Management Information
Data, information and knowledge
Data are raw, unprocessed facts and figures. Information is data that has been processed so it is meaningful to its user. Knowledge is information combined with experience and judgement. Exam questions regularly present a list and ask you to classify items as data or information: a list of daily till receipts is data; a report showing sales by product against budget is information.
Qualities of good information
Use the mnemonic ACCURATE: Accurate, Complete, Cost-effective, Understandable (user-targeted), Relevant, Authoritative, Timely. Add reliable source, correct volume, right channel, concise. Above all, information has value only if its benefit exceeds its cost: value = increase in the value of the decision made with the information, less the cost of producing it. More information is not automatically better information.
Levels and systems
Strategic information is long-term, summarised and largely external; tactical information is medium-term and often exception-based; operational information is short-term, detailed and internal. Transaction processing systems capture day-to-day data, management information systems turn it into routine reports, executive information systems give summarised internal and external data with drill-down, and decision support systems allow 'what if' modelling.
Sources
Primary data are collected for the purpose in hand; secondary data already exist. Both may be internal or external. Always consider cost, reliability and bias.
Rule of thumb
If a report costs £8,000 and the improved decision it enables is worth £25,000 more than the decision taken without it, its net value is £17,000 and it should be produced. If it costs £30,000, it should not.