Information System

Accuracy refers to whether information is accurate or inaccurate. Information is accurate if it represents a fact or situation as it really is. Inaccurate information can result from errors in the collecting, processing, or reporting activities involved in producing and transmitting it. However, if users are unaware that it is inaccurate and they use it in decision making, then it is information to them. This is one of the problems with the generation and distribution of information within organizations.

In most cases the user of the information is not the same persons who collected, processed, and distributed it. Users assume that what they have received is accurate information. It is therefore the responsibility of the provider to ensure its accuracy. Completeness refers to how thorough or inclusive a set of information is. It tells everything you need to know about a situation. Because of the complexity of most business decision-making situations, it is virtually impossible to attain a complete set of information. The aim is to acquire the most complete set possible.

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Cost-effectiveness refers to the relationship between the benefit to be derived from using information and the cost of producing it. If the cost is more than the benefit, the information is not cost-effective and is usually not produced. User-targeted refer to information should be summarized and presented together with relevant ratios or percentages. Relevance refers to whether information is needed and useful in a particular situation. If it is needed, then the information is relevant. However, relevance is not a static attribute.

What is relevant for a chief executive officer may not be relevant for a purchasing clerk, and vice versa. In addition, what is relevant today may not be relevant tomorrow in making the same decision. Authoritative, also known as verifiability, refers to the ability to check the accuracy and completeness of information. Without authoritative it is not possible to determine accuracy, thus bringing into question the information’s usefulness. The term audit trail is used to indicate that summarized information can be traced back to its original sources to verify its accuracy.

Timeless refers to two conditions: Is the information available when it is needed, and is it outdated when it is received or when it is to be used? If the information is not available when needed or if it is outdated by the time it is used, then it has little or no value in decision making, problem solving, or control activities. Outdated information may also be counterproductive or worse than no information at all. Easy to use information should be clearly presented, not excessively long, and sent using the right medium and communication channel (e-mail, telephone, report etc). Uses of Information

1. Planning Planning requires knowledge of the available resources, possible time-scales and the likely outcome under alternative scenarios. Information is required that helps decision making, and how to implement decisions taken. 2. Controlling Once a plan is implemented, its actual performance must be controlled. Information is required to assess whether it is proceeding as planned or whether there is some unexpected deviation from plan. It may consequently be necessary to take some form of corrective action. 3. Recording transactions Information about each transaction or event is required.

Reasons include: (a) Documentation of transactions can be used as evidence in a case of dispute. (b) There may be a legal requirement to record transactions, for example for accounting and audit purposes. (c) Operational information can be built up, allowing control action to be taken. 4. Performance measurement Just as individual operations need to be controlled, so overall performance must be measured. Comparisons against budget or plan are able to be made. This may involve the collection of information on, for example, costs, revenues, volumes, time-scale and profitability.

5. Decision making Strategic planning, management control and operational control may be seen as a hierarchy of planning and control decisions. b) Management Levels Management is divided into three basic levels: strategic (top-level) managers, tactical (middle-level) managers, and operational (low-level) managers. Although all three levels of management work toward organizational goals and are involved to varying degrees in all five of the management functions, each level requires different types of information. Strategic (top-level) managers

Strategic (top-level) managers make decisions involving the long-range, or strategic, goals of organizations. Their job is to make strategic decisions. Strategic decisions are complex decision rarely based on predetermined routine procedures, involving the subjective judgment of the decision maker. Strategic means that, of the five major management functions, top-level managers spend most of their time planning and organizing. Strategic information is used to plan the objectives of the organization, and to assess whether the objectives are being met in practice. Such information includes overall

profitability, the profitability of different segments of the business, future market prospects, the availability and cost of raising new funds, total cash needs, total manning levels and capital equipment needs. Middle-level managers implement the goals of the organization. Their job is to oversee the supervisors and to make tactical decisions. A tactical decision is a decision that must be made without a base of clearly defined informational procedures, perhaps requiring detailed analysis and computations. Tactical (middle-level) managers divide their time among all five functions of management.

They are concerned with short-term, tactical decisions directed toward accomplishing the organizational goals established by the top-level managers. Middle-level managers work on budgets, schedules, and performance evaluations and need information that is fairly detailed to permit them to compare present and past results and make adjustments where necessary. Middle-level managers require mainly internal information but also use some external information. A tactical manager for an automotive company might decide how long to advertise a new car on television in a particular state.

Many organizations are using computerization to reduce the number of tactical managers and cut costs. Tactical information is used to decide how the resources of the business should be employed, and to monitor how they are being and have been employed. Such information includes productivity measurements (output per hour) budgetary control or variance analysis reports, and cash flow forecasts, staffing levels and profit results within a particular department of the organization, labour turnover statistics within a department and short-term purchasing requirements. 1.

An open system is one in which the system’s interaction with the environment is not controlled. Besides having inputs and outputs, an open system has disturbances, or uncontrolled inputs, that affect the processes within the system. Disturbances to the airline system, for example, may include icy runways. That input is capacity of people, process is operated and output is destination. Well-designed systems minimize the impact of disturbances. Systems designers anticipate the things that can go wrong in the environment and create processes and interfaces to control them.

For example, ATM system, that input is accept ATM card, process is read the ATM card and output is pay out money and bills. In accounting information systems, internal controls protect system processes against disturbances from the environment. An inadequate design is one in which designers gave insufficient thought to potential disturbances, thus producing an open system. 2. A closed system is totally isolated from its environment. There are no external interfaces, the system has no effects outside of its boundaries, and the environment has no effect on the processes within the system.

The closed system is a theoretical rather than a practical concept, because all systems interact with their environment in some way. For example, ABC company shareholders meeting. Any one should not be know their content of meeting, so that closed system do not have input, process and output. 3. Deterministic systems are predictable systems where the output can be predicted from the input. A deterministic system operates according to a predetermined set of rules. Its future behavior can be predicted exactly if it’s current state and operating characteristics are known.

For examples, food industry system. Because that is fully automatic system, so the input is food, process is that food pack into the plastic food bag and output is foodstuff. 4. Probabilistic systems are where some conditions of the system can be predicted from the previous state but only in terms of probable behavior, and there is always a certain degree of error attached to the prediction of what the system will do. Most industrial and business systems are regarded as probabilistic and it is to these that most control effort is directed.

For example: money exchange, that input is overseas market, process is national treasury and output is amount of money exchange. 5. Self-organizing systems are those which adapt and react to inputs or stimuli. The method of adaptation is uncertain and the same inputs do not always produce the same responses. Social groups and organizations are within this category. Most of the computerized stock control systems currently implemented manually, but recent advances in self-organizing database management systems. For example, plantation system, that input is seed, process is manure and water and output is plant.


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