CHAPTER TWO
FOUNDATIONAL CONCEPTS IN MIS
2.1. Introduction
The concept of the MIS has evolved over a period of time comprising many different sides of the organizational function. MIS is a necessity of all the organizations.
The initial concept of MIS was to process data from the organization and present it in the form of reports at regular intervals. The system was largely capable of handling the data from collection to processing.
It was more impersonal, requiring each individual to pick and choose the processed data and use it for his requirements.
This concept was further modified when a distinction was made between data and information.
When this becomes a reality, the concept of MIS changed to a decision-making system.
The job in a computer department is to manage the information resource and leave the task of information processing to the user.
The concept of MIS in today ís world is a system which handles the databases, provides com-putting facilities to the end user and gives a variety of decision- making tools to the user of the system.
The information should be generated in this setting and must be useful in managing the business. This is possible only when it in conceptualized as system with an appropriate design.
The MIS, therefore, relies heavily on the systems theory offers solutions to handle the complex situations of the input and output flows.
The concept, therefore, is a blend of principle, theories and practices of the Management, Information and System giving rise to single product known as Management Information System (MIS).
Business and Management Functions
2.1.1. Business functions
Marketing Function
Marketing function is concerned with identifying the customers for the firm’s products or services, determining what customers need or want, planning and developing products and services to meet their needs, and advertising and promoting these products and services. Sales is concerned with contacting customers, selling the products and services, taking orders, and following up on sales. Marketing information systems support these activities.
Manufacturing and Production Function
The manufacturing and production function is responsible for actually producing the firm’s goods and services. Manufacturing and production systems deal with the planning, development, and maintenance of production facilities; the establishment of production goals; the acquisition, storage, and availability of production materials; and the scheduling of equipment, facilities, materials, and labor required to finish products. Manufacturing and production information systems support these activities.
Finance and Accounting Functions
The finance function is responsible for managing the firm’s financial assets, such as cash, stocks, bonds, and other investments, to maximize the return on these financial assets. The finance function is also in charge of managing the capitalization of the firm (finding new financial assets in stocks, bonds, or other forms of debt). To determine whether the firm is getting the best return on its investments, the finance function must obtain a considerable amount of information from sources external to the firm. The accounting function is responsible for maintaining and managing the firm’s financial records such as receipts, disbursements, depreciation, and payroll to account for the flow of funds in a firm. Finance and accounting share related problems, how to keep track of a firm’s financial assets and fund flows. They are concerned with the current inventory of financial assets, records exist for disbursements, receipts, payroll, and other fund flows.
Human Resources Functions
Human resources function is responsible for attracting, developing, and maintaining the firm’s workforce. Human resources information systems support activities, such as identifying potential employees, maintaining complete records on existing employees, and creating programs to develop employees’ talents and skills.
2.1.2. Management Functions
It should be noted that the value of any information is derived from the actions that management takes as a result of using that information. It follows that information specialists need to know what type of tasks and functions management have to perform so that they are able to produce relevant and usable information.
The functions of management can be grouped into five areas: planning; decision making; organization and co-coordinating; leadership and motivation and control. Obviously, the emphasis given to each area varies from manager to manager and is especially dependent on the level of the manager in the organization.
There are clear differences in information requirements between a manager at the operational or transactional level, such as transport supervisor, and a manager at the tactical level, such as accounts or sales manager, or at the strategic level, such as managing director/board of directors. At the highest (strategic) level, structured, formal MIS may actually be counter-productive, for at these levels informal MIS and external influences become increasingly important.
2.3. Data, Information, Knowledge and Wisdom
- Data
Data is raw facts and figures.
Data is the product of symbols or representations of an event or facts about the world, like number, letter, pictures, lines graphs, etc
Data processing by computers refers to the transfer of facts from one medium to another. E.g., printing list of students for registration.
Data represents facts or figures obtained from experiments or surveys, used as basis for making calculations or drawing conclusions
In and of itself, data has no meaning. If I count the number of cars that stop at the stop sign on my block per hour for a week, that’s data. It may be useful or not, depending on the context. It has no meaning until it is placed in a context. It is like an event out of context, without a meaningful relation to other things. It doesn’t have a meaning of itself and simply it exists and has no significance beyond its existence.
If we are given a certain data, we can associate it to different things and give it different meanings.
e.g.1: If we take number “5”, it can be associated with
- Cardinal number and has one meaning, and
A number greater than 4 and less than 6 with another meaning
e.g.2: If we take the word “time” it will have different meaning when it is associated with different things:
“Being on time” -refers to punctuality
“Time never stops” – refers to the indefiniteness of time
Therefore: Data without a context has no meaning
But this doesn’t mean that data are useless. They are the elements that are inputted, stored and manipulated by the computer.
The validity of a data (how far they reflect the reality or represent the real world) is very important. They are valid as far as they accurately represent the real world.
Invalid data is due to a correctable error (e.g., spelling error) or due to a conceptual mistake (e.g., “Earth is the center of the Universe”)
- Information
When does data become information?
When you put a whole lot of data together that is related to one subject it yields information. e.g. Take a telephone book, it is developed by bringing different data together (Name, Address and Telephone number)
In other words: (Sets of data) + (Relational connection among data sets) = Information
Information processing by computers refers to the storage, retrieval, creation or rearrangement of relationships among data.
What we perceive or understand is the relationship between pieces of data, or between pieces of data and other information.
Therefore,
Data + Understanding of Relationship = Information
Information is data that has been given a meaning by way of relational connection. This relational connection converts data into information. In computer system for instance, a relational database makes for information from the data stored within it.
Information is data with context. Therefore, information is context dependent.
Knowledge
Knowledge is the understanding that you have forgiven information. With that understanding you’ll be able to use the information for you benefit.
When information does become knowledge?
Once you spend some time interpreting and understanding a body of information, then you have knowledge. For example:
Information is available in encyclopedia; this information becomes knowledge when we understand what it means or how to apply it.
There is information in a telephone book. The knowledge is understanding:
Name – referring to a person (telephone subscriber)
Number – referring to code enabling to operate the machine/make contact with the person
How to use a telephone
How telephone circuit operates, etc.
If a bank customer requests his/her balance, the bank clerk posses knowledge on:
How to operate the workstation (computer)
How to interpret customer request
How to interpret an account
How to explain it to the customer
What the clerk gets from the system (database) is an INFORMATION such as Name, Type of Account,
Account Number, Account Balance, etc.
Information becomes knowledge when one is able to understand the patterns that exist within information and their implication.
Example:
If the humidity is very high and the temperature drops substantially, the atmosphere is unlikely to be able to hold moisture so it rains.
Understanding such a pattern that provides a high level of predictability as to what will happen next represents knowledge.
If I put Birr 100 in my saving account and the bank pays 5% per annum, at the end of one-year Interest = Birr 5 and principal = 105
Understanding this pattern represents knowledge and it enables to understand the results it will produce.
Therefore, knowledge= Information + understanding of the pattern. This pattern:
Has the technology contributed in the process of creation of knowledge?
The process of creating knowledge is time taking. The technology has not done anything to make the process of creating knowledge any quicker or cheaper. The technology has greatly reduced the cost involved in assembling and storing data, and in transferring and storing, information. Creating knowledge still takes human brain, human thoughts and time – especially today when there is too much information available. - Wisdom
Wisdom is the ability to apply knowledge in order to solve a problem. After gaining knowledge, wisdom is used to meet new situations and hence is the ability to imagine the consequences of our actions for ourselves and for others.
It is an asset for good judgment that we acquire through experience.
It is accumulated knowledge gained through a combination of:
Academic study
Personal experience
It comes from the ability to synthesize (combine) various streams of knowledge:
That enables us to make informed judgments about various ideas and propositions that may lie outside of our own direct areas of expertise.
Allow you to understand how to apply concepts from one domain to new situations or problems.
To make such wise judgment we have to add values, ethics and reasons to knowledge. Then we arrive at a conclusion that benefits others and ourselves.
Wisdom is also defined as the state of being wise:
Acting based on broad (not narrow minded) perspective
Avoiding narrow self-interest and moving towards greater social contribution
Grounded on the past (experience) and be able to create the future
Be informed by multiple forms of intelligence including:
Reason
Intuition
Spirit
Values
Wisdom is the ability to understand the fundamental principles that govern the patterns representing knowledge. This understanding enables us to know what the knowledge itself is.
( Wisdom deals with the future and it incorporates vision. Based on wisdom it is possible to create the future rather than grasping the present and the past.
An individual with wisdom normally has enough experience and perspective to identify patterns and trends so that various bodies of knowledge can be put in context, combined and applied appropriately.
The one who has knowledge may not necessarily have the capacity to process wisdom. You can find people with advanced degrees who lack wisdom or wise judgment? Our grandparents may lack knowledge since they are not educated. But they are long on wisdom. Through long experience they can apply the values, ethics and reasons to make wise judgment.
Inevitably, wisdom requires a deep understanding of human nature- of ambition, styles of intelligence, human motivations. This deep understanding enables the possessor of wisdom to make judgments about representations of knowledge that lie outside of his or her own expertise. e.g. The most effective executives and leaders are extremely proficient at understanding other people.
Therefore, wisdom combines
Experience of connecting and reviewing bodies of knowledge, and
A genuine grasp of human nature and the different ways that exist in the real world, This allows the proper use of data, information and knowledge to judge between right and wrong, good and bad.
( In an “information age,” technology cannot confer wisdom: wisdom takes more time to develop and cultivate than even knowledge does.
The following diagram can summarize the above discussion.
CHAPTER TWO
FOUNDATIONAL CONCEPTS IN MIS
2.1. Introduction
The concept of the MIS has evolved over a period of time comprising many different sides of the organizational function. MIS is a necessity of all the organizations.
The initial concept of MIS was to process data from the organization and present it in the form of reports at regular intervals. The system was largely capable of handling the data from collection to processing.
It was more impersonal, requiring each individual to pick and choose the processed data and use it for his requirements.
This concept was further modified when a distinction was made between data and information.
When this becomes a reality, the concept of MIS changed to a decision-making system.
The job in a computer department is to manage the information resource and leave the task of information processing to the user.
The concept of MIS in today ís world is a system which handles the databases, provides com-putting facilities to the end user and gives a variety of decision- making tools to the user of the system.
The information should be generated in this setting and must be useful in managing the business. This is possible only when it in conceptualized as system with an appropriate design.
The MIS, therefore, relies heavily on the systems theory offers solutions to handle the complex situations of the input and output flows.
The concept, therefore, is a blend of principle, theories and practices of the Management, Information and System giving rise to single product known as Management Information System (MIS).
Business and Management Functions
2.1.1. Business functions
Marketing Function
Marketing function is concerned with identifying the customers for the firm’s products or services, determining what customers need or want, planning and developing products and services to meet their needs, and advertising and promoting these products and services. Sales is concerned with contacting customers, selling the products and services, taking orders, and following up on sales. Marketing information systems support these activities.
Manufacturing and Production Function
The manufacturing and production function is responsible for actually producing the firm’s goods and services. Manufacturing and production systems deal with the planning, development, and maintenance of production facilities; the establishment of production goals; the acquisition, storage, and availability of production materials; and the scheduling of equipment, facilities, materials, and labor required to finish products. Manufacturing and production information systems support these activities.
Finance and Accounting Functions
The finance function is responsible for managing the firm’s financial assets, such as cash, stocks, bonds, and other investments, to maximize the return on these financial assets. The finance function is also in charge of managing the capitalization of the firm (finding new financial assets in stocks, bonds, or other forms of debt). To determine whether the firm is getting the best return on its investments, the finance function must obtain a considerable amount of information from sources external to the firm. The accounting function is responsible for maintaining and managing the firm’s financial records such as receipts, disbursements, depreciation, and payroll to account for the flow of funds in a firm. Finance and accounting share related problems, how to keep track of a firm’s financial assets and fund flows. They are concerned with the current inventory of financial assets, records exist for disbursements, receipts, payroll, and other fund flows.
Human Resources Functions
Human resources function is responsible for attracting, developing, and maintaining the firm’s workforce. Human resources information systems support activities, such as identifying potential employees, maintaining complete records on existing employees, and creating programs to develop employees’ talents and skills.
2.1.2. Management Functions
It should be noted that the value of any information is derived from the actions that management takes as a result of using that information. It follows that information specialists need to know what type of tasks and functions management have to perform so that they are able to produce relevant and usable information.
The functions of management can be grouped into five areas: planning; decision making; organization and co-coordinating; leadership and motivation and control. Obviously, the emphasis given to each area varies from manager to manager and is especially dependent on the level of the manager in the organization.
There are clear differences in information requirements between a manager at the operational or transactional level, such as transport supervisor, and a manager at the tactical level, such as accounts or sales manager, or at the strategic level, such as managing director/board of directors. At the highest (strategic) level, structured, formal MIS may actually be counter-productive, for at these levels informal MIS and external influences become increasingly important.
2.3. Data, Information, Knowledge and Wisdom
- Data
Data is raw facts and figures.
Data is the product of symbols or representations of an event or facts about the world, like number, letter, pictures, lines graphs, etc
Data processing by computers refers to the transfer of facts from one medium to another. E.g., printing list of students for registration.
Data represents facts or figures obtained from experiments or surveys, used as basis for making calculations or drawing conclusions
In and of itself, data has no meaning. If I count the number of cars that stop at the stop sign on my block per hour for a week, that’s data. It may be useful or not, depending on the context. It has no meaning until it is placed in a context. It is like an event out of context, without a meaningful relation to other things. It doesn’t have a meaning of itself and simply it exists and has no significance beyond its existence.
If we are given a certain data, we can associate it to different things and give it different meanings.
e.g.1: If we take number “5”, it can be associated with
- Cardinal number and has one meaning, and
A number greater than 4 and less than 6 with another meaning
e.g.2: If we take the word “time” it will have different meaning when it is associated with different things:
“Being on time” -refers to punctuality
“Time never stops” – refers to the indefiniteness of time
Therefore: Data without a context has no meaning
But this doesn’t mean that data are useless. They are the elements that are inputted, stored and manipulated by the computer.
The validity of a data (how far they reflect the reality or represent the real world) is very important. They are valid as far as they accurately represent the real world.
Invalid data is due to a correctable error (e.g., spelling error) or due to a conceptual mistake (e.g., “Earth is the center of the Universe”)
- Information
When does data become information?
When you put a whole lot of data together that is related to one subject it yields information. e.g. Take a telephone book, it is developed by bringing different data together (Name, Address and Telephone number)
In other words: (Sets of data) + (Relational connection among data sets) = Information
Information processing by computers refers to the storage, retrieval, creation or rearrangement of relationships among data.
What we perceive or understand is the relationship between pieces of data, or between pieces of data and other information.
Therefore,
Data + Understanding of Relationship = Information
Information is data that has been given a meaning by way of relational connection. This relational connection converts data into information. In computer system for instance, a relational database makes for information from the data stored within it.
Information is data with context. Therefore, information is context dependent.
Knowledge
Knowledge is the understanding that you have forgiven information. With that understanding you’ll be able to use the information for you benefit.
When information does become knowledge?
Once you spend some time interpreting and understanding a body of information, then you have knowledge. For example:
Information is available in encyclopedia; this information becomes knowledge when we understand what it means or how to apply it.
There is information in a telephone book. The knowledge is understanding:
Name – referring to a person (telephone subscriber)
Number – referring to code enabling to operate the machine/make contact with the person
How to use a telephone
How telephone circuit operates, etc.
If a bank customer requests his/her balance, the bank clerk posses knowledge on:
How to operate the workstation (computer)
How to interpret customer request
How to interpret an account
How to explain it to the customer
What the clerk gets from the system (database) is an INFORMATION such as Name, Type of Account,
Account Number, Account Balance, etc.
Information becomes knowledge when one is able to understand the patterns that exist within information and their implication.
Example:
If the humidity is very high and the temperature drops substantially, the atmosphere is unlikely to be able to hold moisture so it rains.
Understanding such a pattern that provides a high level of predictability as to what will happen next represents knowledge.
If I put Birr 100 in my saving account and the bank pays 5% per annum, at the end of one-year Interest = Birr 5 and principal = 105
Understanding this pattern represents knowledge and it enables to understand the results it will produce.
Therefore, knowledge= Information + understanding of the pattern. This pattern:
Has the technology contributed in the process of creation of knowledge?
The process of creating knowledge is time taking. The technology has not done anything to make the process of creating knowledge any quicker or cheaper. The technology has greatly reduced the cost involved in assembling and storing data, and in transferring and storing, information. Creating knowledge still takes human brain, human thoughts and time – especially today when there is too much information available. - 7Wisdom
Wisdom is the ability to apply knowledge in order to solve a problem. After gaining knowledge, wisdom is used to meet new situations and hence is the ability to imagine the consequences of our actions for ourselves and for others.
It is an asset for good judgment that we acquire through experience.
It is accumulated knowledge gained through a combination of:
Academic study
Personal experience
It comes from the ability to synthesize (combine) various streams of knowledge:
That enables us to make informed judgments about various ideas and propositions that may lie outside of our own direct areas of expertise.
Allow you to understand how to apply concepts from one domain to new situations or problems.
To make such wise judgment we have to add values, ethics and reasons to knowledge. Then we arrive at a conclusion that benefits others and ourselves.
Wisdom is also defined as the state of being wise:
Acting based on broad (not narrow minded) perspective
Avoiding narrow self-interest and moving towards greater social contribution
Grounded on the past (experience) and be able to create the future
Be informed by multiple forms of intelligence including:
Reason
Intuition
Spirit
Values
Wisdom is the ability to understand the fundamental principles that govern the patterns representing knowledge. This understanding enables us to know what the knowledge itself is.
( Wisdom deals with the future and it incorporates vision. Based on wisdom it is possible to create the future rather than grasping the present and the past.
An individual with wisdom normally has enough experience and perspective to identify patterns and trends so that various bodies of knowledge can be put in context, combined and applied appropriately.
The one who has knowledge may not necessarily have the capacity to process wisdom. You can find people with advanced degrees who lack wisdom or wise judgment? Our grandparents may lack knowledge since they are not educated. But they are long on wisdom. Through long experience they can apply the values, ethics and reasons to make wise judgment.
Inevitably, wisdom requires a deep understanding of human nature- of ambition, styles of intelligence, human motivations. This deep understanding enables the possessor of wisdom to make judgments about representations of knowledge that lie outside of his or her own expertise. e.g. The most effective executives and leaders are extremely proficient at understanding other people.
Therefore, wisdom combines
Experience of connecting and reviewing bodies of knowledge, and
A genuine grasp of human nature and the different ways that exist in the real world, This allows the proper use of data, information and knowledge to judge between right and wrong, good and bad.
( In an “information age,” technology cannot confer wisdom: wisdom takes more time to develop and cultivate than even knowledge does.
The following diagram can summarize the above discussion.
About me
Introduce yourself! Use this space to write 2 or 3 sentences about who you are, what you do, and where you are.
which started with the debate raised by Austrian economic school representatives on whether an enterprise needs to have any social responsibility beyond paying salary (to provide employees living), taxes (to ensure government with the money to implement social projects) and dividends (to improve investors’ wellbeing). Yet the mainstream research in corporate social responsibility indicated that participation in such activities leads to increased profits and better interaction with major enterprises’ stakeholders.
Currently the majority of researchers agree that classical capitalism is unable to resolve social problems, so enterprises need to step in to improve well-being and correspondingly develop their image. Scholars have realized that Corporate Social Responsibility had changed corporate governance practices and led to realization of double goals achieved by corporations. This increased interest from the practitioners’ side enhanced research in the field and led to incorporating the ideas of corporate social responsibility into management curricula in business schools worldwide.
At the current moment, corporate social responsibility was followed by an even more challenging concept, sustainable development. This concept required fulfilment of social, economic and environmental goals as a holistic result of organization’s functioning and development. Another important concept, related to corporate social responsibility, is business ethics. This one is becoming more and more popular among both scholars and practitioners with development of technology.
It can be said that business ethics are integrated into companies through Corporate Social Responsibility (CSR), which cannot be defined in a single way, nor has its concept remained unchanged since its appearance in the business world. The labor conflicts that developed at the end of the 19th century as a result of the industrial revolution, when the model of artisan work was changed to one of mass production, revealed a series of social problems that forced companies to take measures that could be considered as the origin of CSR (Jenkins 2009).
The broadest definition of corporate social responsibility is concerned with what is – or should be the relationship between global corporations, governments of countries and individual citizens. More locally the definition is concerned with the relationship between a corporation and the local society in which it resides or operates. Another definition is concerned with the relationship between a corporation and its stakeholders.
For us all of these definitions are pertinent and each represents a dimension of the issue. A parallel debate is taking place in the arena of ethics – should corporations be controlled through increased regulation or has the ethical base of citizenship been lost and needs replacing before socially responsible behaviour will ensue? However this debate is represented it seems that it is concerned with some sort of social contract between corporations and society.
This social contract implies some form of altruistic behaviour – the converse of selfishness – whereas self-interest connotes selfishness. Self-interest is central to the Utilitarian perspective championed by such people as Bentham, Locke and J. S. Mill. The latter, for example, is generally considered to have advocated as morally right the pursuit of the greatest happiness for the greatest number – although the Utilitarian philosophy is actually much more based on selfishness than this – something to which we will return later. Similarly Adam Smith’s free- market economics, is predicated on competing self-interest.
These influential ideas put interest of the individual above interest of the collective. The central tenet of social responsibility however is the social contract between all the stakeholders to society, which is an essential requirement of civil society. This is alternatively described as citizenship but for either term it is important to remember that the social responsibility needs to extend beyond present members of society. Social responsibility also requires a responsibility towards the future and towards future members of society. Subsumed within this is of course a responsibility towards the environment – which we will also return to later – because of implications for other members of society both now and in the future.
There is however no agreed definition of CSR so this raises the question as to what exactly can be considered to be corporate social responsibility. According to the EU Commission [(2002) 347 final: 5],
“…CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”
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