MIS UNIT-1 NOTES

AN OVERVIEW OF MANAGEMENT INFORMATION SYSTEM

MAIN TOPIC - MANAGEMENT INFORMATION SYSTEM:

SUB - TOPIC - CONCEPT:

1) What is an information system?

An information system can be defined technically as a set of interrelated components that collect (or
retrieve), process, store, and distribute information to support decision making and control in an
organization. In addition to supporting decision making, coordination, and control, IS also help managers
and workers analyse problems, visualize complete subjects, and create new products. Information system
may be automated or manual. Information systems are used as a tool by top, middle, and operational levels
of management for carrying out business and management functions smoothly. Every profit or non-profit
business organization uses many types of information systems. MIS is a type of IS generally used by middle
level managers in management and decision making in business functions in the organization.

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2) Functions of an information system:
• Input - Collects and captures raw data from within the organization or from its external environment.
• Processing - Converts raw input into a meaningful form.
• Output - Transfers the processed information to the people who will use it or to the activities for which it
would be used.
• Feedback - Information system also requires feedback, which is output that is returned to appropriate
members of the organization to help them evaluate or correct the input stage.
3) Management information system (MIS) as a subject:
Management information system (MIS) involves study of people, processes and technology in an
organizational context. According to Laudon and Laudon, MIS as a subject is a study of information systems
focussing on their use in business and management.
4) Meaning of the term ‘business’:
Business is an activity carried out by the owner with the following intentions:
• To earn profits
• To manufacture products and services
• To generate employment
• To contribute in the welfare of the society
5) Terms in MIS and their meanings:
• Management - Management science
• Information – Information and technology
• System - Systems analysis and design / software engineering
a) First term – Management:
Management refers to the kind of tasks and activities that are performed by managers. In fact, management
is a process of achieving an organization’s goals and objectives by making the fullest use of available
resources like men, materials, machines, money, methods etc.
Management is to get the work done through and with the help of people, by performing basic functions of
management like planning, organizing, staffing, directing and controlling. Coordination is necessary after
directing. Decision making function goes hand-in-hand with all the above functions. Management can be
seen as a function, a process, a profession or a class of people. Along with material, capital, and labour,
management is considered as a resource.

Resources of management: Functions of management:

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b) Second term – information:
Information is not restricted to only tangible things like raw material, components, chemicals, finished
goods, people, vehicles, departments, branches, sites etc. Information is also related to intangible things like
services also. E.g., loan, deposit, account in a bank; course, exam in a college etc. Information has a much
wider scope. Information can be considered as the basic substance of human intellectual activity.
Information effectively contributes in expansion of human knowledge base. Information is a bridge that
links different organizations that constitute the modern society. Information is a vital ingredient at all the
levels of social behaviour. E.g., a company gives a purchase order to the supplier and in return supplier gives
a bill to the company. Human body is a system having units like memory, input, and output (sensory
organs), processor (brain), and control (heart). Human beings function as information processors.
i) Data – Process - Information:
Data mean raw facts and figures. Data which have been processed and shaped into a form that is meaningful
and useful to human beings are called information.

Data mean streams of raw facts representing events occurring in organizations or the physical environment
before they have been organized and arranged into a form that people can understand and use. Information is
derived from data. It is a processed data. It is a finished form of data. It indicates summarization of data.
Information is data that has been proceed into a form that is meaningful to the recipients and is of real or
perceived value in current or prospective actions or decisions. Information and data are used
interchangeably.
ii) Example:

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Raw data from a supermarket checkout counter can be processed and organized to produce meaningful
information, such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a
specific store or sales territory.
c) Third Term – system:
System is a set of elements which are interrelated. They are organized in a particular structure to achieve a
common goal or objective.
i) Characteristics of a system:
• Organization of components – Structure and order of components in the system
• Interaction between components – Functioning of each component with the other in the system. E.g.,
interaction between purchase and production, advertising with sales etc.
• Interdependence of components – Dependence of one component on the other. E.g., dependence of
production on stores, stores on purchase etc.
• Integration of components – Holism of systems, how the systems are tied together
• Central objective – Real and stated central objective
ii) Universal systems model:

6) Information systems literacy:

• Broader understanding of IS, which encompasses an understanding of the management and
organizational dimensions of systems as well as the technical dimensions of systems is called as IS
literacy.
• Computer literacy, in contrast, focuses primarily on knowledge of IT.
MIS tries to achieve this broader information systems literacy. MIS deals with behavioural issues as well as
technical issues surrounding the development, use and impact of information systems used by managers and
employees in the firm.
7) Operating elements of an information system:

Sr.no. Physical Description

component

1 Hardware Hardware refers to physical computer equipment and associated devices.

Hardware must provide for five major functions: input or entry, output, secondary
storage for data and programs, central processor (computation, control and
primary storage), communications

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 2 Software Software is a broad term given to the instructions that direct the operation of the
hardware. The software can be classified into two major types: system software
and application software

3 Database The database contains all data utilized by application software. An individual set
of stored data is often referred to as a file. The physical existence of stored data is
evidenced by the physical storage media (computer tapes, disk packs, diskettes,
etc.) used for secondary storage.

4 Procedures Formal operating procedures are physical components because they exist in a
physical form such as a manual or instruction booklet. Three major types of
procedures are required: user instructions (for users of the application to record
data, employ a terminal to enter or retrieve data, or use the result), instructions for
preparation of input by data preparation personnel, operating instructions for
computer operations personnel)

5 Operations Computer operators, system analysts, programmers, data preparation personnel,

personnel information systems management, data administrators etc.

MAIN TOPIC – MIS:

SUB - TOPIC - DEFINITION:

1) A management information system is-

• An integrated user machine system
• For providing information
• To support the operations, management, analysis and decision making functions in an organization.
a) The system utilizes-
• Computer hardware and software
• Manual procedures
• Models for analysis, planning, control, and decision making
• Database
b) Example of a model:

Sr.no. Problem Example of model

1 Amount of Inventory model which computes safety stock under a variety of

inventory safety assumptions
stock

2 Personnel selection Personnel search and ranking of alternatives model

3 New product New product introduction model
pricing
4 Expenditure control Budgetary control model

2) The MIS is defined as a system which provides information support for decision making in the
organization.
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3) The MIS is defined as an integrated system of man and machine (technology) for providing the
information to support the operations, the management and the decision-making function in the
organization.
4) The MIS is defined as a system based on the database of the organization evolved for the purpose of
providing information to the people in the organization.
5) The MIS is defined as a computer-based information system.

SUB - TOPIC - ROLE OF MIS:

1) Need for MIS:

MIS are needed by the organization because the business and management operations are becoming more
and more complex. The complexities in the business have increased due to:
• Global customers, suppliers, and business operations
• Liberalization of economy in India
• Technological revolution in many fields including production, marketing etc.
• Increasing importance of research and development in business
• Changes in product / product life cycle due to changing consumer behaviour and other reasons
• Explosion of information due to internet, no more geographic barriers
• Need for accurate and timely decision making in business
• Developments in management science (methods and techniques like TQM, six sigma, lean
manufacturing)
• Increasing demand for efficient decision making in business
• Invention of computers and telecommunication
• Increasing need for information feedback system
• Changing industry structure due to competitive rivalry
• Increased bargaining power to suppliers
• Increased bargaining power to customers
• Threat of new entrants
• Pressure of substitute products and services
a) The basic purpose of MIS is to provide a formal system which should automate the following tasks:
• Handling voluminous data
• Confirmation of the validity of data and transaction
• Complex processing of data and multidimensional analysis
• Quick search and retrieval
• Mass storage
• Communication of the information to the user on time
• Fulfilling the changing needs of the information
b) Role of Management Information System in short:
• Top level - MIS for strategic and policy planning and decision making
• Middle level - Management information for tactical planning and decision making
• Operational level - Management information for operational planning, decision making and control
• Operational level - Transaction processing and enquiry response
c) Role of MIS:
• MIS ensures that an appropriate data is collected from the various sources, processed and sent further to
all the needy destinations. The system is expected to fulfill the information needs of an individual, a
group of individuals, the managers and the top management.
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• MIS satisfies the diverse needs through a variety of systems such as query systems, analysis systems,
modeling systems and decision support systems.
• MIS helps in strategic planning, management control, operational control and transaction processing.

SUB - TOPIC - IMPACT OF MIS:

1) Impact of MIS:
• MIS creates an impact on the organization’s functions, performance and productivity. With a good MIS
support, 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 the probable trends in the various
aspects of the business. This helps in forecasting and long-term perspective planning.
• A disciplined information reporting system creates a structured database and a knowledge base for all the
people in the organization.
• MIS creates another impact in the organization which relates to the understanding of the business itself.
The MIS begins with the definition of a data entity and its attributes. It uses a dictionary of data, entity,
and attributes because of which there is a common understanding of terms and terminology in the
organization bringing clarity in the communication.
• MIS monitors and assesses the business environment comprising of factor like – market forces,
technological changes, complex diversity of business, and competition.
• MIS provides information to the top management for strategy formulation and focusing attention towards
decision making and action.
• MIS assesses the business progress in terms, market, quality, profit, and direction.
2) MIS is used as an instrument to bring a change in the organization as follows:
• Reduced hierarchy – fewer managers required.
• Shared information and not concerned information.
• Restructuring of work-flows giving new powers to both line and staff functionaries.
• Authority based on more knowledge and not seniority.
• Culture of the organization tends to become performance / result oriented.
• Open and competitive culture.
• No geographical limitations for the organization.
• Broader views are generated.
• Continuous learning and its importance are realized by the organization.

SUB - TOPIC - MIS AND THE USER:

• MIS helps the clerical personnel in the transaction processing and answers their queries on the data
pertaining to the transaction, the status of a particular record and references on the variety of documents.
• 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 operations level to correct an out-of-control
situation.
• MIS helps the middle management in short term planning, target setting and controlling the business
functions. It is supported by the management tools of planning and control.
• MIS helps the top management in goal setting, strategic planning and evolving the business plans and
their implementation.
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 Sr.no. User Uses

1 Clerical Handle transactions, process input data and answer enquiries.

personnel

2 First level Obtain operations data, assistance with planning, scheduling,

managers identifying out-of-control situations, and making decisions

3 Staff Information for analysis, assistance with analysis, planning and

specialists reporting

4 Management Regular reports, ad-hoc retrieval requests, ad-hoc analysis, ad-hoc

reports, assistance in identifying problems and opportunities, assistance
in decision-making analysis

MAIN TOPIC – MANAGEMNT AS A CONTROL SYSTEM:

SUB - TOPIC - FUNCTIONS OF MANAGEMENT:

1) Functions of management:
• Planning - designing the future course of action for the organization to achieve the desired goals and
objectives. E.g., launching a new product, establishing a new factory plant, mergers, acquisitions, joint
ventures.
• Organizing - arrangement of people and other resources in various departments required for running the
organization. E.g., buying a space, machines, furniture; raising capital etc.
• Staffing – recruiting manpower as per the requirement of skills; doing all the activities necessary for
recruitment like publishing advertisements, arranging tests, interviews, induction programmes etc.
• Directing – guiding manpower to do different tasks in the organization, giving instruction about rules,
policies, processes, procedures; preparation of manuals, SOPs etc.
• Coordinating – doing work cohesively by maintaining proper communication through notices, memos,
chats, e-mails amongst people in the organization; conducting meetings for brain-storming sessions,
group discussions etc.
• Controlling - comparing actual performance of the organization with targeted performance and taking
corrective action if necessary. A comparison unit compares actual output with the targeted output and
calculates the variance which is provided to a feedback unit. Feedback unit provides a corrective action as
per the need.
2) Management as a control system:
• Planning, organizing, staffing, directing, coordinating and controlling are the various steps in a
management process.
• All the steps prior to a control are necessary but are not necessarily self-assuring the results unless it is
followed by a strong control mechanism. The management experts have viewed these steps as
‘Management control system’.
• They postulate a hypothesis that unless a control is exercised on the process, the goals will not be
achieved. They advocate a system of effective control to ensure the achievement of business objectives.
3) Definition of control:

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Control is a process through which managers assure that actual activities conform to the planned activities,
leading to the achievement of the stated common goals. The control process measures a progress towards
those goals, and enables the manager to detect the deviations from the original plan in time to take corrective
actions before it is too late.
4) Management as a control system makes a systematic effort in the following way:
• To set the performance standards in line with the performance objectives
• To design the information feedback systems
• To compare the actual performance with these predetermined standards
• To identify the deviations from the standards
• To measure its significance and to take corrective actions in case of significant deviations

5) A reliable and effective control system has the following features:

• Early warning mechanism – This is a mechanism of predicting the possibility of achieving the goals
and standards before it is too late and allowing the manager to take corrective actions.
• Performance standard – The performance standard must be measurable and acceptable to all the
organization. The system should have meaningful standards relating to the work areas, responsibility,
managerial functions and so on. E.g., the top management would have standards relating to the business
performance, such as production, sales, inventory, quality etc. The operational management would have
standards relating to the shift production, rejections, downtime, utilization of resources, sale in a typical
market segment and so on. The chain of standards when achieved, will ensure an achievement of the
goals of the organization.
• Strategic controls – In every business, there are strategic areas of control known as critical success
factors. The system should recognize them and have controls instituted on them.
• Feedback – The control system would be effective, if it continuously monitors the performance and
sends the information to the control centre for action. It should not only highlight the progress, but also,
the deviations. The feedback should be accurate in terms of results and should be communicated on time
for corrective action.
• Realistic – The system should be realistic so that the cost of control is far less than the benefits. The
standards are realistic and are believed as achievable. Sufficient incentive and rewards are to be provided
to motivate the people.

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• The information flow – The system should have the information flow aligned with the organization
structure and the decision-makers should ensure that the right people get the right information for action
and decision making.
• Exception principle – The system should selectively approve some significant deviations from the
performance standards on the principle of management by exception. (The exception is defined as a
significant deviation from the performance, or the process and standard. The deviation could be abnormal
on the positive or on the negative side of the standard. The deviation could be predictive or could be
arising out of random causes in the business operations. It is therefore necessary to assess whether the
deviation is sporadic or consistently coming in, calling for the managerial attention.)

SUB-TOPIC – MANAGERIAL ROLES:

1) Role of a manager:
• Interpersonal roles - acting as leaders, attempting to motivate, counsel and support subordinates.
• Informational roles - receiving the most concrete, up-to-date Information and redistributing it to those
who need it.
• Decisional roles - taking decisions about various activities.

SUB-TOPIC – LEVELS OF MANAGEMENT:

Levels of management in the organization:

• Top / strategic level of management – CEO, CFO, CAO, CIO, COO, MD, VP, senior level people
engaged in long-term strategic planning and decision making
• Middle / tactical level of management – General, plant, regional managers engaged in short-term
tactical planning and decision making
• Lower / operational level of management – Clerical, shop-floor employees, departmental managers
engaged in day-to-day planning and decision making

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MAIN TOPIC - MIS:

SUB–TOPIC – A SUPPORT TO MANAGEMENT:

The management process is executed through a variety of decisions taken at each step of planning,
organising, staffing, directing, coordinating and control. The MIS aids decision-making. If the management
is able to spell out the decisions required to be taken, the MIS can be designed suitably.

1) Decisions in management:
• Planning - A selection from various alternatives – strategies, resources, methods etc.
• Organization - A selection of a combination out of several combinations of the goals, people, resources,
method and authority
• Staffing - Providing a proper manpower complement
• Directing - Choosing a method from the various methods of directing the efforts in the organization
• Coordinating - Choice of the tools and the techniques for coordinating the efforts for optimum results
• Controlling - A selection of the exceptional conditions and providing the decision guidance to deal with
them.
2) MIS: A support to management:
• The objective of the MIS is to provide information for a decision support in the process of management.
It should help in such a way that the business goals are achieved in the most efficient manner.
• Since the decision making is not restricted to a particular level, the MIS is expected to support all the
levels of management in conducting the business operations. Unless the MIS becomes a management aid,
it is not useful to the organization.

SUB-TOPIC – MANAGEMENT EFFECTIVENESS AND MIS:

1) ‘Negandhi Estafen’ model:

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• ‘Negandhi Estafen’ provides a good model for the analysis of management effectiveness, which
generates an enterprise effectiveness in achieving the goals and objectives.
• The model emphasises on the fact that management effectiveness depends on management philosophy
and environmental factors.
• The environmental factors provide the opportunities to survive and grow with certain constraints, the
management philosophy sets the guidelines for deciding the management practices of running the
enterprise.
• While the environmental factors are difficult to control, it is left for the management to change its
philosophy towards the various players in the business viz. the employees, the consumers, the suppliers,
the government, the community and the shareholders. Basically, its’s a change in the attitude towards
these players.
• If the attitude towards employees is to treat them as business partners, you will empower them and create
a sense of belonging to the organization. Such an attitude will have an impact on the management
practices, where the employee will play a decisive critical role. It will affect the organization structure by
reducing its size and the reporting levels.
• If the attitude towards the consumer is changed to fulfil the expectations giving rise to a higher
satisfaction, then the management practices in the product design, manufacturing and marketing will
undergo a significant change. The product life cycle then will be short, and more features and functions
will be added to the product fulfilling not only the functional needs but also the service needs of the
consumer.
• The management practices, therefore emerge out of the management philosophy and the environment in
which it operates. The management effectiveness would largely depend on both these factors.
• The MIS design would therefore be different depending upon the management practices followed by
several organizations in the same industry. Such design improves the management effectiveness leading
to an improvement in the enterprise effectiveness.
2) Goals, objectives and targets:
• These are set by the top-level management.
• The goals are long term aims to be achieved by the organization. (E.g., Manufacturing - Be a leader in the
household consumer goods industry, with modern amenities.)
• Objectives are the relatively short-term milestones to be accomplished. (E.g., Manufacturing - Provide
complete product range in processing.)
• Targets generally refer to physical achievements in the organization’s business. (E.g., Manufacturing - 20
percent growth per annum in turnover.)

SUB-TOPIC - ORGANIZATION AS A SYSTEM:

Organization is a system which consists of different elements like people, departments, resources,
procedures, processes, technology (hardware, software, communication devices) etc. These elements are
interrelated with each other and work in coordination to achieve goals of profitability and social
responsibility.

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1) Organization as a system – model:

2) Organization as a system – H. J. Levitt’s extended model:

• The basic model of organization as a system prepared by H.J. Levitt included 4 elements of the system as
task (process), people, technology and structure.
• The extended model of organization as a system included 5 elements of the system as task (process),
people, technology, structure and culture.
• The arrangement of task in terms of process and work design is dependent on the people. You may
choose the best technology and well-designed tasks, but they have to be suited for the people.
• These are to be arranged in a proper structure.
• Culture also affects organization as a system.
• According to Levitt an organization should be viewed as a socio-technical system consisting of people,
tasks, technology, culture and structure.
3) MIS and Organization effectiveness:
The organization system is an open system and MIS should be so designed that it highlights the critical
business, operational, technological and environmental changes to the concerned level in the organization,
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so that action can be taken to correct the situation. Since the organization as a system has a dynamic role to
play to meet the changing needs of a business, the MIS becomes a common support system for playing the
dynamic role. When the organization is moving through the phases of introduction, growth, maturity and
decline, MIS should provide an information support, relevant to that phase of the business cycle. This means
the designer of MIS should foresee such requirements and make the design flexible enough to support such
requirements.
The design of the MIS in isolation from organizational factors, is defined to fail as it just does not fit into the
structure. Since organization system in the same business differ for various reasons such as the leadership
style, the management style, culture and group of people as a body and so on, it is difficult to evolve a
standard model of the MIS for a business and/or an industry. MISA plays a very important role in creating
organization behaviour which in turn sets the goals for achievement. Technology and people decide the
organization structure and style of the management.

SUB-TOPIC – DECISION MAKING:

1) Meaning of a term “decision”:

Decision means choosing the best alternative amongst the set of alternatives, to solve a problem in the given
situation of certainty, uncertainty or risk.
2) Decision making process:

3) Steps in Decision Making:

• Problem definition – user defines the nature of the problem
• Information gathering – user determines the nature of relevant information and gather the facts

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• Information assessment – user weighs the gathered information -
❖ To see if some information ‘out weighs’ other information
❖ To identify personal priorities
❖ To identify the choices or alternatives available to solve the problem
• Choice or decision making – user combines evaluation of relevant information and sees which plans and
alternative plans fit to the problem definition.
• Behavioral action – doing it
• Review – to review the decision over a period of time for suitability of the decision with changing times
4) Dangerous decision traps:
• Plunging in before full information – taking a decision on the basis of insufficient information
• Solving wrong problems – wasting energy and time in solving problems which are trivial or unnecessary
• Narrow view – lack of thinking in long term a depth from organization’s point of view
• Overconfidence – false confidence about rightness of the decision and lack of understanding the risk of
wrong decision making
• Short-sighted shortcuts - unnecessary selection of quick and may be wrong methods to save time
• Shooting from the hip – react with a decision without careful consideration towards the problem in the
organization
• Equating popularity with accuracy – decisions taken to maintain popularity may not be accurate
• Fooling yourself - knowing that the decision is wrong, going ahead with it
• Not keeping track – history of decisions taken by the organization is not maintained properly.
• Not checking – before finalizing a decision, it is not checked or conceptually tested from all angles.
To avoid these traps:
• Frame the problem better. State the problem from multiple perspectives.
• Gather information more intelligently.
• In complex decisions, use systematic processes to come up to conclusions.
• Seek and learn from feedback by keeping track of success and failures.
5) Types of decision by different criteria:
• Operational, tactical, strategic decisions
• Structured, semi-structured, unstructured decisions
• Decisions under certainty, uncertainty and risk
Other types of decisions –
• Rational and irrational decisions
• Programmed and non-programmed decisions
• Individual and group decisions
6) Strategic, tactical and operational decisions:
• Operational decisions – at lower level, day-to-day, based on internal information
• Tactical decisions – at middle level, short term, based on external + internal information
• Strategic decisions – at top level, long term, based on external information
7) Structured, semi-structured and unstructured decisions:
a) Structured decisions:
• Decision characteristics – decisions taken by operational management. Structured decisions are
repetitive and routine and they involve a definite procedure for handling them so that they don’t have to
be treated each time as if they were new.
• Information requirements – specified, scheduled, narrow, interactive, real-time, internal, detailed
• Examples – determine overtime eligibility, restock inventory, offer credit to customers, determine special
offers to customers
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b) Semi-structured decisions:
• Decision characteristics – decisions taken by middle management. Semi-structured decisions have
elements of structured and unstructured decisions. Only part of the problem has clear-cut answer
provided by an accepted procedure.
• Information requirements – focused, specified, interactive, internal, real-time, scheduled
• Examples – design a marketing plan, develop a departmental budget, design a new corporate website
c) Unstructured decisions:
• Decision characteristics – decisions taken by senior management. Unstructured decisions are those in
which the decision maker must provide judgement, evaluation and insight to solve the problem. Each of
these decisions is novel, important and nonroutine and there is no well-understood or agreed-on
procedure for making them.
• Information requirements – general, broad scope, interactive, external, internal, real-time, ad hoc
• Examples – decide entry or exit from markets, approve capital budget, decide long-term goals
8) Decision under certainty, risk and uncertainty:
• Certainty – routine type decisions, tactical and operational decisions, short term decisions
• Risk – strategic decisions, long term decisions, ad hoc decisions, situational decisions
• Uncertainty – strategic and tactical decisions, long and short-term decisions, routine and ad hoc
decisions, situational decisions, this situation can be converted to certainty situation
9) Rational and irrational decisions:
• Rational decisions – logical, scientific techniques based.
• Irrational decisions – based on hunch and intuition
10) Importance of information in decision making:
• Whenever there is a problem, need arises for an action to be taken to solve a problem.
• Data related to a problem are first collected and then processed to generate information.
• Information is analysed to decide a course of action to be taken to solve a problem.

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SUB-TOPIC – INFORMATION, KNOWLEDGE AND BUSINESS INTELLIGENCE:

1) Data, information, knowledge, wisdom:

2) Raw Data:
Raw data mean streams of raw facts representing events occurring in organizations or the physical
environment before they have been organized and arranged into a form that people can understand and use.
Examples of the events in the organization are selling the product to the customer, purchasing the raw
material from the supplier, booking of a room in a hotel by a customer, admission of a patient in the
hospital, recruitment of an employee in the company etc.
3) Examples of master and transactional data:

Master data Transactional data

Customer, Product Sales order

Supplier, Product Purchase order
Doctor, Patient Patient admission, treatment
Company, Student Vacancy, shortlist, selection list
Employee Payroll

4) Data go through many steps before it become information:

• Acquisition of data
• Classification of data
• Storage of data
• Retrieval of data
• Editing of data
• Verification and quality control of process that produced the data
• Aggregation of data
• Hypothesis generation
• Description of data
• Test of analysis assumptions
• Analysis of data
• Extrapolation of implications of findings
• Choice of format for presentation of data
• Distribution of reports
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• Evaluation of effectiveness of report
5) Data processing:
• The term data processing is used to denote the set of activities that are undertaken to convert input into
output.
• The data processing activity can be represented using the process model. (Input-Process-Output)
• The data captured is used as input for the processing activity. The input is processed to produce output
that is meaningful information.
• Data processing activities involves collection, capturing, recording, storage, retrieving and processing
data into usable formats or information.

6) Information means:
• Information – derived from data / processed data / finished form / summarization of data
• Information is data that has been processed into a form that is meaningful to the recipients and is of real
or perceived value in current or prospective actions or decisions.
• Information and data are used interchangeably.
7) What information does?
• Information improves representation of an entity.
• Information updates the level of knowledge.
• Information has a surprise value.
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• Information reduces uncertainty.
• Information aids in decision making.
8) Information processing:
• Capturing - Data from an event / transaction have to be recorded
• Verifying - Data have to be checked / validated for correctness
• Classifying - Data have to be placed in specific categories
• Arranging / sorting - Data have to be placed in a particular order / sequence
• Summarizing - Data elements have to be combined / Aggregated
• Calculating - Arithmetical / logical calculations / computations have to be carried out
• Storing - Data have to be placed in some storage media
• Retrieving - Specific data elements have to be searched for and accessed
• Reproducing - Data have to be duplicated from one medium to another
• Dissemination / communication - Data have to be transmitted from one place (device) to another (user)
9) Factors affecting information quality:
a) Utility - Form, time, access, possession, consistency, age
b) Degree of satisfaction
c) Error
d) Bias
a) Utility of information:
• Form - if the information is presented in the form the manager requires, then its utility increases.
• Time - if it is available, when needed, the utility is optimized.
• Access - if the information is easily, and quickly accessible through the online access system, its utility
gets an added boost.
• Possession - lastly, if the information is possessed by the manager who needs it, then its utility is the
highest.
• Consistency of information - the information is termed as inconsistent if it is derived from data which
does not have consistent pattern of period. Somewhere, the information must relate to a consistent base or
a pattern. The regularity in providing the information also helps in assessing the consistency in the
information.
• Age of information - If the information is old, it is not useful today. The currency of the information
makes all the difference to the users. If the information is old, then it does not meet any characteristics of
the information viz., The update of knowledge, the element of surprise, the reduction of uncertainty, and
the representation.
b) Satisfaction:
The degree of satisfaction of the manager would determine the quality of information. Satisfaction increases
with validity of information. The validity of the information relates to the purpose of the information. It also
depends on how the information is used.
c) Error:
An erroneous information is a serious problem because the decision maker cannot make the adjustments as
he is not aware of it in terms of the location, and the quantum of error. Errors should be prevented, failing
that they should be detected, and if not, they should be controlled. Reliability of information is connected to
the representation, and the accuracy of what is being described.
The errors creep in on account of various reasons namely–
• An incorrect data measurement
• An incorrect collection method
• Failure to follow the prescribed data processing procedure
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• Loss of data or incomplete data
• Poor application of data validation, and control systems
• A deliberate falsification
d) Bias:
If the information is processed out of a biased data, it will have a bias. The procedure of communicating the
information should be such that the system is able to detect the degree, and the nature of the bias, and correct
the information accordingly.
An impartial information contains no bias, and has been collected without any distorted view of the
situation. The partiality creeps in, if the data is collected with a preconceived view, a prejudice, and a pre-
determined objective or a certain motive.
10) The information can be classified in three types:
• Strategic information – external to the organization and used by top level management
• Tactical information - external + internal information and used by middle level management
• Operational information – day-to-day or routine information used by lower-level management
11) Information can also be classified as:
• Internal information – exists within the organization
• External information – exists in the external environment of the organization
• Action information – leads the manager towards action
• No action information – information is just made available to the manager but he may not take any action
• Recurring information– used frequently
• Nonrecurring information– used on ad hoc basis
• Planning information – used in short term / long term planning
• Control information - used in taking corrective action (feedback-control)
12) Knowledge:
Knowledge means concepts, experience and insights that provide a framework for creating, evaluating and
using information.
Knowledge is a set of information which provides capability to understand different situations, enables to
anticipate implications, and judge their effects, suggests ways or clues to handle the situations.
Knowledge is not an advanced set of information and nor it’s a wisdom. Knowledge is a capability to handle
a complex situation. More the knowledge, higher is the capability. It is made of mental models, scripts and
schemas including linkages to concepts and meta concepts and operational and behavioural patterns.
13) Knowledge driven capability has 3 components:
• Visualization of strategic options to handle complex information
• Anticipation and assessment of its results
• Forecasting its effects in terms of benefits, cost, losses and damages
14) Difference between data, information, Knowledge with example:
• Rainfall record collected every day is a ‘data’.
• When this data is processed by region and month, it is an ‘information’.
• When this information is analysed using analytical tools, it reveals rainfall pattern. This pattern is
‘knowledge’.
• When the knowledge is processed taking other relevant variables and information to build a forecasting
model to predict the rainfall, the model is a knowledge asset.
15) What is knowledge?
• Personalized information
• State of knowing and understanding
• An object to be stored and manipulated
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• A process of applying expertise
• A condition of access to information
• Potential to influence action
16) Sources of Knowledge in an Organization:
• Intranet
• Data warehouses and knowledge repositories
• Decision support tools
• Groupware for supporting collaboration
• Networks of knowledge workers
• Internal expertise
17) Some terms related to knowledge:
• Knowledge and information-intense products – Products that require a great deal of learning and
knowledge to produce.
• Knowledge discovery – Identification of novel and valuable patterns in large databases; the process of
extracting useful information from large set of data using sophisticated algorithms/methods; methods to
discovering novel or previously unknown knowledge from data or text.
18) Important dimensions of knowledge:
a) Knowledge is a firm asset.
b) Knowledge has different forms.
c) Knowledge has a location.
d) Knowledge is situational.
a) Knowledge is a firm asset:
• Knowledge is an intangible asset.
• The transformation of data into useful information and knowledge requires organizational resources.
• Knowledge is not subject to the law of diminishing returns as are physical assets, but instead experiences
network effects as its value increases as more people share it.
b) Knowledge has different forms:
• Knowledge can be either tacit, explicit or intellectual.
• Knowledge residing in the minds of employees that has not been documented is called tacit knowledge.
Tacit knowledge is intangible and cannot be codified. The consultants and experts possess tacit
knowledge.
• Knowledge that has been documented is called explicit knowledge. Explicit knowledge is the one that
can be codified and/or modelled. Software products are packaging explicit knowledge.
• Intellectual knowledge could be either tacit or explicit and is owned by somebody. It is also termed as
intellectual asset or capital. IC is made out of leveraging on personal understanding of organization’s
action capabilities and use of other intellectual assets.
• Knowledge involves know-how, craft and skill.
• Knowledge involves knowing how to follow procedures.
• Knowledge involves knowing why, not simply when things happen (causality).
c) Knowledge has a location:
• Knowledge is a cognitive event involving mental models and maps of individuals.
• Knowledge can reside in e-mail, voice mail, graphics and unstructured documents as well as structured
documents.
• There is both a social and individual basis of knowledge. Knowledge resides either in the minds of
humans or in specific business processes.

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• Knowledge is “sticky” (hard to move) “situated” (enmeshed in a firm’s culture) and “contextual” (works
only in certain situations).
d) Knowledge is situational:
• Knowledge is conditional - Knowing when to apply a procedure is just as important as knowing the
procedure (conditional).
• Knowledge is related to context – User must know how to use a certain tool and under what
circumstances.
19) Knowledge management:
• Knowledge management is the systematic and explicit management of knowledge related activities,
practices, programs and policies within enterprises to create a vital knowledge, share it with others and
improve continuously its content and quality.
• Knowledge management comprehensive strategy is to focus on three perspectives of business -
operational, tactical and strategic.
• To be competitive, proactive business organization must increasingly manage knowledge systematically
through knowledge management.
• KM activities and functions are implicit in each employee’s and department’s daily work. Organization
will continue to be motivated by several end goals and evolve strategies to achieve them. In this
endeavour, KM objective is to develop the best available knowledge (explicit, tacit and ICs) to make
people and enterprise capable as a whole to act effectively to implement various strategies.
20) Driving forces behind KM:
The emerge of KM is a result of many forces. In today’s business world KM is not an alternative or luxury,
but it is a necessity due to demand of customer centric business initiatives. The forces which drive KM are
external and internal.
21) Driving forces behind KM – External:
Business organizations perform in the environment that they can’t control. Their success depends on how
they deal with these forces and still grow.
• Globalization of business – With loosening of trade barriers and advances in internet / web technology,
business operates beyond the local and national boundaries. It has a bigger market to tap and more
sources and resources to bank upon. The immediate impact is business organization finds itself in stiff
competition.
• Demanding customers – Customers have easy access to information about products and services, and
are now more knowledgeable to demand more value at least cost. Customers drive your business by
demanding higher quality, new features, quick response and door delivery.
• Innovative competitors – Competition is no longer limited to quality and cost but extended to providing
value adding new features using technologies and best practices.
• Resourceful vendors – Vendors continue to increase their capabilities by use of technologies, innovative
product features and better logistics.
• Bottlenecks in effectiveness – Organizations have implemented various management and technology
strategies to remove bottlenecks in workflow and processes. Bottlenecks are no more physical but
intangible, namely capability of anticipating the change in market and environment requiring proactive
action to deal with it.
• Technological capabilities – Business operations need technology implementation to bring in efficiency
and effectiveness. Today business operates through collaborative work, high end information
management and use of advanced search engines for information search.

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• Understanding of human cognitive functions – People and organization behaviour affects effectiveness
of the business enterprises. Knowledge about people, in terms of understanding mental models and
associations affecting decision making is essential. KM initiative is the result of this requirement.
22) Driving forces behind KM – internal:
These forces require organization to work with knowledge, calling for formal implementation of KM with
initiatives on number of technology fronts, behaviour and information management. The cutting edge
for business operations is HR capability to anticipate, assess and act before competition moves in. To build
such capability, KM is necessary for development and application of tacit, explicit and embedded
knowledge (IC).
23) Changing workplace:
Once KM initiatives are in, it would affect the workplace scenario drastically. Visible changes are extensive
use of technology, networks, supply chain, collaborative work culture and so on.
24) Visible changes, but more importantly, affecting the people side of the business are following-
• Configuring interdisciplinary teams for better mix of competencies.
• Work completion needs more application of conceptual knowledge.
• Work completion needs more collaboration and co-ordination between people in a network.
• People show more understanding and involvement in the work due to increased understanding of
personal benefits.
• More reliance on models, search engines, embedded decision support systems and knowledge sharing. As
a result, the people in workplace would experience less physical work, more intellectual work, increased
dependence on others and collaborative relation among participants.
25) Key aspects of knowledge management:
• Accelerating knowledge creation and application – In competitive global business economy
knowledge is not static. It changes dynamically. Obsolescence is its character. Its application also
changes. To meet this challenge searching new knowledge and developing knowledge-based capabilities
to remain ahead in business is a prime need. KM systems are designed for rapid search, formulate and
model the knowledge.
• Converting tacit into explicit knowledge – Tacit knowledge is intangible, distributed and possessed by
individual employees. KM converts tacit knowledge into explicit through coding, modelling, putting into
manuals for acquisition and guidance to the HR. After conversation to explicit knowledge, it is integrated
into processes and systems which deliver goods and services to customer.
• Build knowledge Assets-IC - Some of the knowledge bodies are so strategically important for
organization’s business that they need to be protected taking legal recourse, such as patent, trademarks
and rights to use.
In summary, KM involves knowledge generation through creation and acquisition and knowledge
application through integration, pooling, replication, storage and identification.
26) Designing for business benefits from KM:
The trend in knowledge economy is to use KM for business benefit by designing products, services and
process which deliver them. The processes which are largely benefitted by KM are the feeder process which
contributes to the efficiency and effectiveness of core process like manufacturing, purchasing, delivery and
so on. The organizations which treat “knowledge” as key resources are likely to be benefitted the most. The
KM processes are generation and storage of knowledge, identification and exploitation of knowledge, and
generation and application of knowledge delivery strategies.
These processes put together create organization which is knowledge competent. It is important to note that
there are barriers in the process of KM. The biggest barrier is people who suffer from inertia to change, lack
of motivation, difficulties in transferring knowledge to new people and so on.
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The next barrier is management itself afraid of giving power (knowledge) and sharing power (knowledge)
with others. Knowledge management process also suffers from structural barriers namely fragmented
organizational functional systems and reluctance to change traditional systems.
KM processes are executed through various methods and tools. They are traditional database tools, process
modelling tools, work flow / work group management tools, search engines and navigational tools,
visualization tools and collaborative tools. Using these tools, KM manages knowledge related activities,
processes and policies within the enterprise; KM ensures the organization viability through building
competitive quality of its knowledge assets and applying them in all its operational, management and
strategic activities.

SUB-TOPIC – BUSISNESS INTELLIGENCE FOR MIS:

1) Business intelligence:
Business intelligence is a term that refers to the sum total of gathering and processing data, building rich and
relevant information and maintains it live and up to a date. Organizations leverage on business intelligence
to develop strategies and use it to put strategy into operations. BI is used for timely, effective decisions and
better plans for the future. BI is a terminology representing a collection of processes, tools and technologies
helpful in achieving more profit by considerably improving the productivity of an enterprise and its people.
BI is an outcome of turning a raw data into intelligent information by analysing and rearranging the data
according to the relationships between the data items by knowing what data to collect and manage in what
context.
2) Business intelligence definition and concept encompasses following things -
• Technology and software infrastructure – An enabler to capture and process the data, information,
knowledge
• Data bases, data warehouses – Storing the data of current and future relevance from decision making
view point.
• Develops and maintains knowledge data bases for all core functions and for business at large.

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3) Business intelligence and MIS:
Business intelligence is developed by putting different, but close context information sets, together to detect
or forecast events and bring to surface certain issues. It relies on exploration and analysis of seemingly
unrelated information to provide insights, identify trends, discover opportunities, and take proactive
decisions. In a crisis, the BI is available for ready to use supports in building new strategies to overcome the
crisis. BI is built keeping a long-term perspective of business needs of growth and direction. Information and
knowledge are bult to handle current and near future problems.
Business Intelligence is all about converting large amounts of corporate data into useful information, thereby
triggering some profitable business action with the help of knowledge acquired through BI analysis. A
typical BI environment involves business models, data models, data sources. ETL (Extraction, Transform
and Loading) tools are needed to transform and organize the data into useful information in the data
warehouse, data marts. OLAP analysis and reporting tools are used on data warehouse for finding useful
information.

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