Learning Unit1 | US:12998 NQF Level 5 Worth 8 Credits PRODUCE SPREADSHEETS USING ACCOUNTING RELATED INFORMATION TECHNOLOGY |
Unit Standard Purpose | People credited with this unit standard are generally found within the accounting technician intermediate stage. On successful completion of the unit standard, people will be able to use information technology as an essential tool when undertaking accounting activities. This involves the ability to obtain information from a computerised management information system, produce spreadsheets for the analysis of numerical information, and contribute to the quality of the aforesaid management information system within an accounting environment. |
Learning Assumed to be in Place | Unit standards for Computer literacy at NQF level 4 Unit standard, Work with information technology in an accounting environment, NQF level 5 |
Session 1 SO 1 | Obtain information from a computerised management information system. |
Learning Outcomes (Assessment Criteria) | · the principles of general information technology are described in relation to MIS, other IT applications and spreadsheets. · The required information is correctly located within the MIS structure. · Advice is sought from the appropriate person, where there are difficulties in obtaining the required information. · Additional authorisation is obtained for sensitive or confidential information in accordance with the organisation’s security regulations. · Information is checked for its accuracy and completeness. · Information is stored in a format that facilitates access and use by others. · Confidential information is kept secure and not disclosed to unauthorised people. |
What is computerized management information system?
A management information system (MIS) is a computerized database of financial information organized and programmed in such a way that it produces regular reports on operations for every level of management in a company. It is usually also possible to obtain special reports from the system easily.
What Is a Management Information System?
In business, management information systems (or information management systems) are tools used to support processes, operations, intelligence, and IT. MIS tools move data and manage information. They are the core of the information management discipline and are often considered the first systems of the information age.
MIS produce data-driven reports that help businesses make the right decisions at the right time. While MIS overlaps with other business disciplines, there are some differences:
The concept includes what computers can do in this field, how people process information, and how best to make it accessible and up-to-date. Cummings adds, “The ‘right information in the right place at the right time’ is what we are striving for. This discipline is much more eclectic than straight computer science.”
Besides computer science, there are fields of study that overlap with MIS, both at the theoretical and practical levels:
History of Management Information Systems
The technology and tools used in MIS have evolved over time. Kenneth and Aldrich Estel, who are widely cited on the topic, have identified six eras in the field.
After an era ends, the previous era’s hardware are still in use. In fact, mainframes (albeit much faster, cheaper, and easier to access than their predecessors) are still used today.
From Ledgers to Flash Memory
In the days where businesses recorded all transactions in a bound ledger, tallying and tracking what was going on took a lot of time and work. In the late 1800s, process automation began to appear in the form of punch cards. Associated machines tabulated the punch card data and printed results, which made it easier to capture transactions. The company that came to eventually be known as IBM was founded in the early 1900s and became the leader in business machines and punch cards. These cards evolved from a solution to automate pattern creation in weaving machines. The company adapted the idea to store and input data for applications from as simple as time for payroll to very complicated uses like recording census data. When general-purpose computers became available after WWII (originally developed for codebreaking, calculating shell trajectories, and other war-related needs), the punch card became an input method as well as a way to store outputs (though it required readers to decode and print the data so people could read it).
Later, magnetic media (such as tapes and floppy disks) took over the storage of input and output, and computers could read and write directly to their own memory. This eliminated the need for the specialized machines. Next, optical media (like CDs and DVDs) that could store much more data on a single disc came along. Today, we are transitioning to flash memory (which also goes by solid state, as in a solid state drive or SSD). Flash memory has a higher capacity, is less volatile, and you can reuse it thousands of times with little degradation in quality.
Each of these periods has brought an increase in storage capacity at a lower cost. In tandem with the constant increase in computing power, more and more powerful software, almost-ubiquitous connectivity via wifi and mobile devices, and ever-expanding networking that evolved into the internet, work that previously took many hours – like tabulating a company’s shipping costs over a year or population increases in a state over a century – now takes little time or human effort.
On the software side, the functions that paper ledgers performed moved to spreadsheet programs (the term spreadsheet came from the large sheets of paper spread out on tables). Microsoft Excel is the best-known example, but it wasn’t the first to become popular. VisiCalc, which was created for the Apple II in the late 1970s by Dan Bricklin and Bob Frankston, was the first to gain popularity. There were spreadsheet programs available for mainframes and minicomputers before VisiCalc, but they didn’t offer the ability to see results in real time.
Spreadsheets became more powerful in the 70s and 80s. When connected with databases, they gave users the ability to easily and quickly access and manipulate data. As users’ needs and desires changed, specialized programs were developed for different user groups, allowing innovative ways to use data.
Information technology and MIS used to be synonymous. Task automation (such as report creation) led to an expansion of the work that fell under MIS. Simultaneously, the definition of IT expanded even more, and it now encompasses areas beyond MIS, such as cyber security and network administration.
Management information system is a broad term that incorporates many specialized systems. The major types of systems include the following:
Types of MIS Reports
At their core, management information systems exist to store data and create reports that business pros can use to analyze and make decisions. There are three basic kinds of reports:
Beyond the need to stay competitive, there are some key advantages of effective use of management information systems:
Components of MIS
The major components of a typical MIS long-form (Management Information System) are:
Types of Information Systems
The type of information system that a user uses depends on their level in an organization. The following diagram shows the three major levels of users in an organization and the type of information system that they use.
Transaction Processing Systems (TPS)
This type of information system is used to record the day to day transactions of a business. An example of a Transaction Processing System is a Point of Sale (POS) system. A POS system is used to record the daily sales.
Management Information Systems abbreviated as MIS, are used to guide tactic managers to make semi-structured decisions. The output from the transaction processing system is used as input to the MIS system.
Decision Support Systems (DSS)
Decision support systems are used by top level managers to make semi-structured decisions. The output from the Management Information System is used as input to the decision support system’s systems also get data input from external sources such as current market forces, competition, etc.
Manual Information Systems VS Computerized Information Systems (MIS)
Data is the bloodstream of any business entity. Everyone in an organization needs information to make decisions. An information system is an organized way of recording, storing data, and retrieving information.
Manual Information System
A manual information system does not use any computerized devices. The recording, storing and retrieving of data is done manually by the people, who are responsible for the information system.
The following are the major components of a manual information system
The following diagram illustrates how a typical manual information system works
Advantages and Dis-advantages of a manual information system
Advantages:
The following are the advantages of manual information systems
Disadvantages:
The following are some of the disadvantages of a manual information system.
Computerized systems were developed to address the challenges of manual information systems. The major difference between a manual and computerized information system is a computerized system uses a combination of software and hardware to record, store, analyze and retrieve information.
Advantages and Disadvantages of a computerized information system (MIS)
The following are some of the disadvantages of a computerized information system.
Advantages:
The following are the advantages of computerized information systems
Disadvantages:
Session 2 SO 2 |
Produce spreadsheets for the analysis of numerical information. |
Learning Outcomes (Assessment Criteria) | The spreadsheet is titled in a way that clearly defines its use and purpose. The arrangement of the spreadsheet is consistent with organisational conventions. Spreadsheet produced for own work and area of responsibility and/ or on request from others All rates and other numeric inputs and assumptions are stated to the correct number of decimal places. Calculated values are checked for correctness when changes are made to input data. The spreadsheet is used to carry out data modifications and for entry of related formulas. Each cell is formatted clearly and accurately. A method is selected to eliminate rounding errors which is suitable for the purpose of the spreadsheet. Confidential information is kept secure and not disclosed to unauthorised people. |
A spreadsheet is a computer application for organization, analysis and storage of data in tabular form. Spreadsheets were developed as computerized analogs of paper accounting worksheets. The program operates on data entered in cells of a table. Each cell may contain either numeric or text data, or the results of formulas that automatically calculate and display a value based on the contents of other cells. A spreadsheet may also refer to one such electronic document.
Spreadsheet users can adjust any stored value and observe the effects on calculated values. This makes the spreadsheet useful for “what-if” analysis since many cases can be rapidly investigated without manual recalculation. Modern spreadsheet software can have multiple interacting sheets and can display data either as text and numerals or in graphical form.
Besides performing basic arithmetic and mathematical functions, modern spreadsheets provide built-in functions for common financial accountancy and statistical operations. Such calculations as net present value or standard deviation can be applied to tabular data with a pre-programmed function in a formula. Spreadsheet programs also provide conditional expressions, functions to convert between text and numbers, and functions that operate on strings of text.
Spreadsheets have replaced paper-based systems throughout the business world. Although they were first developed for accounting or bookkeeping tasks, they now are used extensively in any context where tabular lists are built, sorted, and shared.
Spreadsheets are grid-based files designed to organize information and perform calculations with scalable entries. People all around the world use spreadsheets to create tables for any personal or business need.
However, spreadsheets have grown from simple grids to powerful tools, functioning like databases or apps that perform numerous calculations on a single sheet. You can use a spreadsheet to determine your mortgage payments over time, or to help calculate the depreciation of assets and how it will affect your business’s taxes. You can also combine data between several sheets, and visualize it in color-coded tables for an at-a-glance understanding. With all the new functionality, using a spreadsheet program can be intimidating for new users.
How to Create a Spreadsheet in Excel
The world’s most robust pure spreadsheet application, Excel, comes as part of both Microsoft Office and Office 365. There are two main differences between the two offerings: First, Microsoft Office is an on-premise application whereas Office 365 is a cloud-based app suite. Second, Office is a one-time payment, and Office 365 is a monthly subscription. Excel is available for both Mac and PC.
Unique Features of Excel
With over 400 functions, Excel is more or less the most comprehensive spreadsheet option when it comes to pure calculations. It also has strong visualization abilities, including conditional formatting, Pivot Tables, SmartArt, graphs, and charts. Home and business users alike can create powerful spreadsheets and reports to track data and inform their decisions.
One powerful Excel feature is Macro, little scripts and recordings you can create to make the program perform different actions automatically. While no other spreadsheet program has this type of feature, it is complex and can pose difficulty for beginners.
Excel also has close tie-ins with Microsoft Access, a database program, which can add power. In general, Excel integrates best with databases and any dataset requiring many calculations per workbook.
Understanding Your Main Screen
When you first open Excel in Office 365 or a newer version of Microsoft Office, you’ll see a basic screen. Here are the key features in this view:
A. Basic App Functions: From left to right along this top green banner you’ll find icons to: reopen the Create a Workbook page; save your work; undo the last action performed and display which actions were recorded; redo a step that’s been undone; select which tools appear below.
B. Ribbon: This grey area is called the Ribbon, and contains tools for entering, manipulating, and visualizing data. There are also tabs that focus on specific features. Home is selected by default; click on the Insert, Page Layout, Formulas, Data, Review, or View tab to reveal a set of tools unique to each tab. We’ll cover this more in the “Navigating the Ribbon” section later on.
C. Spreadsheet Work Area: By default the work area is a grid. Along the top are column headers A through Z (and beyond), and along the left side are numbered row headers. Each rectangle in the spreadsheet is called a cell, and they are each named according to their column letter and row number. For example, the cell selected here is A3.
D. Formula Bar: The Formula Bar displays the information contained within a highlighted single cell or range of cells. If in cell A1 you entered “1” as a value, “1” will appear in the Formula Bar. Plain text that you enter in a cell will also appear in the Formula Bar.
There are cases where what you see in the Formula Bar is different than what’s in the cell. For example, let’s say A1 = 1 and A2 = 2. If you create a formula in A3 that equals A1 + A2, then the A3 cell in your worksheet would show “3,” but the Formula Bar would show “=A1+A2.” This is important when you’re trying to move cells to other parts of your worksheet – remember that the display “value” of a cell isn’t necessarily what the cell contains.
That said, other formulas that reference a cell will take into account the current value of a cell. If A4 = A3 + 1, then it would be equal to 4, because it stacks the formula of A3 (A1 + A2) with A4 = A3 + 1. Formulas can reference other formulas multiple times.
E. Search Bar: Simply type the value you want to find to highlight all cells containing that value. It doesn’t have to be an exact match. For instance, if you searched for “o,” a cell labeled “Dogs” would appear among your search results.
F. Sheet Tabs: This is where the different sheets in your workbook can be found. Each sheet gets its own tab, which you can name yourself. These can be useful to separate out data so that one sheet doesn’t get too overwhelming. For example, you might have an annual budget, where each month is a column, and each row is a type of expense. Instead of keeping every single year you track on one sheet and scrolling horizontally, you can make each tab a different year containing 12 months only.
Note that data from different sheets in the same workbook can be referenced for formulas. For example, if you have two sheets, Sheet1 and Sheet2, you could bring Sheet2 data into Sheet1. If you wanted cell A1 in Sheet1 to equal the A1 in Sheet2, you’d enter this formula into A1: “=Sheet2!A1”. The exclamation mark calls on the previous sheet referenced before locating the data.
G. Viewability Options: The left icon is Normal which shows the worksheet as it appears in the image above, and the right icon is Page Layout, which divides your worksheet into pages resembling how it would look when printed, with the option to add headers. The slider with the “-” and “+” on it is for scale or zoom-level. Drag the slider left or right to zoom in or out.
Navigating the Ribbon
The Home tab is where you manage the formatting and appearance of your sheet, along with some simple formulas you’ll always need.
The Paste tool can paste anything in your clipboard into the selected cell, and typically retains everything including the value, formula, and format. However, Excel has a wealth of pasting options: you can access these by clicking the down arrow next to the Paste icon. You can paste what you’ve copied as a picture. You can also paste what you’ve copied as values only, so that instead of duplicating the formula of a copied cell, you duplicate the final value shown in the cell.
The Format paintbrush copies everything related to the formatting of a selected cell. When you select a cell and click Format, you can then highlight a whole range of cells, and each one will take on the formatting of the original cell, without changing their values.
The other tool in this section is Merge and Center. There are instances when you may want to combine several cells and have them act as one long cell. For example, you might want a header for an entire table to be clear and easy to read. Select all the cells you want combined, click Merge, and then type your header and format it. Though the default setting for headers is centered text, simply click the drop-down arrow to select different merging and unmerging options.
Conditional formatting is a bit more complex. Use the drop-down menu to select from a range of options, like inserting helpful visual icons to represent status or completion, or changing the color of different rows. Most important are the conditional rules, which are created with a simple logic. For example, let’s say you have a column with data in A1 through A3, and A4 holds the sum of these three cells. You could place formatting on A4 with a rule that says “if A4 > 0, then highlight A4 green.” Then, you could add another rule that says “if A4 < 0, then highlight A4 red.” Now you have a quick visual reference where green = a positive number and red = a negative number, which will change based on what you enter into A1, A2, and A3.
Use Fill to take a cell’s contents and extend them in any direction for as many cells as you want. If the cell contains a value, Fill will simply copy the value over and over again. If it contains a formula, it will recalculate its relative position for each new cell. If the first cell equals A1+B1, then the next would equal A2+B2, and so on.
The Clear button lets you either clear the value, or just clear cell formatting.
Sort & Filter tools let you choose what to display, and in what order. At the base level, this tool sorts cells containing text from A to Z, and cells containing numbers from lowest to highest. It can also sort by color or icon. Sorting and filtering helps surface only the data you need.
Use the Insert tab to add extra elements to your Excel workbook that go beyond text and colors.
Table builds a simple table that includes any number of columns you select. Rather than placing the table elsewhere on the worksheet, it turns the data into a table on the spot, and applies customizable color formatting.
The Page Layout tab has everything you need to change the structural parts of your worksheet, especially for purposes of printing or presenting.
The Formulas tab stores nearly everything related to Excel’s reputation as “complex.” Because this article is intended for beginners, we won’t cover every function is this section thoroughly.
AutoSum works the same as it does in the Home tab.
Recently Used is helpful for bringing up frequently used formulas to save time looking through menus.
Financial includes everything related to currency, values, depreciation, yield, rate, and more.
Logical includes conditional functions, like “IF X THEN Y.”
Text functions help clean, regulate, and analyze plain text cells, such as displaying the character count of a cell (helpful for Twitter posts), combining two different rows via Concatenate, or pulling out numerical values from text entries that aren’t formatted correctly.
Date & Time functions help make meaning out of time-formatted cells, and include entries like “TODAY,” which enters the current date.
Lookup & Reference functions help pull information from different parts of your workbook to save you the trouble of looking for them.
Math & Trig functions are just what they sound like, involving every sort of math discipline you can imagine.
More Functions includes Statistical and Engineering data.
The Data tab is for performing more complex data analysis than most beginners will need –
The Review tab is part of the Ribbon that helps with sharing and accuracy checks.
Use the tools in the View tab to change settings related to what you can see or do.
Now that you’ve learned about the tools in Excel, let’s practice making our own spreadsheet from scratch. This guide will cover basics, with a few intermediate techniques to get you more comfortable with spreadsheets.
Step 1: Create a Workbook
When you open Excel, you’ll be presented with a screen like this. Create a new workbook by clicking the New tab on the sidebar. The Recent tab below that will bring up any workbooks you’ve recently opened. Below that is the Shared tab, which shows workbooks that other Excel users have sent to you directly through the app (we won’t focus on that right now). The final tab is Open, which opens a file browser so you can select an existing workbook.
On the New tab, you can see a number of templates available, which can help you jump straight into making specific types of spreadsheets, like budgets and task lists. In this example, however, we’re going to build a spreadsheet from scratch. Click Blank Workbook on the top left corner, then click Create.
Step 2: Plan Your Needed Data
Before you can create any kind of spreadsheet, you need to plan what it’ll include so you can structure and format it accordingly. While it is possible to change the spreadsheet structure later on, the more data you’ve added, the more inconvenient it becomes. Plus, moving around entire rows and columns increases the chances of accidentally changing formulas. In this example, we’re making a monthly budget, so we’ll use a monthly time stamp. As we explored above, we can use other sheets in this workbook to track other time increments, like weeks or years. Of course we want to add all of our different expenses together, but we should also think of categories for comparison. We could have one for necessities, and one for luxuries. We’ll need subtotal rows, along with a comparison of budget to actual spending. At the end, we’ll also want to easily compare the different parts of the budget together.
Now we know the elements we need, and can organize them accordingly.
Step 3: Create Headings
Since we know we want to compare month to month, we should use months as our column headings – horizontally is usually best for time comparison. Since we know we’ll also have categories of spending to label and sublabel, we should leave the A and B columns open, and start at cell C1.
Here’s a useful trick: if you type a number or timestamp with a logical next entry, you can click the lower right corner of that cell and drag in any direction to autofill the rest of the sequence as far as you want. For this example, after typing “January” in C1, you can drag it across to N1 and watch it fill in the rest of the months. To create the diagonal names in the screenshot, navigate to the Home tab and find and click the formatting option with a diagonal rising appearance. This makes the headings stand out without changing the column width. We’ll also need an area on the sheet where we can get row totals for more useful data, so create the heading Total in cell O1.
Step 4: Label the Rows
Create three blocks of entries on column B. Name the first block Necessities, which will include everything you see, and end with a subtotal. Name the second block Luxuries and include a few categories; also end with a subtotal. The last block will have our Total, the budget to compare it to, and the difference between the two, which we’ll call Saved (this amount represents the difference between the expected and actual spent). To makes them stand out, use the Paint Bucket tool and select a color (grey in this example).
For column A, we’ll create labels that clearly line up with our grey blocks, and position the writing vertically so it doesn’t take too much space. To make the width of the column smaller, grab the right edge of the A column and drag it to the left. To combine all the cells for our category labels, highlight A2 through A7, and Merge & Center. To get the writing vertical, navigate to the Home tab, find the formatting option and click vertical writing. Finally, choose the height alignment as centered so the vertical text will appear in the middle. Repeat this with cells A9 through A13.
Step 5: Add Boundaries
Add boundaries to the spreadsheet using the icon in the above graphic. Select each collection of cells, and don’t adjust the spaces between the grey block groupings. Click All Borders to draw distinct grids. Now, make the outer boundary of each block thicker by selecting the entire area and choosing Thick Box Border. Finally, do the same around the inner row of each box labeled Subtotal, to make these visually distinct. Apply a Thick Box Border to Column O, Total, and leave spaces between each row grouping. All of this improves spreadsheet readability.
Step 6: Create a Results Table
Use the side of your nicely-formatted spreadsheet to create the outlines of a simple table which will contain your main results. This information will assist you in creating a chart, later. Give it an appropriate label, and label its rows for the total from Necessities, the total from Luxuries, and the total Saved for the year.
Step 7: Format and Write Formulas
This is where the spreadsheet gets a lot more powerful. It involves a series of steps:
Step 8: Script Conditional Formatting
Before entering data, there’s one more bit of set up: conditional formatting. To do this, click the drop down arrow on Conditional Formatting and click Manage Rules. Next, click + to add a rule, which takes you to a new popup menu. Click Style: Classic. Then choose Format only cells that contain, and click Cell Value greater than 0. Format this with a standard option, green fill with dark green text. Now you’ll be returned to the Manage Rules section, where you can select which range of cells it applies to. Choose C17 through O17 to have it affect the Saved row only.
Now repeat the steps, but this time Format only cells that contain the Cell Value equal to or less than 0. Use the standard option light red fill with dark red text, and apply it to the same range of cells.
Now you have a conditional format for all the final calculated Saved row entries. If it’s greater than 0, it gets marked green, and if it’s 0 or less, it gets marked red. When your data is entered, you can instantly see which months you saved money in, and which you didn’t.
Step 9: Enter Data and Watch the Calculations
First, enter an assumed budget, and copy it across the Budget row by dragging it from its bottom right corner. In this case, the assumed budget is $3,000.00.
Next, enter your data for each month of last year, totaled from receipts and bank statements, and categorized accordingly. Now for the magic of spreadsheets: as you enter each bit of data, you’ll see your Subtotals, Totals, Saved rows filling in, as well as the Portion of Budget table – all calculating and updating in real-time.
Step 10: Create a Pie Chart
Create a simple visualization. Select the entire Portion of Budget table, and then click the Insert tab on the Ribbon, and choose Pie Chart. Because of how the table is set up, the chart will be titled Portion of Budget, and each dollar amount will appear as a percent of the pie chart with the necessary label. Don’t forget to click Save on the top left of the Excel app.
Session 3 SO 3 |
Contribute to the quality of the management information system. |
Learning Outcomes (Assessment Criteria) | Potential improvements to the MIS are identified and considered for their impact on the quality of the system and any interrelated systems. Suggestions for changes are supported by a clear rationale as to how they could improve the quality of the system. The reliability of assumptions and judgements made is assessed and clearly stated. The benefits and costs of all changes are described accurately. Suggestions are presented clearly and in a way that assists people to understand and act on them. |
Characteristics of Management Information System (MIS)
Following are the key characteristics of MIS:
MIS follows the system approach, which implies a step by step approach to the study of system and its performance in the light of the objective for which it has been constituted. It means taking an inclusive view at sub-systems to operate within an organization.
The management-oriented characteristic of MIS implies that top-down approach needs to be followed for designing MIS. A top-down method says the initiation of system development determines management requirements as well as business goals. MIS implies the management dynamically to the system development towards the completion of management decision.
The design and development of MIS should be as per the information required by the managers. The required design and development information is at different levels, viz., strategic planning, management control and operational control. It means MIS should cater to the specific needs of managers in the hierarchy of an organization.
The design and development of MIS should also be future purpose so that the system is not restricted to provide only the past information.
A complete MIS is a combination of its multiple sub-components to provide the relevant information to take out a useful decision. An integrated system, which blends information from several operational areas, is a necessary characteristic of MIS.
This concept supports numerous basic views of system analysis such as avoiding duplication, combining similar functions and simplifying operations. The expansion of common data flow is a cost-effectively and logical concept.
MIS should always develop as a long-term planning because it involves logical planning to get success of an organization. While developing MIS, the analyst should keep future oriented analysis and needs of the company in mind.
The MIS development should be decomposing into its related sub-systems. These sub-systems must be meaningful with proper planning.
it contains data in tabular form. The data base is responsible to operations like insertion, deletion, updating of records. This database covers information related to inventory, personnel, vendors, customers, etc. the data stored in the database.
Advantage & Disadvantages of MIS
Modern businesses have been leveraging management information systems (MIS) to manage, order, organize and manipulate the gigabytes and masses of information generated for various purposes. MIS helps businesses optimize business processes, address information needs of employees and various stakeholders and take informed strategic decisions. However, budget allocation and monitoring issues can affect the efficacy of MIS. It has its advantages and disadvantages depending on organizational deployment and usage.
ADVANTAGES
An MIS provides the following advantages:
DISADVANTAGES:
Characteristics of a Good Management Information System
The purpose of a management information system, often referred to simply as MIS, is to help executives of an organization make decisions that advance the organization’s goals. An effective MIS assembles data available from company operations, external inputs and past activities into information that shows what the company has achieved in key areas of interest, and what is required for further progress. The most important characteristics of an MIS are those that give decision-makers confidence that their actions will have the desired consequences.
Relevance of Information
The information a manager receives from an MIS has to relate to the decisions the manager has to make. An effective MIS takes data that originates in the areas of activity that concern the manager at any given time, and organizes it into forms that are meaningful for making decisions. If a manager has to make pricing decisions, for example, an MIS may take sales data from the past five years, and display sales volume and profit projections for various pricing scenarios.
Accuracy and Reliability of Information
A key measure of the effectiveness of an MIS is the accuracy and reliability of its information. The accuracy of the data it uses and the calculations it applies generally determine the effectiveness of the resulting information. However, not all data needs to be equally accurate.
For example, payroll information needs to be precise, but employee hours spent on a given task can be based on reasonable estimates. The sources of the data determine whether the information is reliable. Historical performance is often part of the input for an MIS, and also serves as a good measure of the accuracy and reliability of its output.
Usefulness of Information
The information a manager receives from an MIS may be relevant and accurate, but it is only useful if it helps him with the particular decisions he has to make. For example, if a manager has to make decisions on which employees to cut due to staff reductions, information on resulting cost savings is relevant, but information on the performance of the employees in question is more useful. The MIS has to make useful information easily accessible.
Timeliness of Information
MIS output must be current. Management has to make decisions about the future of the organization based on data from the present, even when evaluating trends. The more recent the data, the more these decisions will reflect present reality and correctly anticipate their effects on the company. When the collection and processing of data delays its availability, the MIS must take into consideration its potential inaccuracies due to age and present the resulting information accordingly, with possible ranges of error.
Data that is evaluated in a very short time frame can be considered real-time information. For example, information on an increase in product defects may be flagged for instant management attention.
Completeness of Information
An effective MIS presents all the most relevant and useful information for a particular decision. If some information is not available due to missing data, it highlights the gaps and either displays possible scenarios or presents possible consequences resulting from the missing data. Management can either add the missing data or make the appropriate decisions aware of the missing information. An incomplete or partial presentation of information can lead to decisions that don’t have the anticipated effects.
End