Basic Concepts - Understanding Information: Slide 1.1

Slide 1.
Chapter 1
Basic concepts
understanding information
Bocij, Chaffey, Greasley, Hickie, Business Information Systems, 3rd Edition Pearson Education Limited 2006
Slide 1.2
Learning objectives
After this lecture, you should be able to:
distinguish between data, information and
knowledge;
describe and evaluate information quality in terms
of its characteristics;
classify decisions by type and organisational level;
identify the information needed to support
decisions made at different organisational levels.
Slide 1.3
Management issues
From a managerial perspective, this chapter
addresses the following areas:
the importance of managing information and
knowledge as a key organisational asset;
the transformation process from data to
information of high quality;
the process and constraints of decision making;
the different kinds of decisions that managers
make and how these affect the organisation.
Slide 1.4
Where is the emphasis?
Where should it be?
Information Technology
Information Technology
The stress should be on the I rather than the T in IT (Davenport, 2000).

Peter Drucker stressed the importance of information to organisational competitiveness in
1993 when he wrote:
The industries that have moved into the center of the economy in the last
forty years, have as their business, the production and distribution of
knowledge and information rather than the production and distribution of
things.
Slide 1.5
What is data?
Data are raw facts or observations that are
considered to have little or no value until they have
been processed and transformed into information.
Example definitions:
(a) a series of non-random symbols, numbers, values or
words;
(b) a series of facts obtained by observation or research
and recorded;
(c) a collection of non-random facts;
(d) the record of an event or fact.
Slide 1.6
What is information?
Information: Data that have been processed so
that they are meaningful.
Example definitions:
(a) data that have been processed so that they are
meaningful;
(b) data that have been processed for a purpose;
(c) data that have been interpreted and understood
by the recipient.
Slide 1.7
Figure 1.1 Transforming data into information using a data process
Slide 1.8
Information summary
Information:
involves transforming data using a defined
process;
involves placing data in some form of meaningful
context;
is produced in response to an information need
and therefore serves a specific purpose;
helps reduce uncertainty, thereby improving
decision behaviour.
Slide 1.9
Activity
What types of information processing are
involved when a national retailer summarises
national sales formation nationally?
Slide 1.10
Types of information processing

Classification: This involves placing data into categories, for
example, categorising an expense as either a fixed or a
variable cost.
Rearranging/sorting: This involves organising data so that
items are grouped together or placed into a particular order.
Employee data, for example, might be sorted according to last
name or payroll number.
Aggregating: This involves summarising data, for example, by
calculating averages, totals or subtotals.
Performing calculations: An example might be calculating an
employees gross pay by multiplying the number of hours
worked by the hourly rate of pay.
Selection: This involves choosing or discarding items of data
on the basis of a set of selection criteria. A sales organisation,
for example, might create a list of potential customers by
selecting those with incomes above a certain level.
Slide 1.11
Activity 1.1 data versus information

From the point of view of a student at university,
which of the following might be examples of
information? Which might be examples of data?
(a) the date
(b) a bank statement
(c) the number 1355.76
(d) a National Insurance number
(e) a balance sheet
(f) a bus timetable
(g) a car registration plate
Slide 1.12
Information value
Tangible value:
Value of info Cost of gathering info
Intangible value:
Improvements in decision behaviour Cost of
gathering information
Slide 1.13 Activity 1.2 Tangible and
intangible information
When information is used effectively, it can bring
about many of the improvements listed below. State
and explain why each of the items listed illustrates a
tangible or intangible value of information.
(a) improved inventory control;
(b) enhanced customer service;
(c) increased production;
(d) reduced administration costs;
(e) greater customer loyalty;
(f) enhanced public image.
Slide 1.14
What is the importance of
informal information?
Formal communication: Formal communication
involves presenting information in a structured
and consistent manner.
Informal communication: This describes less
well-structured information that is transmitted by
informal means, such as casual conversations
between members of staff.
Slide 1.15
Information quality dimensions
Time Content Form Additional characteristics
Timeliness Accuracy Clarity Confidence in source
Currency Relevance Detail Reliability
Frequency Completeness Order Appropriate
Time period Conciseness Presentation Received by correct person
Scope Media Sent by correct channels
Slide 1.16
Figure 1.2 The business environment of an organisation and the main factors that
influence it
Slide 1.17
What is the relation between
e-business and IT
When a business has fully integrated information
and communications technologies (ICTs) into its
operations, potentially redesigning its business
processes around ICT or completely reinventing
its business model e-business is understood to
be the integration of all these activities with the
internal processes of a business through ICT.
DTI Definition
Slide 1.18
How does information
support managers?
Henri Fayol (18411925) devised a classic
definition of management that is still widely used
in both industry and academia.
To manage is to forecast and plan, to organise,

to command, to coordinate and to control
Slide 1.19
Different decision types

Decision behaviour: Describes how people make
decisions and the factors that influence them.
Structured decisions: Situations where the rules
and constraints governing the decision are known.
Unstructured decisions: Complex situations, where
the rules governing the decision are complicated or
unknown.
Cognitive style: This describes the way in which a
manager absorbs information and reaches decisions.
A manager's cognitive style will fall between
analytical and intuitive styles.
Slide 1.20
Is your data hard or soft?

Hard data, also known as quantitative data, tend
to make use of figures, such as statistics. Hard
data are often collected in order to measure or
quantify an object or situation.
Soft data, often known as qualitative data, tend

to focus on describing the qualities or
characteristics of an object or situation.
Interviews, for example, are often used to collect
qualitative data related to a persons opinions or
beliefs.
Slide 1.21
Decisions and management level
Decision
Management Type of decision Time scale Impact on Frequency of
level organisation decisions
Strategic Unstructured Long Large Infrequent
Tactical Medium Medium
Operational Structured Short Small Frequent
Slide 1.22
Figure 1.3 Levels of managerial decision taking
Slide 1.23
Information characteristics by
management level
Information
Management Time period Frequency Source Certainty Scope Detail
level
Strategic Wide Infrequent External Less certain Wide Summarised
Tactical
Operational Narrow Frequent Internal More certain Narrow Detailed
Slide 1.24
A model of decision making

Stage Activities
Intelligence Awareness that a problem exists
Awareness that a decision must be made
Design Identify all possible solutions
Examine possible solutions
Examine implications of all possible solutions
Choice Select best solution
Implementation Implement solution
Evaluation Evaluate effectiveness or success of decision
Slide 1.25
Business rules
Business rule: A rule that defines the actions
that need to occur in a business when a particular
situation arises.
For example, a business rule may state that if a
customer requests credit and they have a history
of defaulting on payments, then credit will not be
issued.
A business rule is broken down into an event that
triggers a rule with test conditions that result in
defined actions.
Slide 1.26
Figure 1.4 Decision tree notation for checking credit
Slide 1.27
Figure 1.5 Framework for a decision table
Slide 1.28
Figure 1.6 Decision table for the credit checking example
Slide 1.29
Knowledge management
The European Guide to Best Practice in Knowledge
Management defines knowledge as:
The combination of data and information to which is

added expert opinion, skills and experience to result
in a valuable asset which can be used to make
decisions. It is the essential factor in adding meaning
to information. Knowledge may be explicit and/or
tacit, individual and/or collective
Mekhilef et al., 2003
Slide 1.30
Competitive intelligence
The Competitive Intelligence handbook
(www.combsinc.com) presents different definitions of
CI, for example:
The objective of competitor intelligence is not to steal
a competitors trade secrets or other proprietary
property, but rather to gather in a systematic, overt
(i.e., legal) manner a wide range of information that
when collated and analysed provides a fuller
understanding of a competitor firms structure,
culture, behaviour, capabilities and weaknesses.
Slide 1.31
Activity 1.8 Competitive intelligence
and customer knowledge
The marketing department of a construction company is planning the
creation of a competitive intelligence system. Its aim is to capture and
disseminate information about 30 key competitors and also existing or
potential customers served by account representatives.
You are designing the system. Working in groups, agree on an

approach for:
1. Capturing data (who is involved, what information they need to collect).
2. Entering data (who is responsible for this, how they evaluate and categorise
the different types of information entered).
3. Output requirements. Using the framework for quality of information in Table
1.1, what are the requirements in terms of types of content, frequency, who
can access the data and filtering according to different criteria?
4. What types of hardware and software may be required for the system
(reference to later chapters may be needed to answer this)?

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Slide 1.

The stress should be on the I rather than the T in IT (Davenport, 2000).

Figure 1.1 Transforming data into information using a data process

Types of information processing

Activity 1.1 data versus information

Information quality dimensions

Time Content Form Additional characteristics

Timeliness Accuracy Clarity Confidence in source

Currency Relevance Detail Reliability

Frequency Completeness Order Appropriate

Time period Conciseness Presentation Received by correct person

Scope Media Sent by correct channels

To manage is to forecast and plan, to organise,

Different decision types

Is your data hard or soft?

Soft data, often known as qualitative data, tend

Decisions and management level

Management Type of decision Time scale Impact on Frequency of

level organisation decisions

Strategic Unstructured Long Large Infrequent

Tactical Medium Medium

Operational Structured Short Small Frequent

Figure 1.3 Levels of managerial decision taking

Management Time period Frequency Source Certainty Scope Detail

Strategic Wide Infrequent External Less certain Wide Summarised

Operational Narrow Frequent Internal More certain Narrow Detailed

A model of decision making

Intelligence Awareness that a problem exists

Awareness that a decision must be made

Design Identify all possible solutions

Examine possible solutions

Examine implications of all possible solutions

Choice Select best solution

Implementation Implement solution

Evaluation Evaluate effectiveness or success of decision

Figure 1.4 Decision tree notation for checking credit

Figure 1.5 Framework for a decision table

Figure 1.6 Decision table for the credit checking example

The combination of data and information to which is

You are designing the system. Working in groups, agree on an

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