Uses and control of information: formula sheet

Key formulas

Information chain

Data → (processing) → Information → (understanding and experience) → Knowledge

Data is raw, information has meaning, knowledge includes judgement.

ACCURATE qualities

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

Learn the eight words in order. Each one needs a short explanation in a written answer.

Cost-benefit test

Information is worth producing if its value to decision-making > the cost of producing it

Value is often hard to measure, so the test is usually judgemental.

Strategic information

External + summarised + long-term + uncertain + whole organisation

Used for objectives and long-term planning. Often irregular and partly qualitative.

Tactical information

Mostly internal + periodic + summarised by department + medium term

Used for control, resource allocation and variance review.

Operational information

Internal + detailed + current + frequent + short term

Used for day-to-day tasks. Usually quantitative and highly accurate.

System to level match

TPS → operational; MIS → tactical; DSS → tactical/strategic (semi-structured); EIS → strategic

A typical pairing. State it as typical, not absolute.

Flow of data

TPS data → MIS reports → DSS models / EIS summaries

TPS is the base layer feeding the others.

Cost-benefit rule for information

Obtain information if expected benefit of better decisions > cost of obtaining it

A judgement test, not a calculation. Benefits are often hard to quantify; costs include collection, processing and time.

Internal vs external

Internal = inside the organisation; External = outside it

Classify by where the information originates, not by who uses it.

Primary vs secondary data

Primary = collected first-hand for this purpose; Secondary = already collected for another purpose

Primary is more relevant but costlier. Secondary is cheaper but may be dated or unsuitable.

Formal vs informal

Formal = planned, documented channels; Informal = unplanned, personal contacts

Informal sources are quick but unverified.

Three Vs of big data

Volume + Velocity + Variety

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

Types of analytics

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

Each step adds more insight and usually needs more advanced tools. Match the question wording to the type.

Data types

Structured = fixed format; Unstructured = no fixed format

Sales ledgers are structured. Emails, images and social posts are unstructured.

Qualities of good information

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

Use as a checklist when asked whether information is reliable. Any sensible equivalent list is accepted.

General vs application controls

General controls = whole IT environment; Application controls = one specific system

The most common PM distinction. Give an example of each.

Application control types

Input controls + Processing controls + Output controls

Examples: validation checks, control totals, reconciliation, restricted distribution of reports.

Control cost test

Cost of control < Expected loss avoided (benefit)

A control is worthwhile only if its cost is justified by the risk reduced.

Quick revision

• Data is raw facts and figures; information is data processed so it has meaning for a decision; knowledge is information understood and applied through experience.
• Good information is relevant, accurate, complete, timely, understandable and cost-effective for its user.
• Strategic managers use summarised, mainly external, long-term and uncertain information.
• Operational managers use detailed, mainly internal, short-term and more certain information.
• Tactical managers sit between the two and use information to control resources and monitor performance.
• Internal sources include accounting records, payroll and production data; external sources include government, competitors and market research.
• Big data is often described by high volume, velocity and variety; some add veracity and value.
• Data analytics means examining data to find patterns that support decisions.
• Cloud computing gives on-demand access to shared computing resources over the internet, often at lower upfront cost.
• Cloud risks include reliance on the provider, loss of control over data and security concerns.
• Data governance sets who owns data, who may use it and the standards it must meet.
• Controls over information include access restrictions, passwords, encryption, backups and staff training.

Common mistakes

• Treating data and information as the same thing. Fix: Always state the difference: information is processed and has meaning for a decision. Give a short example.
• Calling a processed report knowledge. Fix: Knowledge needs human understanding and judgement. A report is information until someone interprets it.
• Saying strategic information is detailed and internal. Fix: Remember strategic means summarised and largely external. Detail belongs at operational level.
• Confusing DSS and EIS. Fix: DSS lets a user model and test options on a specific problem. EIS gives senior managers summarised, easy-access views of overall performance.
• Classifying a source by who uses it instead of where it comes from. Fix: Ask where the data originated. A government statistics report used by managers is still external.
• Assuming internal information is always reliable and complete. Fix: Note that internal data can be historical, wrongly recorded or narrow in scope, and often says nothing about competitors or the market.
• Mixing up velocity and volume. Fix: Volume is how much data. Velocity is how fast it arrives and must be handled.
• Calling predictive analytics prescriptive. Fix: Predictive says what is likely to happen. Prescriptive recommends the action to take.
• Giving only benefits of cloud computing and ignoring risks. Fix: Write at least as many risks as benefits when the requirement says discuss or evaluate. Include security, provider dependence, internet reliance and data location.
• Describing ERP as just an accounting package. Fix: Say it integrates all functions on one shared database and give an example of a transaction updating several areas at once.

Exam tips

• In objective questions, find the single symptom in the scenario and match it to one ACCURATE quality. Do not choose the quality that merely sounds general.
• In Section C, tie each quality to the scenario. A bare list of the eight words earns few marks.
• Use a one-line example when distinguishing data, information and knowledge. It shows understanding.
• Always mention cost-benefit when asked about the value of information.
• Spend your time on application. Definitions are quick marks, but the scenario points make the difference.
• In objective tests, look for keywords: external and summarised point to strategic; detailed and current point to operational; periodic departmental point to tactical.
• For DSS versus EIS, look for modelling or what-if (DSS) against dashboard, summary or drill-down (EIS).
• In written answers, always tie points to the scenario's users and reports. Generic lists score poorly.