IT Knowledge - Class I - Chapter 1 Information with Organization

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
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.	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.	The average score of a class or of the entire school is information that can be derived from the given data.
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.
Nature	Raw, unanalyzed facts, figures and events	Useful knowledge derived from the data
Process	Data is unprocessed instructions.	If data is processed willbecome information
Basis	Data is material for information	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

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.

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.

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.

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.

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.

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.