Basic Concepts of MIS

Introduction

In this study session, you be looking at the basic concepts of MIS. You will begin by
explaining what is meant by management. Moving on, you will discuss data and information.
Under which you will examine the characteristics and values of information. Furthermore,
you will discuss information as an aid to decision making. As such, you will highlight the four
stages of decision making. Lastly, you will take a look at system and make attempt at
defining MIS.

Learning Outcomes

Outcomes

When you have studied this session, you should be able to: 1.1 define management

1.2 discuss data and information

1.3 describe information as an aid to decision making 1.4 define a system

Terminology

Deviation The action of departing from an established course or accepted standard. MIS
Management information system, orMIS, broadly refers to a computer-based system that
provides managers with the tools to organize, evaluate and efficiently manage departments
within an organization.

1.1 Management

Management has been defined in process or activities that describe what managers do in
the operation for their organization plan, organize, initiate and control operations. They plan
by setting strategies and goals and selecting the best course of action to achieve the goals.
They organize the necessary tasks for the operational plan, set these tasks up into
homogenous groups and assign authority delegation; they control the performance
standards and avoiding deviation from standard.

Decision-making is a fundamental prerequisite of each of the foregoing processes. The job of

MIS is to facilitate decisions necessary for planning, organizing and controlling the work and
functions of the business so that specified goals of business are achieved.

ITQ Question What is the fundamental prerequisite of the processes of management?

Feedback

Decision-making. Every step taken in management should aid decision making

1.2 Data and Information

Data refers to raw, unevaluated facts, figures, symbols, objects, events, etc. Data may be a
collection of facts lying in storage, like a telephone directory or census records. Information
is a processed data i.e. it is data that have been put into a meaningful and useful context and
communicated to a recipient who uses it to make decisions. Information involves the
communication and reception of intelligence or knowledge. It appraises and notifies,
surprises and stimulates, reduces uncertainty, reveals additional alternatives or helps
eliminate irrelevant or poor ones, and influences individuals and stimulates them to action.
An element of data may constitute information in a specific context; for example, when you
want to contact your friend, his or her telephone number is a piece of information;
otherwise, it is just one element of data in the telephone directory (Babu et al., 1987).

Computers have made the processing function much easier. Large quantities of data can be
processed quickly through computers aiding in the conversion of data to information. Raw
data enter the system and are transformed into the system's output, that is, information to
support managers in their decision making. Figure 1.1 shows how data can be transformed
to information while Figure 1.2 shows data as the input that undergoes a process to give the
output which is our information.

Question

Data and information are synonymous, true or false Feedback

Though they are related, they aren‘t synonymous. So the answer is false. Note that
information is the processed form of data.

1.2.1 Characteristics of Information

The characteristics of good information are relevance, timeliness, accuracy, cost-

effectiveness, reliability, usability, exhaustiveness, and aggregation level. This is summarized
in figure 1.3. Information is relevant if it leads to improved decision making. It might also be
relevant if it reaffirms a previous decision. If it does not have anything to do with your
problem, it is irrelevant. For example, information about the weather conditions in Nigeria in
January is relevant if you are considering a visit to Nigeria in January. Otherwise, the
information is notrelevant.

Timeliness refers to the currency of the information presented to the users. Currency of data
or information is the time gap between the occurrence of an event in the field until its
presentation to the user (decision maker). When this amount of time is very short, we
describe the information system as a real-time system.

Accuracy is measured by comparing the data to actual events. The importance of accurate
data varies with the type of decisions that need to be made. Payroll information must be
exact. Approximations simply will not suffice. However, a general estimate of how much
staff time was devoted to a particular activity may be all that is needed.

Question

What parameter measures the relevance of information? Feedback

Improved decision making. Information is relevant if it helps the manager make decision as
regards to the index case.

1.2.2 Value of Information

Information has a great impact on decision making, and hence its value is closely tied to the
decisions that result from its use. Information does not have an absolute universal value. Its
value is related to those who use it, when it is used, and in what situation it is used. In this
sense, information is similar to other commodities. For example, the value of a glass of
water is different for someone who has lost his way in Arctic glaciers than it is to a wanderer
in the Sahara Desert.

Information supports decisions, decisions trigger actions, and actions affect the
achievements or performance of the organization. If we can measure the differences in
performance, we can trace the impact of information, provided that the measurements are
carefully performed, the relationships among variables are well defined, and possible effects
of irrelevant factors are isolated. The measured difference in performance.

due to informational factors is called the realistic value or revealed value of information.

For most information systems, particularly those supporting middle and top management,
the resulting decisions often relate to events that are not strictly defined and involve
probabilities that cannot be quantified. The decision-making process often is obscure and
the outcomes are scaled by multiple and incomparable dimensions. In such cases, we may
either attempt to perform a multi-attribute analysis or derive an overall subjective value. The
subjective value reflects people's comprehensive impression of information and the amount
they are willing to pay for specific information (Ahituv et al., 1994).

ITQ Question The value of an information could be absolute, true or false? Feedback

False. Its value is related to those who use it, when it is used, and in what situation it is used.
In this sense, information is similar to other commodities.

1.3 Information as an Aid to Decision Making

The process of decision making can be described as comprising four steps: intelligence,
design, choice, and review (Simon, 1977).

1.3.1 The Intelligence Stage

This encompasses collection, classification, processing, and presentation of data relating to

the organization and its environment. This is necessary to identify situations calling for
decision.

1.3.2 The Decision Stage

During the decision stage, the decision maker outlines alternative solutions, each of which
involves a set of actions to be taken. The data gathered during the intelligence stage are now
used by statistical and other models to forecast possible outcomes for each alternative. Each
alternative can also be examined for technological, behavioural, and economic feasibility.

1.3.3 The Choice Stage

In the choice stage, the decision maker must select one of the alternatives that will best
contribute to the goals of the organization.