BUS 815:
MANAGEMENT
INFORMATION
SYSTEM
Prof Mustapha
Momoh
CONCEPTS OF INFORMATION
The concept information technology is all about nature, man, information and
their interrelationships and/or inter-dependencies. Three resources
fundamental to human existence and survival are Materials, Energy and
Information. All these are necessary to provide the physical things which
humans need. For example, Materials include; clothing, buildings, cosmetics,
items of ostentation, weapons, furniture, medicines, etc, Energy include; food,
water, air, solar, fuel or carbons, electricity, radioactive substances, labour, etc;
and Information include; ideas, events, experience, knowledge,
communication, etc.
In addition to supporting physical production, however, information
is also the substance of all human intellectual activity; it is basic to education,
government, agriculture, the conduct of business, and above all the
maintenance and expansion of our store of knowledge.
DATA VERSUS INFORMATION
Data’ and ‘Information’ are often used interchangeably in layman point
of view as meaning the same thing. However, for managers and information
specialists these two terms have distinct meanings; as explained below:
Data
The word data is the plural of datum, which means basic facts, figures,
ideas, events, transactions, unevaluated messages, etc which have been
recorded. It is a raw material (input) from which information is produced.
Data are obtained by reading, direct observation, counting, measuring,
weighing, etc, which are then recorded. Frequently they are called raw or
basic data and are often records of the day-to-day transactions of the
organisation. The input data used to produce information originate from
internal and external sources (e.g. numbers of hour worked pay rate, quality
and type of materials consumed, names of persons; places or things as well as
occurring events).
INFORMATION CONTINUES….
Information
Information on the other hand, is the processed data that
facilitates meaningful decision making. This includes business
information, personnel information, management information, annual
report, payroll and invoice, etc.
The concept of information in an organisational context is more complex than
mere expression of words. Information is data that have been interpreted,
presented and understood by those who will use it for decision making.
FUNCTIONS PERFORMED BY INFORMATION
Information performs a number of managerial functions which includes:
Assisting management in improving knowledge necessary for managerial
decision.
reduction of uncertainty; generally uncertainty exists where there is less
than perfect knowledge of every situation. It is often rare to have perfect
knowledge about things in planning and decision making; however,
relevant information helps reduce the unknown or uncertainty therein.
monitoring and control by providing information about performance and
the extent of deviations from standard or planned performances.
Concepts of Information continues
Simplification of complex phenomenon: by reducing uncertainty, enhancing
understanding and knowledge, it helps simplifies problems and complex
situations to a more manageable level.
acting as a memory supplement to personal memory by having historical facts
about performance, transactions, results of past actions and decisions available
for drawing inferences.
acting as a means of communication; since managers need to know about
developments, technological advancement, plans, forecasts, impending changes,
etc which only information can provide.
TYPES OF INFORMATION
Information varies by nature, source and other characteristics; therefore, it
can be classified in numerous ways as presented below:
By source: internal or external and primary or secondary
By nature: quantitative, qualitative, formal and informal
By level: strategic, tactical, operational
By time frame: periodic, historical, present, future
By usage: management, business, student, military, marketing, etc.
By form: written, oral, audio, visual
By occurrence: planned intervals, occasional, on demand
By size: detailed or summarised
CLASSIFICATION OF INFORMATION BY DECISION LEVEL
As presented above, information can be classified in terms of specific area of discipline, functionality and levels of
managerial decision making. Here, we shall briefly look at various types of information based on the levels of
managerial decision making, such as:
i). Strategic Information: Top executives plan and make policy decisions of strategic importance. Subsequently, middle
level managers use these strategic decisions. Managers at top levels however, require information to support long range
planning and policy decisions.
ii).Tactical Information: The middle level management devises the tactics to allocate resources and establish controls to
implement the top level plans. A manager at middle tactical levels needs information to help him make short or medium
range decision on strategic operations.
iii). Operational Information: The lower level operating managers make the necessary day-to-day scheduling and
control decisions to accomplish specific task. Managers at lower operating levels need information to help them make vital
day-to-day operating decisions
Characteristics of good information
Good information is that which creates value by possessing most or all of the following
attributes as presented below:
relevant for its purpose
sufficiently accurate for its purpose
complete enough for the problem
communicated in time for its purpose
from a source in which the user has confidence
communicated to the right person
that which contains the right level of details
THE VALUE OF INFORMATION
Information has no value in itself. Its value is derived from the value of the change in decision behaviour caused by
the information relative to the cost of producing the information. There is tendency to assume that information; past and
present, accurate or relevant, etc are all better information. It is better information if and only if it improves the resultant
decisions, otherwise it has no value.
It’s disheartened having data captured, prepared and processed by whatever means; incur costs and at the end do not
produce value. It is only when data are communicated and understood by the end users, who in turn transformed it into
decision variable that value arose. A typical relationship between cost of producing information and value derivable from
resultant information is depicted in Fig. 1.1 below
INFORMATION SYSTEM
Information system is the mechanism to ensure that required information is available to you in the form you want
and when you need it. Information system exists in virtually all types of discipline.
CHARACTERISTICS OF GOOD INFORMATION
Good information possesses quite a number of attributes. These attributes include the following:
i) Accuracy: It is defined as the ratio of correct information to the total amount of information produced over a period of
time (e.g. If 1,000 items of information are produced and 950 of these items give a correct report of the actual
situation, then the level of accuracy is 0.95.
ii) Timeliness: It is desirable to have promptly processed information to compliment accuracy. The response time should
be short enough so that the information does not lose its freshness and value. Again, the response time should be long
enough to reduce volume, costs and reveal important trends that signal the need for action.
iii) Completeness: Incomplete information could lead to ineffective decision making. Therefore a good management
decision requires not only accurate and timely information but information in its complete sense is very important.
iv) Conciseness: concise information that summa-rises (i.e. using tables, graphs or charts) the relevant data that points out
areas of exception to normal or planned activities is required.
v) Relevancy: this refers to how well the information relates to user’s needs. In other words, good information must be
relevant to the matters at hand.
vi) Clarity: this refers to the degree to which information is free from ambiguity.
vii) Flexibility: this refers to the adaptability for use by more than one user.
SOURCES OF DATA/INFORMATION
There are two basic sources of data/information commonly in use; they are; internal and external
sources. Data/Information could be sourced from within a system or an organisation and/or from the environment external
to a system or an organisation. They are as presented below:
a) Internal Sources: consist of individuals and departments located within an organisation. These sources may furnish
facts on a regular and planned basis. Internal source can be divided into two; namely: ‘Formal’ and ‘Informal’.
Formal: Is a systematic or planned data gathering activities. Of course, once the need for data is
established and the value of supplying it is deemed to worth the cost, then formal approach is used.
Informal: Data can be received on an informal basis through casual contacts and discussions.
b) External Sources: are the generators and distributors of data located outside the organisation. These include customers,
competitors, technologies, business publicat-ions, industrial associations and government agencies. Such sources provide
the organisation with environmental data that may give the managers important clues or ideas on what is likely to
happen.
COMPONENTS OF A SYSTEM
A system is a group of diverse but interacting elements that are integrated together, working
together to achieve an overall objectives or set of goals. Every system is made up of
the following components that function dependently to achieve the function of the whole.
They are; Input, Transformation processor, Output and System feedback as presented fig.
2.1 below.
Input: Every system has an input. That’s what it takes from
its environment to enable it survive as a system (i.e.
materials).
Transformation Processor: Again, every system has system
of conversion of input into output
Output: The product of every system is referred to as the
output of a system.
System Feedback: Feedback is a control mechanism or the
activities of a system that is reintegrated into the system to
bring about the desired changes.
TYPES OF A SYSTEM
A system can be classified based on its relationship with its environment. Below are common types of system in this
category:
Open System: An Open system is a system that is affected by its environment and it has concerns for its environment.
It is a system that relates with its environment, and takes input from, and gives output to its environment. E.g.: the
computer system, biological system (man), social system (i.e. university), etc.
Closed System: A closed system operates as a self-contained unit. It has no concerns for its environment whatsoever. A
military is a Semi-Closed System that takes its input from the environment (Human resources) and does not return
them until they are used up. Solar system is another example of closed system. It is however typical to have a
completely closed system in practice.
ORGANISATION AS AN OPEN SYSTEM
Every organisation generally is not closed; it must interact with its environment to survive and
develop. In relating with the environment, an organisation is open to a variety of external
influences. Scarcity of raw materials for example, may spur developmental activity that drastically
SUB-SYSTEM
When we look more closely at the environment of a system, we see that it consists of
systems interacting with their environments. For example, the environment of a person is
full of other persons, animate and inanimate. If for certain reasons we now consider a
collection of two or more of such systems which interact with each other; that collection
could again be seen as a system (larger system). For example, a group of interacting
people may form a family, a company, and/or a community. The mutual interactions of the
component systems in a way "glue" these components together into a whole. If these parts
did not interact, the whole would not be more than the sum of its components. A concept
refers to as synergy. But because they interact, something more is added. With respect to
the whole the parts are seen as subsystems. With respect to the parts, the whole is seen as
a super system.
INFORMATION SYSTEMS RELEVANT TO MANAGEMENT
When we look more closely at the environment of a system, we see that it consists of
systems interacting with their environments. For example, the environment of a person is
full of other persons, animate and inanimate. If for certain reasons we now consider a
collection of two or more of such systems which interact with each other; that collection
could again be seen as a system (larger system). For example, a group of interacting
people may form a family, a company, and/or a community. The mutual interactions of the
component systems in a way "glue" these components together into a whole. If these parts
did not interact, the whole would not be more than the sum of its components. A concept
refers to as synergy. But because they interact, something more is added. With respect to
the whole the parts are seen as subsystems. With respect to the parts, the whole is seen as
a super system.
INFORMATION SYSTEMS RELEVANT TO MANAGEMENT
Transaction Processing Systems (TPS): This is also referred to as ‘Operational Information System (OIS)’ this is a
computer-based information subsystem that executes and records the routine day-to-day transactions required to conduct
an organisation’s business. The type of information required here is information of operational importance.
Office Automation Systems (OAS): as discussed earlier, it merely refers to a computer-based information subsystem
aimed at facilitating communication and increasing the productivity of managers and office workers through document
and message processing
Management Information Systems (MIS): is a computer-based system that produces routine reports with online access
to current and historical information needed by managers; mostly at the middle level management. This particular
information system is important in planning, decision making, and controlling activities. It integrates various
Operational Informational Systems (OIS) otherwise known as ‘Transaction Processing Systems’ from each business
units
Decision support systems (DSS): this is a computer-based information system that supports the process of managerial
decision making in situations that are not well structured. It is not an end in itself but a means to an end. In other words,
DSS only aid decision making, it does not make decision on its own.
Executive Information System (EIS): is a computer-based information system that supports decision-making and
effective functioning of an organisation. It is an Expert System applicable in the field of management that can take
decision with little or no human interventions.
DATA PROCESSING SYSTEM
This refers to the organisation of data processing facilities in a particular pattern as described below:
Centralised System: this type of system is an arrangement whereby a host computers with storage facility serve two or
more persons (users) at the same time, are linked together. The users are linked up to the system through remote
terminals.
Decentralised System: this is a situation where each department in an organisation has its own computer and does not share
any thing in common as far as processing and storage using the computer is concerned.
Distributed Processing: this is the type of processing technique that involves the interconnection (linking together) of
two or more autonomous computers in order to achieve communication capability.
Data Processing Techniques
A number of data processing techniques widely in use are discussed below:
Batch Processing: This is a processing technique that requires the collection of data of homogeneous type.
Real-Time Processing: This is a processing technique where by the data is processed as they occur and the results are quickly
available to influence the events currently taking place.
This type of system is applicable in airline seat reservation systems, hotel-booking systems etc.
Time-Sharing Processing: This gives multiple accesses to the computer system and every user is constrained by a time standard
to submit and get their task done.
INFORMATION AND MANAGEMENT
In most large organisations, management rarely observe operations directly, rather they
make decisions, prepare plans and control activities by using the available information obtained
either from formal sources; i.e. the organisation’s MIS, or from informal means such as; face-to-
face conversations, telephone calls, emails and through other social contacts.
Such information may equally come from external sources such as; customers, suppliers,
competitors, government and regulatory authority, foreign organisation, and so on.
There is nothing more deceitful than an attempt to make decisive decision out of incomplete
and inaccurate information. Notwithstanding, managers need good information to assist them in
taking decisive decision; to plan, to organise, to coordinate, to control and to lead.
Although all managers need information, but they do not all need the same type of
information. The type of information required is dependent on many factors including the level of
management, the task at hand, confidentially, urgency, etc.
LEVELS OF MANAGEMENT AND FUNCTIONS AND INFORMATION REQUIREMENTS
The value of information depends largely on the level and functions of management. Therefore it is
imperative for the information providers to know what type of task and/or functions management have to
perform so that they are able to produce relevant and effective information.
To support this view Lucey (2005) argue that the tasks and functions management have to perform vary
greatly according to the type and size of organisation and the way responsibilities are organised. The tasks
and functions of management can be grouped into seven major areas. These are: planning, decision making,
organising, coordinating, leadership, motivation and control. Of course, the emphasis given to each of these
areas varies from manager to manager depending on their economic and political will. It may also depend on
the managerial level in the organisation.
Basically, three levels of management are common in all organisations; the top or strategic
management, middle or tactical management and lower or operational management. Consequent upon this,
there are clear differences in information requirements between manager at the operational, tactical and
manager at the strategic level. For instance, at the highest level, structured, formal MIS may actually be
counterproductive, while informal MIS and external influences become increasingly important.
STUDY QUESTIONS
i. Draw distinctions between Data and Information
ii. Explicate the relationship between ‘information value’ and the cost of producing it.
iii. Discuss the five (5)two (2) functions of Management Information.
iv. State the levels management and their information requirements
v. How does Data processing system relates to Information system?
vi. Is Manager and Managing Director use the same information for managerial decision?
vii. What do you understand by term information System?
viii. Why do considered Information System is an open system?
ix. Define information System
x. What is MIS?
xi. Briefly discuss the information relevant to managers of a named organization
xii. Briefly discuss the data processing techniques and data procession system known to you
xiii. What is the differences between a system and a sub-system?
xiv. What is the course code and title
xv. Outline the course syllabus and mark the topic you find difficult to comprehend
THANK
YOU !
