maintain correct record of its employees.

Produce pay cheques & pay reports, maintain personal records & analyze the use of
personnel in business operation are the important activities done at the transaction processing
level. Mgt control level conducts budget analysis, turnover analysis etc & showing the
variances resulting from planned & actual performance. Strategic planning of personnel
involved with the planning of alternative strategies for recruiting, training & compensating
employees. In this regard they have to collect different type of info from external sources.

4. Finance & Accounting Subsystem

Financial subsystem undertakes the function of arranging adequate finance to the business at
min cost. This function includes granting credit to customers, cash mgt & financial
arrangement. Accounting info system record & report the flow of funds through the
organization on a historical basis & prepares important financial statements like profit & loss
account & balance sheet.

Transaction processing system engaged in the legal & historical record keeping & produces
financial statements. They undertake activities like order processing, inventory control,
payroll & general ledger systems. Mgt control level focuses on planning & control of
business operations & they compare the actual cost of financial resources with the targeted
cost. The strategic planning level for accounting & finance involves in the long term
strategies connected with financial & accounting matters.

5. Logistics Subsystem

The logistic subsystem includes activities like purchasing, receiving, inventory control &
distribution. The transactions to be processed are purchase requisitions, manufacturing
orders, receiving reports & shipping orders. The operational control function make use of
info contained in reports like out of stock items, over stocked items, inventory turn over
reports etc managerial control level compares the planned & actual inventory levels, cost of
purchased items, stock outs etc analysis of new distribution strategies, adoption of new policy
towards the sellers are some of the common tasks dealt at the strategic planning level.

6. Information Processing Subsystems

It’s the responsibility of the info processing subsystem to provide the necessary info
processing services & resources. Typical transactions for info processing are requests for
processing, changes in data & program. Managerial control over info processing requires data
on planned & actual performance. Acquisition of hardware & software & automation of info
processing etc are some of the strategic decision to b taken at the top level management.

MIS Structure Based On Management Activity

MIS provides useful information to the different levels of management for discharging their
function more effectively and efficiently. In order to understand design of suitable
management information system.

This means that the structure of management information can be expressed in terms of
different levels of management activity. There are three important levels of management
namely strategic management, management control or tactical management and operational
management. These levels of management activity are discussed below.

Strategic Management

The first area of management is strategic planning level or top level management. Top level
management consists of board of directors and other chief executives. They are ranking
officers of the organization. Top level management develops over all organizational goals,
strategies, policies and objectives through long range strategic planning. They integrate the
functions of entire organization.

Strategic managers make decisions that affect the entire organization. Their decisions may
also leave a long term impact in the organization. Here the decision maker develops
objectives and allocates resources to attain these objectives. Decisions of this type are made
over a long period of time and usually involve huge investments. Developing and introducing
a new product in the market, the opening of branches abroad, mergers or acquisition etc. is
some of the examples for strategic decisions.

Management Control or Tactical Management

Management control level or middle level management decisions involve financial or

[personal consideration. They make wide ranging decisions for their subordinates on the basis
of general guide lines received from the top level management. They develop medium range
plans and defining objectives of their departments. These managers are responsible for
finding the best operational measures to accomplish the strategic decisions set by the top
level management.

They make plans and compare the actual performance with standards. Then they determine
variances if any and take remedial measures to avoid them in future. For example if the top
level managers to make decisions regarding the acquisition of hardware, software and
imparting training to staff under him.

Operational Management

Operational management or lower level management deals with routine activities. They make
short term plans to carry out day to day activities more effectively and efficiently. They are in
charge of small group or subordinates. These managers’ implements policies handed over to
them by their superiors. With in these policies, they make decisions that affect their small
units for a short period .preparation of pay roll and inventory management are examples of
operational control level decisions.

Management level and Information requirement

The information requirement of management depends on the different levels of management.

The model of ‘managerial pyramid’ was popularized by Robert N. Anthony. He contributed
new levels of management on the basis of planning level, management control level and
operational control level are these three revised levels of management.

It true that the top level managers spend more time on strategic decisions than supervisors in
the bottom level of management. While top managers spend very little time, operational
supervisors spend more time to take operational decisions.

Three levels of management activity can be differentiated on the basis of the planning aspects
for each level. Different management activities functions will have different information
characteristics. The following table provides different information characteristics by different
level of management. It is based on the work of G. Anthony Gory and Michael Scott Morton
in the early 1970’s.

*Information System for operational management

The responsibility of operational level management is to supervise operational activities.

Operational control makes use of pre-established procedures and decision rules. A large
percentage of decisions are programmable. The procedures to follow are quite stable. They
supervise the day to day activities.

The informational source of operational control is mainly come from internal data generated
from transactions.

* Informational system for tactical management

Management control information is required by managers of departments, profit centers etc to

measure performance, decide control actions,

Formulate new decision rules to be applied by operational personnel. They require only
information in summary form

Management control makes use of both internal &external data.

* Information system for strategic management

The purpose of strategic planning is to formulate strategies to achieve organization goals.

They make long term plans. Strategic planning decisions occur only once in a while. Strategic
planning requires summarized data from a variety of source. They depend upon external data
such as competitor’s policy, market condition, government policies etc. or decision making.

Management information system cannot be applied effectively at the strategic planning level.
The success of the strategic decisions depends on the skills, experience and the judgment
ability of human decision makers in the interpreting data and information. Hence decisions at
the strategic level are unstructured and non-programmed.

Therefore it is concluded that many of the changes in the information needs can be attributed
to the degree of decision structure at each level will be more structured , those at the
management control level are semi-structured and those at the strategic level are more
unstructured. Therefore the information system should be designed to meet the information
requirements of managers at all levels.

Basic Subsystems of MIS

Transaction Processing System: A Transaction Processing System (TPS) is a type of
information system that collects, stores, modifies and retrieves the data transactions of an
enterprise. It is designed to process routine business transactions.

Transaction Processing Cycle:

Features of TPS

 Rapid response – Fast performance with a rapid response time is critical. Transaction
processing systems are usually measured by the number of transactions they can
process in a given period of time.
 Continuous Availability – The system must be available during the time period when
the users are entering transactions. Many organizations rely heavily on their TPS. A
breakdown will disrupt operations or even stop the business.
  Data Integrity – The system must be able to handle hardware or software problems
without corrupting data. Multiple users must be protected from attempting to change
the same piece of data at the same time, for example two operators cannot sell the
same seat on an airplane.
 Ease Of Use – Often users of transaction processing systems are casual users. The
system should be simple for them to understand, protect them from data-entry errors
as much as possible, and allow them to easily correct their errors.

Transaction Processing Modes

Batch Processing: Batch processing is where the information is collected and stored as a
batch but not processed immediately. Batch processing is useful for enterprises that need to
process large amounts of data using limited resources

Real-Time Processing: Each transaction is processed immediately, without the delay of

accumulating transactions into a batch.