Kingston College of London

Information for Decision Making

Unit 4

Lecture 1

By

Rahat Kazmi

September 2010
 Overview
• Why Do We need Information within an organization?

• How can We develop, Organize, Analyse and Communicate information

(including quantitative and financial information) for management?

• Why all organizations must manage information, just as all commercial

businesses must aim to make a profit?

• Does Information increases knowledge, reduces uncertainty and add

value?

• Why good decisions are virtually impossible without appropriate

information?

• Why does every organization must collect, communicate and process

information to survive in a rapidly changing, competitive environment?

• How can managers within the organization make effective decisions in

pursuit of the organisation’s objectives without relevant Information?
Prepared by: Rahat Kazmi
 Learning Outcomes
On completion of this unit, you will be able to:

• 1. Explain the need for quality information in

organizations;
• 2. Identify the relationship between information and
decision-making;
• 3. Use statistical tools available for presenting and
interpreting business information;
• 4. Demonstrate how financial information enables
managers to plan, control and make decision.

Prepared by: Rahat Kazmi

 Section 1
Information
Data
Decision
Making

Data are facts, events and transactions; information is

data processed in such a way as to be useful to the
recipient.
Prepared by: Rahat Kazmi
 Data, Information and Knowledge
• Data is the representation of facts as text, numbers, graphics,
images, sound or video
• Data is the raw material used to create information
• Facts are captured, stored, and expressed as data
• Information is data in context
• Without context, data is meaningless - we create meaningful
information by interpreting the context around data
• Knowledge is information in perspective, integrated into a
viewpoint based on the recognition and interpretation of
patterns, such as trends, formed with other information and
experience
• Knowledge is about understanding the significance of information
• Knowledge enables effective action
Prepared by: Rahat Kazmi
Data Management and Project Success
Data is fundamental to the effective and efficient operation of any
solution:

− Right data
− Right time
− Right tools and facilities

• Without data the solution has no purpose

• Data is too often overlooked in projects
• Project managers frequently do not appreciate the complexity of
data issues

Prepared by: Rahat Kazmi

Data and Information Management
• Data and information management is a business process consisting
of the planning and execution of policies, practices, and projects that
acquire, control, protect, deliver, and enhance the value of data and
information assets

Prepared by: Rahat Kazmi

 Data and Information Management

To manage and utilise information as a strategic asset

To implement processes, policies, infrastructure and solutions to govern,

protect, maintain and use information

To make relevant and correct information available in all business processes

and IT systems for the right people in the right context at the right time with
the appropriate security and with the right quality

To exploit information in business decisions, processes and

relations

Prepared by: Rahat Kazmi

 Data Management Goals

Primary Goals:

• To understand the information needs of the enterprise and all its

Stakeholders
• To capture, store, protect, and ensure the integrity of data assets
• To continually improve the quality of data and information,
including accuracy, integrity, integration, relevance and
usefulness of data
• To ensure privacy and confidentiality, and to prevent unauthorised
inappropriate use of data and information
• To maximise the effective use and value of data and information
assets

Prepared by: Rahat Kazmi

 Data Management Goals

Secondary Goals:

• To control the cost of data management

• To promote a wider and deeper understanding of
the value of data assets
• To manage information consistently across the
enterprise
• To align data management efforts and technology
with business needs
Prepared by: Rahat Kazmi
 Data Management Principles

• Data and information are valuable enterprise assets

• Manage data and information carefully, like any other
asset, by ensuring adequate quality, security, integrity,
protection, availability, understanding and effective
use
• Share responsibility for data management between
business data owners and IT data management
professionals
• Data management is a business function and a set of
related disciplines

Prepared by: Rahat Kazmi

 Data Management Issues

• Discovery - cannot find the right information

• Integration - cannot manipulate and combine
information
• Insight - cannot extract value and knowledge
from information
• Dissemination - cannot consume information
• Management – cannot manage and control
information volumes and growth

Prepared by: Rahat Kazmi

Data Management Problems – User View
• Managing Storage
Equipment
• Application Recoveries/
Backup Retention
• Vendor Management
• Power Management
• Regulatory Compliance
• Lack of Integrated Tools
• Dealing with Performance
Problems
• Data Mobility
• Archiving and Archive
Management
• Storage Provisioning
• Managing Complexity
• Managing Costs
• Backup Administration and
Management
• Proper Capacity Forecasting
and Storage Reporting
• Managing Storage Growth

Prepared by: Rahat Kazmi

 Data Quality

• Poor data quality costs real money

• Process efficiency is negatively impacted by
poor data quality
• Full potential benefits of new systems not be
realised because of poor data quality
• Decision making is negatively affected by poor
data quality

Prepared by: Rahat Kazmi

 Choices Decision Making
• Decisions are required to be taken in day to day life.
• No single task in our life can be done without decision making.
• For every assignment we undertake, there has to be a process
of making choices.
• Whenever we are faced with choices, there is an inevitable
need of selecting one particular course of action.
• Any task can be done in various ways, but doing it
simultaneously through all possible alternatives is virtually
impossible.
• This necessitates making a reasonable choice from all the
options available.

Prepared by: Rahat Kazmi

 Choices Decision Making
An example can be taken for a person who wants to go to Glasgow. He/she
Can look at following options:

• Use any of the local bus service available

• Go by train
• Travel by air

As you can see, the decision to be made in this situation is faced

with the availability of a set of combination of alternatives.

Prepared by: Rahat Kazmi

 Choices Decision Making
Every decision we take in daily life requires some sort of information about
the alternatives available. For instance, in the above example certain factors
need to be considered before taking a decision:

• How urgent it is to reach to Glasgow

• How much time is available to accommodate travelling, since
each mode of travelling will take different time to reach at the
same destination?
• Whether bookings are available for the desired day and time.
• Is there any possibility of cancellation of booking or flight or
bus service.

Prepared by: Rahat Kazmi

 Choices Decision Making
• Which bus service or airline or train service to chose from,
since various options available for travelling to Glasgow.
• Without relevant information, we can’t take the right decision.
• Similar is the case with business. Businesses are run by
organizations which are in-fact a group of people.
• Like individuals organizations have various alternatives on a
day to day basis in operations, Decisions are made by
individuals from the management.

Prepared by: Rahat Kazmi

 What is Information?
• Information is an essential business
commodity. Without information, staff at all
levels in an organization would be unable to
perform their duties. The organization would
not achieve its objectives and, hence, would
not survive.
• Information has no value in itself. It becomes
valuable when its existence enhances the
decision-making process.

Prepared by: Rahat Kazmi

 Information
• Information in all its forms – input,
processed, outputs – is a core
Applications
component of any IT system
• Applications exist to process data
supplied by users and other Information

applications
• Data breathes life into applications Process
IT
• Data is stored and managed by Systems

infrastructure – hardware and

software Infrastructure

• Data is a key organisation asset with

People
a substantial value
• Significant responsibilities are
imposed on organisations in
managing data
Prepared by: Rahat Kazmi
 Knowledge Information Action

Information Data, Information, Knowledge and Action Data

Prepared by: Rahat Kazmi
 When is Information Valuable?
• Relevant;
• Complete;
• Clear;
• Accurate;
• Timely;
• Up to date;
• Well presented;
• Measures favourably against the costs of
providing it

Prepared by: Rahat Kazmi

 Information is an Organisation Asset
• Tangible organisation assets are seen as having a value
and are managed and controlled using inventory and
asset management systems and procedures
• Data, because it is less tangible, is less widely perceived
as a real asset, assigned a real value and managed as if
it had a value
• High quality, accurate and available information is a
prerequisite to effective operation of any organisation

Prepared by: Rahat Kazmi

 Sources of Information
Internal Sources

• Historical records;
• Internal databases;
• Resources capabilities;
• Trends;
• Targets;
• Stock availability;
• Customer credit rating.

Prepared by: Rahat Kazmi

 Sources of Information
External Sources
• External databases;
• Internet;
• Published statistics;
• Government reports
economic and trade
reports;
• Published reports and
annual accounts of
competitors, suppliers and
business customers;
• Suppliers’ price lists and
brochures;
Prepared by: Rahat Kazmi
• Seminars and conferences;
• Newspapers and magazine
reports;
• Market research;
• Economic climate;
• Social trends;
• Competitor activity;
• Global market information.
• Marketing Brochure
• Friends or Family
 levels of Information
Information Flow Down Information Filters Up

Strategic

Tactical

Operational

Figure 1: Levels of Information

Prepared by: Rahat Kazmi
 The Strategic Level of Information
• The strategic level of information oversees the activities
of the entire organization
• It is concerned with long-term planning and policy
decisions.
• For this level information is highly summarized, regarding
company activities to date, trends, forecasts, and
awareness of competitor activity, economic climate,
social trends, and technological and legislative
developments.
• The source of information is mainly external, with more
emphasis on scope than detail.
Prepared by: Rahat Kazmi
 Example of Strategic Level Information

At strategic level, the marketing director would typically

require information on:

• Potential overseas markets

• Extent of competitor activity
• Suitability of products

Prepared by: Rahat Kazmi

 The Tactical Level of Information
• The tactical level of information coordinates and controls
the activities of a department or section
• It is concerned with the short-term planning of that
department or section.
• Information at this level concern factors such as budgets,
development of operational plans and staff
appointments.
• The source of information at this level is both internal
and external
• And it has a medium level of accuracy depending on the
circumstances.
Prepared by: Rahat Kazmi
 Example of Tactical Level Information

At tactical level, the sales manager would typically require

information on:

• Breakdown of sales by salesperson

• Breakdown of sales by region
• Breakdown of sales by product

Prepared by: Rahat Kazmi

 The Operational Level of Information
• The operational level of information is responsible for the
day-to-day running of a department or section
• Information at this level is mostly internal, historical and,
often, quantitative and detailed
• For Example: stock availability, staffing, prices, customer
credit ratings etc.

Prepared by: Rahat Kazmi

 Example of Operational Level Information

At operational level, the sales clerk would typically require

information on:

- Prices
- Stock availability
- Customer credit rating

Prepared by: Rahat Kazmi

 The Requirements of an Information System

What is Good Information?

• Relevant, and sufficiently accurate for its

purpose
• Complete, and from a reliable source
• Communicated, in time, to the right person
• Understandable, with the right level of detail

Prepared by: Rahat Kazmi

 Attributes of Quality Information
• It must enable managers to make
effective decisions
• It must be suitable and timely, for
taking effective control action
• It must be compatible with the
responsibilities of specific managers
• It must contain an appropriate level
of detail for the recipient
• It must relate to the current
situation
• It must have an acceptable level of
integrity
Prepared by: Rahat Kazmi
• It must be compatible with the
response time needs of systems
• It must be based on exceptions or
variances to accord to the principle
of ‘management by exception’, where
appropriate
• It must be produced at an optimum
cost
• It must be easily understandable by
the recipient
• It must not contain unnecessary
jargon or abbreviations
• It must be provided at a suitable
frequency.
Information System (IS) Should Ensure that the:

• Right information is in the

• Right place with the
• Right person at the
• Right time and in the
• Right format.

Prepared by: Rahat Kazmi

 Management Information System (MIS)?

• A management information system provides

managers, at all levels, with appropriate
information for planning, control and
decision-making.
• Information technology can enhance the
organisation’s management information
system by providing better, faster information
• This will result in improvements or changes in
management action.

Prepared by: Rahat Kazmi

 Role of MIS in Management Action

• Better and more accurate planning;

• Enhanced decision-making;
• Closer control of activities;
• Better coordination of activities;
• Improvements in quality.

Prepared by: Rahat Kazmi

An Overview of Management Information
Systems: Perspective

• A management information system (MIS)

provides managers with information that
supports effective decision making and
provides feedback on daily operations

• The use of MIS spans all levels of management

Prepared by: Rahat Kazmi

Sources of Managerial Information

Prepared by: Rahat Kazmi

Inputs to a Management Information System

• Internal data sources (TPSs and ERP systems

and related databases; data warehouses and
data marts; specific functional areas
throughout the firm)

• External data sources (Customers, suppliers,

competitors, and stockholders whose data is
not already captured by the TPS; the Internet;
extranets)

Prepared by: Rahat Kazmi

 Ways IT provides Information

• Internal databases
• Internet for internal communications
• Decision-support packages and spreadsheets
• Routine transaction processing
• External databases for research
• The Internet

Prepared by: Rahat Kazmi

Outputs of a Management Information System

• Scheduled report: produced periodically, or on a

schedule
• Key-indicator report: summary of the previous
day’s critical activities
• Demand report: developed to give certain
information at someone’s request
• Exception report: automatically produced when a
situation is unusual or requires management
action
• Drill-down reports: provide increasingly detailed
data about a situation
Prepared by: Rahat Kazmi
Characteristics of a Management Information System

• Fixed format, standard reports

• Hard-copy and soft-copy reports

• Uses internal data

• User-developed reports

• Users must request formal reports from IS

department

Prepared by: Rahat Kazmi

When decisions affect others – impossible
to please all
• Whatever decision • Different approaches
you make – some for different situations
people will be happy
and some will not • Better to make a
decision that is
• Build and maintain a informed and satisfies
trusting decision
making environment your conscience
– will keep the zone
of acceptance broad

Prepared by: Rahat Kazmi

 Decision Making in our Daily Lives
The work of managers, of scientists, of engineers, of lawyers--the work that steers the
course of society and its economic and governmental organizations--is largely work of
making decisions and solving problems. It is work of choosing issues that require
attention, setting goals, finding or designing suitable courses of action, and evaluating
and choosing among alternative actions.

The first three of these activities--fixing agendas, setting

goals, and designing actions--are usually called problem
solving; the last, evaluating and choosing, is usually called
decision making.
Herbert Simon, Nobel Laureate 1988

We all face decision making situations Life of

leaders – decisions, decisions, decisions, …
Prepared by: Rahat Kazmi
 What is Decision Making?
• Decision making is the developing concepts
leading to the selection of a course of
action among variations. Every decision
making process produces a final choice
• It can be an action or an opinion. It begins
when we need to do something but we do
not know what
• e.g. Decision to raise a Purchase Order

Prepared by: Rahat Kazmi

 Decision making in business and
management
In general, business and management systems should be set up to allow decision
making at the lowest possible level.
Several decision making models or practices for business include:
– SWOT Analysis - Evaluation by the decision making individual or
organization of Strengths, Weaknesses, Opportunities and Threats
with respect to desired end state or objective.
– Buyer decision processes - transaction before, during, and after a
purchase
• Corporate finance:
• The investment decision
• The financing decision
• The dividend decision
• working capital management decisions
– Cost-benefit analysis - process of weighing the total
expected costs vs. the total expected benefits
Prepared by: Rahat Kazmi
 Types of Decisions

• Unstructured/ Nonprogrammed
• Structured/ Programmed
• Semi-structured

Prepared by: Rahat Kazmi

Information Requirements of Key Decision-Making Groups in a Firm

Prepared by: Rahat Kazmi

Prepared by: Rahat Kazmi
Which Mobile Phone should I buy?
What are the things
you consider before
making a decision?

Prepared by: Rahat Kazmi

What should I wear for class (or work) today?

What are the things

you consider before
making a decision?

Prepared by: Rahat Kazmi

Any Questions?

Prepared by: Rahat Kazmi