In order to learn how to generate valid, accurate and useful information, it may be useful to first start by looking at the characteristics of good information. When data is put into a management information system (MIS), this information must be valid, accurate and relevant to the business. When these three criteria are met then the MIS will always work and can be used effectively by a business to manage their information. If there is information that is not valid, accurate or relevant, then it’s no use to the business and may cause problems if it is used to make business decisions.
Examples of valid, accurate and useful information
Sales or marketing data can be used to create management information which can help in making business decisions easier because the data that would be used is valid, accurate and relevant to the business. Marketing is one of the businesses functional areas which would collect sales data so that the information collected by them would be both valid and accurate. As marketing is a primary source of information in the company, the information would be reliable. Precise information such as the number of products sold in a year is recorded on a database and this is why this information is accurate information. By combining sales and marketing information, critical business decisions can be made on issues such as stock control, training or hiring more staff and whether to stop or run promotional activity.
In an MIS, any financial information must be valid, accurate and relevant. This is to show the exact and correct amounts of monies that a company has, where it comes from and where it goes to. Accuracy of financial information is key because it allow the business to predict what the future profit may be and how they could save money. The management information comes from financial so that managers can produce reports that are accurate e.g. income compared to expenditure and how to get the most out of their budgets.
The impact that competitors can have on a business can be huge as it could reduce market share and ultimately put the business out of business but by using valid, accurate and reliable data about competitors, a business can use the management information system to produce information to help themselves keep at least one step ahead of competitors. Having valid information allows a business to gain an insight into what the competitors may be doing and can help develop ways to prevent potential customers from going to competitors. If information is invalid, the business might not be able to foresee what the competitors are going to do and may lose business or profit by not focusing on the right issues.
The accuracy and the reliability of competitor information has to be correct also as if it was incorrect then the collected information about pricing and services of the competitors could mean that the competitor is severely undercutting all other businesses, resulting in increased market share. With relevant information about competitors to hand, this can help prevent a business from losing money and customers. For instance, if a company had information about what services where being used and how often then the business could target the specific service to try to get business from the competitors.
Having information about the skills and qualifications of employees that is both valid and relevant is important as the information produced by management can help make important decisions on staffing matters. The information has to be valid on skills of staff in order to enable managers to make informed decisions on the training needs of staff, which can in turn improve a business’s product and service offering. When the business wants to determine what each employee’s strengths and weaknesses are, it has to look at relevant information so that they can get the best out of them. Having valid, accurate and relevant information can produce information for when the business is running training programs, the allocation of jobs or the roles on a project.
Information that may be rejected
There is a wide range of information and data inputted into a management information system to produce management information that has to be analysed by the system, but if the data that is selected is not valid, accurate or relevant it is rejected.
A management information system could reject any information regarding employees themselves for several reasons, the first being any breach to the Data Protection Act 1998. If the business were to enter details such as age, address or phone number, the business could face serious repercussions for the improper use of information. This means that the information was not used for the purpose it was originally intended for. Other reasons information on employees may be rejected could be that information is irrelevant such as entering personal details (i.e. favourite movies and number of tattoos a person has) which would not be useful for looking at skills of employees.
Business banking details
If a business’s banking details were to be input into a management Information system it could cause major problems for a business as other people outside of accounts and management could gain access to this information to use illegally in fraud (i.e. altering data logs or invoices to steal money). For this reason any banking details would be rejected.
Personal information of customers
The address, telephone number and bank details of customers are personal details which cannot be entered into a management information system, as this information is not relevant to management information and it would also breach the Data Protection Act 1998. If a business were to use this information they could be sued by the customer and face serious legal action.