Management information systems: formula sheet

Key formulas

Data to information

Data + processing and context = Information

Information must be meaningful and useful to the user.

Information to knowledge

Information + experience, understanding and judgement = Knowledge

Knowledge is held by people and used to interpret and act.

Qualities of good information (ACCURATE)

Accurate, Complete, Cost-beneficial, User-targeted, Relevant, Authoritative, Timely, Easy to use

Use it as a checklist. Apply only the qualities that matter in the scenario.

Cost-benefit rule

Value of information ≥ Cost of producing it

If cost exceeds value, the information should not be produced.

Data to information

Data + processing + context = information

Raw facts only become information when they are processed and meaningful to a user.

MIS stages

Input → Processing → Output (with feedback)

Use this to structure any answer on how an MIS works.

Strategic information

External, summarised, long-term, forward-looking, uncertain

Used by senior management for direction and objectives.

Tactical information

Internal and external, medium-term, summarised from operations

Used by middle management for control, such as variance reports.

Operational information

Internal, detailed, short-term, frequent, accurate

Used by supervisors and staff for day-to-day tasks.

Qualities of good information

ACCURATE: Accurate, Complete, Cost-beneficial, User-targeted, Relevant, Authoritative, Timely, Easy to use

Cost-beneficial means the value of the information must exceed its cost.

TPS

Operational level | structured, routine | detailed internal data

Records transactions. Feeds all other systems.

DSS

Tactical level | semi-structured | models, what-if analysis

Supports the decision. The manager still decides.

EIS

Strategic level | unstructured | summarised, internal and external data, drill-down

Dashboard style. Focus on key indicators and trends.

Expert system

Knowledge base + rules + inference engine + user interface

Imitates an expert in a narrow, rule-based area.

The 3 Vs of big data

Volume + Velocity + Variety

Volume is amount, velocity is speed, variety is different forms. Veracity and value are common extra Vs.

Four types of analytics

Descriptive (what happened) → Diagnostic (why) → Predictive (what will happen) → Prescriptive (what to do)

Each step usually needs more sophistication and gives more decision value.

Risk-to-control matching

Threat → Control type → Specific control

Name the threat first, then say whether the control is physical, logical or procedural, then give the specific measure.

Security aims (CIA)

Confidentiality + Integrity + Availability

Confidentiality: only authorised people see data. Integrity: data is accurate and unaltered. Availability: data is accessible when needed.

Common data protection principles

Lawful use, stated purpose, minimum necessary, accurate, limited retention, secure

Use as a checklist for governance. Name the exact law only if the question gives it.

Control cost test

Cost of control ≤ expected loss avoided

A rule of thumb for judging controls. Include non-financial losses such as reputation.

Quick revision

• Data is raw facts; information is data processed to be meaningful; knowledge is information understood and applied by people.
• Good information is relevant, accurate, complete, timely, understandable and worth its cost.
• Strategic information is external and long term; tactical is medium term; operational is detailed and short term.
• Match the system to the user: transaction processing for routine records, management information for control, decision support for non-routine choices, executive information for senior managers.
• Big data is often described by volume, velocity and variety, and sometimes veracity and value.
• Data analytics looks for patterns in data; it supports decisions but does not replace judgement.
• Cloud computing gives access to computing resources over the internet, usually paid by use.
• ERP integrates data from many functions into one shared system and database.
• Security covers confidentiality, integrity and availability of data.
• Data governance sets who owns data, who can use it and how quality is kept.
• Ethical issues include privacy, consent, bias in analysis and misuse of personal data.
• In scenario answers, always tie the point to the business described.

Common mistakes

• Treating data and information as the same thing. Fix: Always state that information is data that has been processed and is meaningful to a user. Show the processing step.
• Describing knowledge as just more information. Fix: Say knowledge is information understood and applied by people, enabling them to interpret and act.
• Treating data and information as the same thing. Fix: Remember that information is processed data with meaning for a decision. A list of sales figures is data; a report comparing it with budget is information.
• Saying strategic information is detailed and frequent. Fix: Strategic information is summarised, often external and less frequent. Operational information is the detailed, frequent kind.
• Saying a DSS makes the decision. Fix: State that a DSS helps the manager analyse options. The manager makes the decision.
• Treating an EIS as a detailed data store. Fix: Remember an EIS shows summarised key information, with drill-down only when needed.
• Confusing predictive and prescriptive analytics. Fix: Predictive says what is likely to happen. Prescriptive says what action to take. Look for a recommendation.
• Defining velocity as the amount of data. Fix: Volume is size, velocity is speed of creation and processing, variety is range of formats.
• Treating cloud computing and ERP as the same thing. Fix: Remember that ERP is what the software does (integrated functions on one database). Cloud is where and how it is hosted and paid for.
• Listing only advantages of ERP. Fix: Always give both sides. Disadvantages include high cost, long implementation, staff resistance, rigid processes and one failure affecting the whole business.

Exam tips

• Define all three terms in one line each. A precise definition earns marks in objective and written questions.
• In a scenario, tie every quality of good information to a quoted fact. Generic lists score poorly.
• Remember the cost-benefit point. It is often the correct answer when the scenario mentions expensive reports.
• Match detail to management level: operational managers need detailed, frequent information; senior managers need summarised, longer-term information.
• In objective questions, read all four options before choosing, as marks are all or nothing.
• In objective questions, find the time horizon and user first. These two clues usually decide the level.
• In written answers, use the three levels as headings and give a scenario-specific example for each. Generic lists earn few marks.
• When asked to evaluate a report or system, apply the qualities of good information to the facts given, not as a bare list.