Management Information System (UNIT-2)

Information, Management and Decision Making:

Attributes of Information:
Information is a vital resource for the success of any organization. Future of an organization
lies in using and disseminating information wisely. Good quality information placed in right
context in right time tells us about opportunities and problems well in advance.

Good quality information − Quality is a value that would vary according to the users and uses
of the information.

According to Wang and Strong, following are the dimensions or attributes of information −

• Intrinsic − Accuracy, Objectivity, Believability, Reputation

• Contextual − Relevancy, Value-Added, Timeliness, Completeness, Amount of

information

• Representational − Interpretability, Format, Coherence, Compatibility

• Accessibility − Accessibility, Access security

Various authors propose various lists of metrics for assessing the quality of information. Let us
generate a list of the most essential characteristic features for information quality −

• Reliability − It should be verifiable and dependable.

• Timely − It must be current and it must reach the users well in time, so that important
decisions can be made in time.

• Relevant − It should be current and valid information and it should reduce

uncertainties.

• Accurate − It should be free of errors and mistakes, true, and not deceptive.

• Sufficient − It should be adequate in quantity, so that decisions can be made on its

basis.

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• Unambiguous − It should be expressed in clear terms. In other words, in should be

comprehensive.

• Complete − It should meet all the needs in the current context.

• Unbiased − It should be impartial, free from any bias. In other words, it should have
integrity.

• Explicit − It should not need any further explanation.

• Comparable − It should be of uniform collection, analysis, content, and format.

• Reproducible − It could be used by documented methods on the same data set to

achieve a consistent result.

Relevance of Information in Decision-Making:

Information plays a vital role in decision-making. Even to take very simple decisions, we
need information. To understand the role played by information in decision-making, we have
to understand how decisions are taken. Decision-making is basically a process that includes the
following stages:

Information is thus, very important to take decisions.

Imagine a simple decision like the one a driver (say) makes when he puts on the brakes to stop
a speeding vehicle when he sees a child crossing the road (in middle of the road). The driver
decides on braking based on a lot of information processing that happens in his brain. At every
stage of the decision-making he uses information that he captures visually. All decisions are
like this.

First we get information about a problem, format it into a structure and then factor in the
information about the context in which the problem has occurred. Like in the above case
instead of the child being at the middle of the road and crossing it, the driver would have seen
the child about to cross over with a few steps only he would probably not have braked to stop
but would have slowed down, as he would have calculated that by the time the vehicle
reaches the crossing stage, the child would already have passed. So if the problem was

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structured as ‘how to not hit the child crossing the road?’, and if the child was at the middle of
the road, the driver would have braked but had the child been at (say) at ninety per cent
completion level of crossing the road, the driver would have only slowed down and not braked
to stop. Therefore, we see that the context has a major role in the decision-making and
information is required both about the problem and about the context in which the problem
occurred. The next stage for the decision maker would be to generate alternatives. In the
driver’s case such possible alternatives would be

Stages of Decision-making Relevance of Information

Identification and structuring of One needs information to identify a problem and put it in
a structured manner. Without information about a
problem/opportunity
problem or opportunity, the decision-making process does
not even start.

Putting the problem/ Without information about the context in which the
problem has occurred, one cannot take any decision on it.
opportunity in context
In a way, the .information about the context defines the
problem.

Generation of alternatives Information is a key ingredient in the generation of

alternatives for decision-making. One has to have
information about possible solutions to generate
alternatives.

Choice of best alternative Based on the information about the suitability of the
alternatives, a choice is made to select the best
alternative.

To stop by braking

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To slow down

To take a sharp turn towards left or right to avoid the child

Press the horn so that the child crosses the road fast

To drive the vehicle on to the footpath and out of the road to avoid collision, etc.

So the decision-maker generates these possible solutions to the problem at hand based on
information about such possible solutions. Each of the alternatives represents a possible
solution, which one can generate if one has information about them. In the case of the driver,
obviously, he needs knowledge and information to generate these alternatives, i.e., to stop by
breaking the driver would need to know that braking stops the vehicle. If he is unaware of this
crucial information he would not have been able to generate this alternative. So information is
vital for generation of alternatives. Now for the choice part also, the decision maker needs to
have information about the suitability of each alternative to decide, which the ‘best’ is. In our
example, the driver calculates the ‘payoff’ for each alternative based on his calculation of the
outcome that again is based on information. He selects the ‘best’ option that solves the
problem. Thus, we can see that information is the key to the decision making process, without
information and the right kind of information decision-making is not possible. Information
plays a crucial role in every stage of the decision-making process.

Decision-making is the most important task of managers in an organization. Therefore, to

enable managers to take good quality decisions, it is very important to provide them with the
right kind of information. Information management in organizations therefore assumes a
special significance. In most organizations, business or otherwise, a systematic systems based
method is used for information management. Systems based information management works
best under a computerized environment and such computer based information management
system is normally called ‘Management Information Systems (MIS)’, which provides the
service of information supply to the managers enabling them to take informed decisions. It
may be worthwhile to mention here that MIS does not necessitates the use of computer based
technology, but the use of computers and information technology makes MIS suitable for

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business organizations in a competitive environment as it helps to provide timely and accurate

information. MIS done manually, without the help of computers is neither timely nor accurate.

We receive and gather information from a huge range of sources. Think about how you find
out about television programs, sports scores and the activities of your families and friends.
How do you know when you have to stop your car at an intersection or when a storm is
coming?

Types of Information:

In business, there are countless types of information including:

• Customer and employee information

• emails, mail and faxes
• Charts and graphs
• Monthly financial reports
• Signs directing customers to a particular location
• Procedures
• Pictures and diagrams
• Industry specific
• Demographic information about customer preferences and trends

Manager Information:

There are three basic types of information that managers need:

Strategic Information:

This information can help senior managers make long-range 'big picture' decisions. For
example:

• Will we open a new branch?

• Will we offer a new line of products?

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• Will we change the structure of our operations?

Tactical Information:

This information can help middle managers make decisions that may include:

• Will we use a new marketing tool?

• Do we need to set different productivity goals?
• Will we change working hours to be more flexible?

Operational Information:

This information is used by Team Leaders and teams to make decisions including:

• Do we put more people on the evening shift?

• What can we do to improve performance on the floor?
• Should we restructure our system of monitoring calls?

Models of Decision Making:

Decision Making:

Decision making is the act of choosing one alternative from a set of alternatives. Firstly, we
have to decide that a decision has to be made and then secondly identify a set of feasible
alternatives before we select one.

Decision Making Process:

It includes:

• Recognizing and defining the nature of a decision situation

• Identifying alternatives
• Choosing the best alternative and
• Putting it into practice

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The Classical Model of Decision Making:

• When faced with a decision situation, managers should obtain complete and perfect
information
• Eliminate uncertainty
• Evaluate everything rationally and logically
• End up with a decision that best serves the interests of the organization.

The Administrative Model of Decision Making:

• When faced with a decision situation managers actually use incomplete and imperfect
information
• Managers are constrained by bounded rationality
• Tend to satisfy and end up with a decision that may or may not serve the interests of
the organization.

The Herbert Simon’s Model of Decision Making:

The decision making process consists of following phases:

1. Intelligence Phase: thinking of the problem as it comes

• Social environment
• Competitive environment
• Organizational environment

2. Design Phase: this consists inventing, developing and analyzing the likely situations

• Understanding the problem

• Generating the solution
• Testing the feasibility of the solution

3. Choice Phase: Selecting the specific alternative or solution

4. Implementation: Put decision into effect; allocate resources ; control

Management Support Systems (MSS): MSS enables senior management to: Access
common, shared sources of internal and external information that have been summarized
in easy-to-access, graphical displays.

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• function as an integrated approach to sharing information in an easy-to-use, highly

visual, and personalized way
• system helps promote a shared view of business activities due to integration of tools
and distributed data/information
• managers can get up-to-date information on industry news, competitor/market trends
and internal operations

Most successful MSS are developed as:

One aspect of a distributed, enterprise information system that enables flexible and integrated
information sharing and communication both inside organization and with external suppliers,
customers and other business partners.

Decision Support Systems:

• Systems that support rather than replace "managers" in their decision-making

activities
• gives decision maker access to data and models, but the intelligence, intuition, and
judgment of the decision maker are integral parts of the system
• DSS provide decision support - don't automatically make the decision. They help with
the decision.
• Primarily support planning function

Types of decisions:

• Organizational problems differ in terms of how structured the problems are

• the extent to which a solution procedure can be stated
• structured - routine, repetitive
• unstructured - novel, non-routine
• semi-structured - somewhere in between

DSS:

• DSS - computer system at management level that combines data, analytical models,
and user-friendly software to support semi-structured and unstructured decision
making
• give uses capability to analyze data - provide software tools
• a DSS is focused on a specific decision

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Definition of DSS:

Computer based systems that help decision makers to confront unstructured and semi-
structured problems through direct interaction with data and analysis models.

Group Decision Support System (GDSS):

A group decision support system (GDSS) is an interactive computer-based system that

facilitates a number of decision-makers (working together in a group) in finding solutions to
problems that are unstructured in nature. They are designed in such a way that they take input
from multiple users interacting simultaneously with the systems to arrive at a decision as a
group.

The tools and techniques provided by the group decision support system improve the quality
and effectiveness of the group meetings. Groupware and web-based tools for electronic
meetings and videoconferencing also support some of the group decision making processes,
but their main function is to make communication possible between the decision-makers.

In a group decision support system (GDSS) electronic meeting, each participant is provided with
a computer. The computers are connected to each other, to the facilitator’s computer and to
the file server. A projection screen is available at the front of the room. The facilitator and the
participants can both project digital text and images onto this screen.

A group decision support system (GDSS) meeting comprises different phases, such as idea
generation, discussion, voting, vote counting and so on. The facilitator manages and
controls the execution of these phases. The use of various software tools in the meeting is also
controlled by the facilitator.

Components of Group Decision Support System (GDSS):

A group decision support system (GDSS) is composed of 3 main components, namely hardware,
software tools, and people.

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• Hardware: It includes electronic hardware like the computer, equipment used for
networking, electronic display boards and audiovisual equipment. It also includes the
conference facility, including the physical set up – the room, the tables, and the chairs –
laid out in such a manner that they can support group discussion and teamwork.
• Software Tools: It includes various tools and techniques, such as electronic
questionnaires, electronic brainstorming tools, idea organizers, tools for setting priority,
policy formation tool, etc. The use of these software tools in a group meeting helps the
group decision-makers to plan, organize ideas, gather information, establish priorities,
take decisions and document the meeting proceedings. As a result, meetings become
more productive.
• People: It compromises the members participating in the meeting, a trained facilitator
who helps with the proceedings of the meeting, and an expert staff to support the
hardware and software. The GDSS components together provide a favorable
environment for carrying out group meetings.

Features of Group Decision Support System (GDSS):

• Ease of Use: It consists of an interactive interface that makes working with GDSS simple
and easy.
• Better Decision Making: It provides the conference room setting and various software
tools that facilitate users at different locations to make decisions as a group resulting in
better decisions.
• Emphasis on Semi-structured and Unstructured Decisions: It provides important
information that assists middle and higher-level management in making semi-structured
and unstructured decisions.
• Specific and General Support: The facilitator controls the different phases of the group
decision support system meeting (idea generation, discussion, voting and vote counting,
etc.) what is displayed on the central screen and the type of ranking and voting that
takes place, etc. In addition, the facilitator also provides general support to the group
and helps them to use the system.

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• Supports all Phases of the Decision Making: It can support all the four phases of
decision making, viz intelligence, design, choice, and implementation.
• Supports Positive Group Behavior: In a group meeting, as participants can share their
ideas more openly without the fear of being criticized, they display more positive group
behavior towards the subject matter of the meeting.
Group Decision Support System (GDSS) Software Tools:

Group decision support system software tools help the decision-makers in organizing their
ideas, gathering required information and setting and ranking priorities. Some of these tools
are as follows:

• Electronic Questionnaire: The information generated using the questionnaires helps the
organizers of the meeting to identify the issues that need immediate attention, thereby
enabling the organizers to create a meeting plan in advance.
• Electronic Brainstorming Tools: It allows the participants to simultaneously contribute
their ideas on the subject matter of the meeting. As the identity of each participant
remains secret, individuals participate in the meeting without the fear of criticism.
• Idea Organizer: It helps in bringing together, evaluating and categorizing the ideas that
are produced during the brainstorming activity.
• Tools for Setting Priority: It includes a collection of techniques, such as simple voting,
ranking in order and some weighted techniques that are used for voting and setting
priorities in a group meeting.
• Policy Formation Tool: It provides the necessary support for converting the wordings of
policy statements into an agreement.

Executive Information System (EIS):

An Executive Information System (EIS) is a kind of decision support system (DSS) used in
organizations to help executives in decision making. It does so by providing easy access to
important data needed in an organization to achieve strategic goals. An EIS usually has
graphical displays on a user-friendly interface.

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Executive information systems can be used for monitoring company performance in many
different types of organizations as well as for identifying opportunities and problems.
Early executive information systems were developed on mainframe computers as computer-
based programs to provide the description, sales performance and/or market research data for
senior executives of a company. Executives, however, were not all literate or confident about
the computers. Also, EIS data endorsed only executive-level decisions that did not necessarily
support the entire company or enterprise.
Current EIS data is available on local area networks (LANs) throughout the company or
enterprise, facilitated by personal computers and workstations. Employees can access company
data to help make decisions in their workplaces, departments, divisions, etc. This enables
employees to provide relevant information and ideas above and below the level of their
company.
Executive support systems are intended to be used directly by senior managers to support
unscheduled strategic management decisions. Often such information is external, unstructured
and even uncertain. Often, the exact scope and context of such information are not known in
advance.
This information is based on data,
• Business intelligence
• Financial intelligence
• Data with technology support to analyze
Executive Information System-Key Characteristics:
The below mentioned figure describes about key characteristics of EIS,

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• Detailed data – EIS provides absolute data from its existing database.
• Integrate external and internal data – EIS integrates external and internal data. The
external data collected from various sources.
• Presenting information – EIS represents available data in graphical form which helps to
analyze it easily.
• Trend analysis – EIS helps executives of the organizations to data prediction based on
trend data.
• Easy to use – It is a very simplest system to use.
Advantages of EIS:
• Trend Analysis
• Improvement of corporate performance in the marketplace
• Development of managerial leadership skills
• Improves decision-making
• Simple to use by senior executives
• Better reporting method
• Improved office efficiency
Disadvantage of EIS:
• Due to technical functions, not too easy to use by everyone
• Executives may encounter overload of information
• Difficult to manage database due to the large size of data
• Excessive costs for small business organizations

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