Class I
IT Knowledge
Chapter 1
Information
with Organization
Information
The word information has existed in the English
language for far longer than the word data. The concept of informing
someone is well understood, and that gives us some clues to meaning. Data
that is (1) accurate
and timely, (2) specific and organized for a purpose, (3) presented within a context
that gives it meaning and relevance, and (4) can lead
to an increase in understanding and decrease in uncertainty.
Information is the data that has been processed into a form
that gives meaningful message to the recipient and is of real or perceived
value in current or progressive decision.
Information is valuable because it can affect behavior,
a decision,
or an outcome. For example, if a manager
is told his/her company's net profit decreased in the past month,
he/she may use this information as a reason to cut financial spending
for the next month. A piece of information is considered valueless if, after receiving it, things remain unchanged.
Value of
information:
Information is of high value if
it is –
Reliable
(accurate)
Clean
Complete
Right quantity –
avoiding intimidating overload
Relevant – and
perceived as relevant by the receiver
For
example,
President
Barack Obama’s top intelligence official sent a memo to his staff saying
"high value information" was obtained during interrogations using
controversial techniques.
Some of the
characteristics of good information are discussed as follows:
i. Understandable:
Since information
is already in a summarized form, it must be understood by the receiver so that
he will interpret it correctly. He must be able to decode any abbreviations,
shorthand notations or any other acronyms contained in the information.
ii. Relevant:
Information is
good only if it is relevant. This means that it should be pertinent and
meaningful to the decision maker and should be in his area of responsibility.
iii. Complete:
It should
contain all the facts that are necessary for the decision maker to
satisfactorily solve the problem at hand using such information. Nothing
important should be left out. Although information cannot always be complete,
every reasonable effort should be made to obtain it.
iv. Available:
Information may
be useless if it is not readily accessible ‘in the desired form, when it is
needed. Advances in technology have made information more accessible today than
ever before.
v. Reliable:
The information
should be counted on to be trustworthy. It should be accurate, consistent with
facts and verifiable. Inadequate or incorrect information generally leads to
decisions of poor quality. For example, sales figures that have not been
adjusted for returns and refunds are not reliable.
vi. Concise:
Too much
information is a big burden on management and cannot be processed in time and
accurately due to “bounded rationality”. Bounded rationality determines the
limits of the thinking process which cannot sort out and process large amounts
of information. Accordingly, information should be to the point and just enough
– no more, no less.
vii. Timely:
Information must
be delivered at the right time and the right place to the right person.
Premature information can become obsolete or be forgotten by the time it is
actually needed.
Similarly, some
crucial decisions can be delayed because proper and necessary information is
not available in time, resulting in missed opportunities. Accordingly the time
gap between collection of data and the presentation of the proper information
to the decision maker must be reduced as much as possible.
viii. Cost-effective:
The information
is not desirable if the solution is more costly than the problem. The cost of
gathering data and processing it into information must be weighed against the
benefits derived from using such information.
Data
Better Data – Better Business
Data comes from
the Latin word datum, meaning “something given.” Over time, the English
language has evolved to use data as plural.Information in raw or unorganized form (such as alphabets, numbers, or symbols) that refer to, or represent, conditions, ideas, or objects
is call data . Data is limitless and present
everywhere in the universe.
Datais the raw materials of
information. A data processing system processes data into information.
Difference between Data and Information
When improving decision making in a business, we need to understand the difference between data and information to define our data quality goals.Data and information are not the same–and they should not be confused.
Comparison chart
Data |
Information |
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|
Meaning
|
Data
is raw, unorganized facts that need to be processed. Data can be something
simple and seemingly random and useless until it is organized.
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When
data is processed, organized, structured or presented in a given context so
as to make it useful, it is called information.
|
|
Example
|
Each
student's test score is one piece of data.
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The
average score of a class or of the entire school is information that can be
derived from the given data.
|
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Etymology
|
"Data"
comes from a singular Latin word, datum, which originally meant
"something given." Its early usage dates back to the 1600s. Over
time "data" has become the plural of datum.
|
"Information"
is an older word that dates back to the 1300s and has Old French and Middle
English origins. It has always referred to "the act of informing, "
usually in regard to education, instruction, or other knowledge
communication.
|
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Nature
|
Raw,
unanalyzed facts, figures and events
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Useful
knowledge derived from the data
|
|
Process
|
Data
is unprocessed instructions.
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If data is processed willbecome information
|
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Basis
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Data
is material for information
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Information
is gathering all material to be it.
|
|
Source
|
Data is raw material for data
processing. Data relates to fact, event and transactions.
|
Information is data that has been
processed in such a way as to be meaningfulto the person who receives it. It is
anything that is communicated.
|
|
Meaning
|
Data is raw material which is
unprocessed for data processing. It is normally entered by input devices into
computer and it can be in any form, useable or not. It does not bring
meaning, some of them is even in computer language.
|
Information is data that has been
processed, it can be useful for the person receiving since it brings meaning.
It can be understood by human and normally convey by output devices to
people.
|
Example of Data:
Joe, Smith,
1234 Circle, SLC, UT, 8404, 8015553211
Example of
Information:
Joe
Smith
1234 Circle
Salt Lake City, UT 84084
(801)555-3211
1234 Circle
Salt Lake City, UT 84084
(801)555-3211
Usefulness of
data:
·
Companies
that sell product may mail order need to keep up to date lists of name and
·
Addresses
of customers who may be interested in making a purchase. This data is very
·
Valuable
and can be sold to other “like” companies. What would make this list become
oflittle value?
·
What
could be added to the data so that it can be kept up to date?
·
Is
the cost of keeping data up to date, accurate and complete worthwhile to
thecompany?
What
are high value / high risk records and information?
High value and high risk records and information are
determined by the business context. Each organization has areas of business
which are high risk and high value, or which are critical because they are the
core business of the organization. Identifying high risk and high value
business processes will depend on the nature of your organization’s business.
For example, there may be business areas in your organization which undertake:
- significant investment by Government or major contributions to the NSW economy
- direct contact with individuals (for example, a regulatory, enforcement, health or welfare activity where there may be dispute)
- development of policy which will impact on individuals and communities or rights and entitlements
- management of natural resources, the protection and security of the state, or infrastructure in NSW
- processes that are open to corruption or the potential of corrupt behavior, or
- a major program of international/national/state significance.
Importance of Information
Bill Gates, founder of Microsoft, stated:
“How you manage information determines whether
you win or lose.”
To
gain the maximum benefits from your company's information system, you have to
exploit all its capacities.
To
increase the information system's effectiveness, you can either add more data
to make the information more accurate or use the information in new ways.
Information
systems gain their importance by processing the data from company inputs to
generate information that is useful for managing your operations.
Information
technology is fundamental to the successof any business.
The
information that is collected and/or assembled in any business is as valuable
resource as capital or people.
Information
may be processed, summarized and analyzed by computers before being used by
managers as the basis for decision making.
to get benefit, Information
must be –
Accurate
Complete
Up-to-date
How
Information Systems Impact Organizations and Business Firms
From an economic point of view, information systems
technology can be seen as a factor of production that can be freely substituted
for capital and labor. As information systems technology automates the
production process, less capital and labor are required to produce a specified
output.
Relationship between Information
Technology and Business
Information and communication technology has made rapid advances since the early 1990s, and has dramatically altered the way in which modern businesses work. It has also enabled a greater number of people to work from home.
Relationship
between information and organization: Information system and organizationhas a
complex two-way relationship. This complex two-way relationship is mediated by
manyfactors, not the least of which are the decisions made or not made by
managers. Other factorsmediating the relationship include the organizational
culture, structure, politics, business processand environment.
Information Technology: Impact on the Economy
Information
technology has impacted the economy in a number of ways. The most noticeable
changes involve e-commerce, marketing tactics, and facilitation of
globalization, job insecurity, and job design. This lesson will explore a
variety of concepts pertaining to the changing economy, including downsizing,
outsourcing, the use of cookies, the benefits and costs of globalization, and
the impact of e-commerce.
E-Commerce
The last decade has seen incredible changes to the
economy due to the World Wide Web. Entrepreneurs have harnessed technology and
changed the way we conduct and transact business. Fortunes have been made and
lost. Some experienced huge success and became dot-com millionaires or
billionaires overnight, while others became dot-bomb failures.
Meet Harry. He's one of the dot-com millionaires. He's
experienced success and helped forge a new economy. Electronic commerce, or
e-commerce, enabled by information technology, has fueled many changes and
created a new economy. E-commerce is the buying and selling of products
over the Internet.
Redefining Organizational Boundaries
E-commerce eliminates barriers such as time,
geography, language, currency, and culture. Harry was able to rejuvenate his
struggling hardware business by opening an online storefront on the Internet.
He can now compete with larger rivals like Home Depot and Lowe's. He has also
gained access to millions of consumers across the globe he otherwise would not
have been able to reach.
Information technology has redefined organizational
boundaries. No longer are businesses confined to brick and mortar stores.
Transactions such as payments can be conducted over the Internet. Relationships
with customers, suppliers, and partners can be strengthened and streamlined.
Inventory can be kept electronically. Purchase orders can easily be exchanged
among different companies electronically.
Consider the increasing popularity of Cyber Monday. Cyber
Monday is the term used to describe the Monday after Thanksgiving, in which
companies offer great deals to persuade consumers to purchase products. It is
the official kick-off to the holiday shopping season. It is growing in
popularity and is in strong competition with Black Friday, the day after
Thanksgiving, which is often cited as the biggest shopping day of the year in
the United States. Harry sees a 15% increase in sales on Cyber Monday, when he
offers his lowest prices and best deals of the season.
Marketing and Privacy
With e-commerce, sales and advertising can be
customized to the individual consumer, and websites can easily monitor consumer
behavior without knowledge or consent. Harry can track his customers' movements
with the use of cookies. Cookies are small data files that are written
and stored on the user's hard drive by a website when that user visits the site
with a browser. The cookies provide Harry with information on pages visited,
items examined, and dates of visits. This information is stored in the cookie
and sent back to the company. Based on the information Harry receives, he can
customize his marketing to fit the needs of each individual customer. This
information allows Harry's Hardware to target customers based on preferences and increase sales.
Companies like Harry's Hardware gather customer
information for targeted marketing and advertising. It is much more effective
to send a user an advertisement specific to their likes rather than just a
general advertisement. The ability to predict consumer preferences and behavior
is greatly increased using this method. The concern that arises is privacy. Information
privacy is the right to determine when and to what extent information about
oneself can be communicated to others. Information technology has created a
more open society where privacy grows scarcer with the development of each new
technological innovation. Some are concerned about the data collected and how
it will be used.
Globalization
Globalization
is the increasing movement of goods, services, and capital across national
borders. Global commerce has transformed the world's economy. In fact, one
fourth of all goods and services produced worldwide are sold to other nations.
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The
acceleration of globalization has been driven by several factors, one of
which is technological innovation. Software, hardware, Internet, fiber optic
cables, and much more have made it easier and faster for companies to
communicate with employees, partners, and suppliers from all over the globe
in real time. Technology has improved transportation, making it faster and
cheaper to move goods from one place to another. Globalization transfers
technology. This means the best and newest innovations spread quickly and
become accessible to people all over the globe. Globalization tends to reduce
prices for consumers. Costs are kept down by moving operations abroad, where
it may be cheaper to hire labor or conduct business.
Transaction cost
theory states that organizations grow in
size because they can obtain certain products or services internally at lower
cost than by using external firms in the marketplace. By lowering the cost of
market participation (transaction costs) information technology allows firms
to obtain goods and services more cheaply from outside sources than through
internal means. Information systems can thus help firms increase revenue
while shrinking in size.
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THE TRANSACTION COST THEORY OF THE IMPACT OF INFORMATION TECHNOLOGY ON THE ORGANIZATION
Firms traditionally grew in size to reduce transaction
costs. IT potentially reduces the costs for a given size, shifting the
transaction cost curve inward, and opening up the possibility of revenue
growth without increasing size, or even revenue growth accompanied by
shrinking size.
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Agency
theory views the firm as a nexus of
contracts among self- interested individuals, who must be carefully supervised
to ensure they pursue the interests of the organization. Information technology
can help reduce agency costs, the costs of coordinating many different people
and activities, so that each manager can oversee a larger number of employees.
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THE AGENCY COST THEORY OF THE IMPACT OF INFORMATION TECHNOLOGY ON THE ORGANIZATION
As firms grow in size and
complexity, traditionally they experience rising agency costs. IT shifts the
agency cost curve down and to the right, enabling firms to increase size
while lowering agency costs.
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Behavioral researchers have
theorized that information technology facilitates flattening of hierarchies by
broadening the distribution of information to empower lower-level employees and
increase management efficiency.
Attributes of
useful and effective information: (Page 29)
- Availability
- Purpose
- Mode and format
- Decay
- Rate
- Frequency
- Completeness
- Reliability
- Cost Benefit Analysis
- Validity
- Quality
- Transparency
- Value of Information
Organization
Organization
A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a managementstructure that determines relationships between the different activities and the members, and subdivides and assignsroles, responsibilities, and authority to carry out different tasks. Organizations are open systems--they affect and are affected by their environment.
Why do organizations exist?
Organizations
exist because groups of people working together can achieve more than the sum
of the achievements which the individuals in the organization could produce
when working separately.
Organization
exist because they:
Overcome
people’s individual limitations, whether physical or intellectual
For
example, one person might struggle all day to carry a piano upstairs, whereas a team of four people, each
taking one corner, may need to put in much
less than a quarter of the effort of one person to complete the task (Coates et al., 1996, p. 19).
Enable people to
specialize in what they do best.
Save time
because people can work together or do two aspects of a different
Task at the same
time.
Accumulate and
share knowledge (e.g. about how best to build cars)
Enable people to
poll their expertise
Enable synergy
What do
organizations have in common?
It is well known that most organizations try to do their own
things and it usually does not matter if their particular method is the most
economical, cost efficient, transparent, etc. But when 20 of the larger
charities, municipalities, public and private charities choose to partner with
one organization to provide the same basic need, IT SHOULD TELL YOU SOMETHING!
How do
organizations differ? (Page 36)
Ownership –
Public vs. Private.
Control
Activity –
Manufacturing, service, healthcare.
Profit or
Non-Profit Orientation
Size– small
local business, multinational company.
Legal Status –
Company, partnership, sole trader.
Source of
Finance – Share issue, borrowing, government fund.
Technology –
high use of technology, low use of technology.
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