BBA-V/UNIT-III/MIS

UNIT –III
Data

Data is raw material from which useful information is derived.

Data is a collection of facts, which is unorganised but can be made organized in to useful
information. The term data and information came across in our daily life and often are
interchanged.

Example of data – Dates, weights, Prices, Number of items sold, Product names etc.

Datam are objective measurements of attributes (characteristics) of entities (such as people,

place, things and events). These measurements are usually represented by symbols such as
numbers, words, codes, composition of numerical, alphabetical and other characters. It takes
variety of forms, including numeric data, text, voice and images.

Data can also be defined as a set of isolated raw facts (statistical, unrelated and uninterrupted)
and figures.

Data can be also be defined as a group of non-random symbols in the form of text, images or
voice representing quantities, actions or objects.

Information

The data, which has been converted in to a useful and meaningful form, is called information.

Data are raw material resources that are processed in to finished information products.

Information can be defined as data that has been converted in to a meaningful and useful context
for specific end users.

Data is usually not useful until subjected to a “Value Aided” process where –
1. Its form is aggregated, manipulated and organized.
2. Its content is analysed and evaluated.
3. It is placed in a proper context for a user.

Thus information is processed data, placed in a context that gives it value for specific end user.

Information in an alternative way can be defined as data that has been processed in to a form that
is meaningful to the recipient and is of real or perceived value in the current or prospective
actions or decisions of the recipient.

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Manager and Information

Management needs only information but not data, to help them make effective decisions. Every
manager is deluged with both data and information, sometimes, to the point of information
overload. The manager may do various things with that information including –

Information and
Data

The Manager

Some information is stored for

Some possible use later. Some
information information
is put to use Some information is combined to is
immediately. form new information discarded.

Some information is passed on to

others

Managers As Information Processors

1. Storing it for further use.

2. Disseminating it to others.
3. Putting it to immediate use.
4. Discarding it.

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The Nature Of Data

Figure given below illustrates the role that data play in the event of an organization. The large
circle labelled “DATA” represents the overall data resources of an organization.

Information

Decision DATA

Action

Information

Decision

Action

This resource is an active participant in the organization’s operations and planning. The small
circles represent the individual elements of data and considered to be raw facts. They are
aggregated and summarised in various meaningful ways to form information. Decisions are
made on the basis of these informations. The results of these actions, which in turn generate
further data, which can be incorporated in to another cycle of the decision making process.

Characteristics of Information

The parameters of a good quality are difficult to determine for information. Quality of
information refers to its fitness for use, or its reliability. Following are the essential characteristic
features :

i. Timeliness : Timeliness means that information must reach the recipients within the
prescribed timeframes. For effective decision-making, information must reach the
decision-maker at the right time, i.e. recipients must get information when they need it.
Delays destroys the value of information. The characteristic of timeliness, to be effective,
should also include up-to-date, i.e. current information.
ii. Accuracy : Information should be accurate. It means that information should be free from
mistakes, errors &, clear Accuracy also means that the information is free from bias.
Wrong information given to management would result in wrong decisions. As managers
decisions are based on the information supplied in MIS reports, all managers need
accurate information.

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iii. Relevance : Information is said to be relevant if it answers especially for the recipient
what, why, where, when, who and why? In other words, the MIS should serve reports to
managers which is useful and the information helps them to make decisions.
iv. Adequacy : Adequacy means information must be sufficient in quantity, i.e. MIS must
provide reports containing information which is required in the deciding processes of
decision-making. The report should not give inadequate or for that matter, more than
adequate information, which may create a difficult situation for the decision-maker.
Whereas inadequacy of information leads to crises, information overload results in chaos.
v. Completeness : The information which is given to a manager must be complete and
should meet all his needs. Incomplete information may result in wrong decisions and thus
may prove costly to the organization.
vi. Explicitness : A report is said to be of good quality if it does not require further analysis
by the recipients for decision making.
vii. Impartiality : Impartial information contains no bias and has been collected without any
distorted view of the situation.

Role and Importance of Information

It has been said before and you hear it everywhere: Information is power. The importance of
information to individuals and organizations, and therefore the need to manage it well, is
growing rapidly. Now more than ever, we need to understand the critical role information plays
in so many aspects of business and life. It drives our communication, our decision making, and
our reactions to the entire environment.

 Information and Communication : Information is vital to communication, and a critical

resource for performing work in organizations. Business managers spend most of their
day in meetings, reading, writing, and communicating with other managers, subordinates,
customers, vendors, and other constituents via telephone, in person, or by e-mail. Indeed,
management itself is information processing. It involves gathering, processing, and
disseminating information. Managing information involves coping with a myriad of
information sources and ultimately making decisions about what to do with it.
A manager must track and/or react to information flowing from sources inside and
outside the organization. The manager processes this river of information and
disseminates it in one of four ways: stores it, uses it, passes it on, and/or discards it. For
example, during the course of a normal business day, a marketing manager for a high-
technology company receives information in the form of e-mail, telephone calls, letters,
reports, memos, trade publications, and formal and informal conversations.
 Information and Decision Making : Every job, project, and/or task involves decision
making. Decision making is the process of identifying, selecting, and implementing
alternatives. The right information, in the right form, at the right time is needed to make
correct decisions. For example, based on information about customers, competitors, and
production capabilities, a manager may decide to alert top executives that a strategic
decision needs to be made. Top executives would use the information received to identify
alternatives for consideration. Each alternative would then be evaluated based on
feasibility, cost, time to implement, consistency with corporate strategy, and other
criteria.

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On the basis of their assessment, top executives would select the alternative that makes
the most business sense and begin implementation. Finally, information would be
gathered to assess the quality of the decisions that were made.
 Information and the Environment : Organizations must strive to make sense of their
environment in order to survive, as well as to achieve and/or exceed performance
objectives. The environment is a potentially useful source of information. That is one
reason why so many organizations are working hard to listen to their customers and
watch their competitors so closely.
Organizations need to ensure that their information-processing systems are properly
integrated, and that the necessary information is flowing in from the environment and
being supplied to the right people in the organization. For instance, it would make sense
to share customer complaint data about a specific product with the members of the
product development team responsible for redesign. More organizations are using
computers and information systems to process the burgeoning amount of information
they face. More sources of information are becoming available to organizations as a
result of information technologies such as electronic databases, information networks,
and electronic bulletin boards.

Classification of Information
The information can be classified in a number of ways provide to better understanding.

1. Action Verses No-Action Information : The information which induces action is called
action Information. ‘No stock‘report calling a purchase action is an action information.
The information which communicates only the status is No-Action Information. The
stock balance is no-action information.
2. Recurring Verses No-Recurring Information : The information generated at regular
intervals is Recurring Information. The monthly sales reports, the stock statement, the
trial balance, etc are recurring information. The financial analysis or the report on the
market research study is norecurring information.
3. Internal and external information : The information generated through the internal
sources of the organization is termed as Internal Information, while the information
generated through the govt. reports, the industry survey etc., termed as External
Information, as the sources of the data are outside the organization.

The information can also be classified, in terms of its application :

 Planning Information : Certain standard norms and specifications are used in planning of
any activity. Hence such information is called the Planning Information. e. g. Time
standard, design standard.
 Control Information : Reporting the status of an activity through a feedback mechanism
is called the Controlling Information. When such information shows a deviation from the
goal or the objective, it will induce a decision or an action leading to control.
 Knowledge Information : A collection of information through the library records and the
research studies to build up a knowledge base as an information is known as Knowledge
Information.

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 Organization Information : When the information is used by everybody in the

organization, it is called Organization Information. Employee and payroll Information is
used by a number of people in an organization.
 Functional/ Operational Information : When the information is used in the operation of a
business it is called Functional/Operational Information.
 Database Information : When the information has multiple use and application, it is
called as database information. Material specification or supplier information is stored for
multiple users.

Sources Of Information

The sources of information could be internal or external.

The top management of the organization is interested on both the internal as well external
information for the betterment of all management actions (Planning, Organizing, Staffing,
Directing, Controlling, Coordinating, Budgeting, Monitoring etc).

Examples of internal information

Quarterly sales profits, Efficiency of machine and manpower etc. (Primary internal sources of
information are Financial reports, personal staff, professional staff, System documentation
manuals, Users or user staff, Reports and Transaction Documents)

Examples of external information

Description of customer satisfaction with products and services, demand of new products and
services, Details of changes in government regulation etc. (Primary sources of external
information are Vendors, Government Documents, Newspapers and Professional Journals)

Apart from internal and external sources of information there can be other sources of information
as under –

System Users – These are key source to find out the existing system activities and to determine
the user objectives and requirements.

Computer Programs – The internal database design and inputs and outputs of various available
programs about an organization is a good source of information.

Procedure Manuals – These manuals specify the user activities in a business process.

What Kinds Of information and From Where

The different information one can gather from various levels is shown below.

Information about the firm

Information about the organization’s policies, goals, objectives and structure explains the kind of
environment that promotes the introduction of computer based information systems. Company
policies are guidelines that determine the conduct of business. Policies are translated into rules
and procedures for achieving the goals. A statement of goals describes the management’s

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commitment to objectives and gives the direction for system development. Objectives are
milestones of accomplishments towards achieving goals. Information from employee manuals,
orientation pamphlets, annual reports and the like help an analyst to form opinions about the
goals of the organization.

Information about the user staff

Another kind of information is the knowledge about the people who run the present system –
their job functions and information requirements, the relationships of their jobs to the existing
system and the interpersonal network that holds the user group together. Information of this kind
highlights the organization chart and establishes a basis for determining the importance of the
existing system for the organization.

Information about workflow

Workflow focuses on what happens to data through various points in a system. This can be
shown by a data flow diagram or a system flowchart. A dataflow diagram represents the
information generated at each processing point in the system and direction it from source to
destination. In contrast a system flowchart describes the physical system. The information
available from such charts explains the procedures used for performing tasks about work
schedules.

Kinds Of Information Information Describing

Policies
Goals
The Organization
Objectives
Organization Structure

Authority relationships
Job functions Information Gathering
User Staff
Information requirements
Interpersonal relationships

Workflow
Methods & Procedures The Work Itself
Work Schedules

Categories Of Information

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Information Gathering Tools

There is variety of information gathering tools available. These are through reviewing previous
literatures, procedures and forms, through onsite observations, by personal interviews, by
distributing and collecting the questionnaires.
No two situations are ever the same. This means that the information seeker must decide on
information gathering tools and how it must be used.

Review Literature, Procedures and Forms

On Site Observations
Information Gathering Tools Data Organization

Interviews

Questionnaires

Information Gathering Methods

Although there are no standard rules for specifying their use, an important rule is that
information must be acquired accurately, methodically, under right conditions, and with
minimum interruption to the user personnel.

Review of Literature, Procedures and Forms

The increasing software packages suggest that the problem solutions are becoming standardised.
Therefore, as a first step, a search of literatures through professional references, procedures,
manuals, textbooks, company studies, government publications or consultant studies etc. may
prove invaluable. The primary drawback is search time.
Procedure manuals and forms describe the format and functions of present system.

Onsite Observations
It is the process of recognizing and noting people, objects and occurrences to obtain information.
The information seeker must be unbiased for the system being observed. The major objective of
onsite observation is to get as close as possible to the real system being studied. There are four
types of observation methods –

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Onsite Observation

Natural or Obtrusive
Contrived or Unobtrusive
Direct Structured
or Indirect
or Unstructured

Direct or Indirect Observation –

The direct observation takes place when the information seeker actually observes the subject
or the system at work. In an indirect observation, the analyst uses mechanical devices such as
cameras and videotapes to capture information.

Natural or Contrived Observation –

A natural observation occurs in a sitting such as the employee’s place of work. The observer
in a place like conference hall or library or laboratory sets up a contrived observation.

Obtrusive or Unobtrusive Observation –

An obtrusive takes place when the respondent knows that he/she is being observed. An
Unobtrusive observation takes place in a contrived way such as behind a one-way mirror.

Structured or Unstructured Observation –

In a structured observation, the observer looks for and records a specific action such as the
number of soup can a shopper picks up before choosing one. In unstructured method of
observation observer can observe whatever might be the pertinent at the time.

Interviews
The interview is a face to face interpersonal role situation in which a person called the
interviewer ask a person being interviewed questions designed to cover the problem area.
Interview is the oldest and most common used device for gathering information. It has certain
qualities that onsite observation method does not have. It is mainly used for –
 As an explanatory device to identify relations or verify information.
 To capture information as it exists.

Questionnaire
The questionnaire is a term used for almost any tool that has questions to which individuals
responds. It is usually associated with self-administered tools with items of the closed fixed
alternative type.
The questionnaire offers following advantages –
 It is economical and requires less skill to administer the interviews.
 It can be administered to large number of individuals simultaneously.

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Cost-Benefit Analysis in Information Systems Development

Since cost plays quite an important role in deciding the new system, it must be identified and
estimated properly. Costs vary by type and consist of various distinct elements. Benefits are also
of different type and can be grouped on the basis of advantages they provide to the management.
The benefits of a project include four types:

 Cost-savings benefits
 Cost-avoidance benefits
 Improved-service-level benefits
 Improved-information benefits

Cost-savings benefits lead to reduction in administrative and operational costs. A reduction in the
size of the clerical staff used in the support of an administrative activity is an example of a cost-
saving benefit.

Cost-avoidance benefits are those, which eliminate future administrating and operational costs.
No need to hire additional staff in future to handle an administrative activity is an example of a
cost-avoidance benefit.

Improved-service-level benefits are those where the performance of a system is improved by a

new computer-based method.

Improved-information-benefit is where computer based methods lead to better information for

decision-making. For example, a system that reports the most-improved fifty customers as
measured by an increase in sales is an improved-information. This information makes it easier to
provide better service to major customers.

Categories of Costs and Benefits

The costs associated with the system are expenses, outlays or losses arising from development
and using a system. But the benefits are the advantages received from installing and using this
system.

1. Tangible or Intangible Costs and Benefits

Tangibility refers to the ease with which costs or benefits can be measure. An outlay of cash for
any specific item or activity is referred to as a tangible cost. These costs are known and can be
estimated quite accurately.

Costs that are known to exist but their financial value cannot be exactly measured are referred to
as intangible costs. The estimate is only an approximation. It is difficult to fix exact intangible
costs. For example, employee moral problem because of installing new system is an intangible
cost. How much moral of an employee has been affected cannot be exactly measured in terms of
financial values.

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Benefits are often more difficult to specify exactly than costs. For example, suppliers can easily
quote the cost of purchasing a terminal but it is difficult for them to tell specific benefits or
financial advantages for using it in a system. Tangible benefits such as completing jobs in fewer
hours or producing error free reports are quantifiable. Intangible benefits such as more satisfied
customers or an improved corporate image because of using new system are not easily
quantified. Both tangible and intangible costs and benefits should be taken into consideration in
the evaluation process. If the project is evaluated on a purely intangible basis, benefits exceed
costs by a substantial margin. We call such projects cost effective. On the other hand, if
intangible costs and benefits are included, the total costs (tangible-intangible) exceed the benefits
making the project an undesirable investment. Hence it is desirable that systems projects should
not be evaluated on the basis of intangible benefits alone.

2. Direct or Indirect Costs and Benefits

Direct costs are those which are directly associated with a system. They are- applied directly to
the operator. For example, the purchase of DVD for Rs.400/- is a direct cost because we can
associate the floppy box with money spent. Direct benefits also can be specifically attributable to
a given project. For example, a new system that can process 30 per cent more transactions per
day is a direct benefit.
Indirect costs are not directly associated with a specific activity in the system. They are often
referred to as overhead expenses. For example, cost of space to install a system, maintenance of
computer centre, heat, light and air-conditioning are all tangible costs, but it is difficult to
calculate the proportion of each attributable to a specific activity such as a report. Indirect
benefits are realized as a by-product of another system. For example, a system that tracks sales-
calls on customers provides an indirect marketing benefit by giving additional information about
competition. In this case, competition information becomes an indirect benefit although its work
in terms of money cannot be exactly measured.

3. Fixed or Variable Costs and Benefits

Some costs and benefits remain constant, regardless of how a system is used. Fixed costs are
considered as sunk costs. Once encountered, they will not recur. For example, the purchase of an
equipment for a computer centre is called as fixed cost as it remains constant whether in
equipment is being used extensively or not. Similarly, the insurance, purchase of software etc. In
contrast, variable costs are incurred on a regular basis. They are generally proportional to world
volume and continue as long as the system is in operation. For example sample, the cost of
computer forms vary in proportion to the amount of processing or the length of the reports
desired.
Fixed benefits also remain constant by using a new system, if 20 percent of staff member are
reduced, we can call it a fixed benefit. The benefit of personnel saving may occur month.
Variable benefits, on the other hand, are realized on a regular basis. For example are reduced, we
can call it a fixed benefit. The benefit of personnel saving may occur month. Variable benefits,
on the other hand, are realized on a regular basis. For example the library information system
that saves two minutes in providing information about a particular book whether it is issued or
not, to the borrower compared with the manual system. The amount of time saved varies with the
information given to the number of borrowers.

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