The document discusses the difference between data and information. Data refers to raw facts and numbers, while information is data that has been processed and organized in a way that makes it meaningful and useful. An example is sales data from a store that is processed into a management report about total daily sales and best-selling products. The document also outlines several uses of information in businesses for planning, recording transactions, controlling operations, and measuring performance. Finally, it discusses the types of information needed at different management levels for strategic, tactical, and operational decision-making.

1. Welingkar’s Distance Learning Division
I.T. for Management
CHAPTER-3
Need for information
Systems in organization
We Learn – A Continuous Learning Forum

2. Welingkar’s Distance Learning Division
Need for information Systems in
organization
The difference between Data and Information?
It is important that you understand the difference between
"data" and "information"
Data
Think of data as a "raw material" -it needs to be processed
before it can be turned into something useful. Hence the
need for "data processing". Data comes in many forms -
numbers, words, symbols. Data relates to transactions,
events and facts. On its own -it is not very useful.
We Learn – A Continuous Learning Forum

3. Welingkar’s Distance Learning Division
Need for information Systems in
organization
Think of the data that is created when you buy a product from a
retailer. This includes:-
- Time and date of transaction (e.g. 10:05 Tuesday 23 December
2003)-Transaction value (e.g. £55.00)
- Facts about what was bought (e.g. hairdryer, cosmetics pack,
shaving foam) and how much was bought (quantities)
- How payment was made (e.g. credit card, credit card number
and code)
- Which employee recorded the sale
- Whether any promotional discount applied
We Learn – A Continuous Learning Forum

4. Welingkar’s Distance Learning Division
Need for information Systems in
organization
At its simplest, this data needs processing at the point of sale in
order for the customer to receive a valid receipt. So the data
about the transaction is processed to create "information" -in this
case a receipt. You can imagine that the same data would also be
useful to the manager of the retail store. For example, a report
showing total sales in the day, or which are the best-selling
products. So the data concerning all shop transactions in the day
needs to be captured, and then processed into a management
report.
The above example demonstrates what information is.
We Learn – A Continuous Learning Forum

5. Welingkar’s Distance Learning Division
Need for information Systems in
organization
Information is data that has been processed in such a
way as to be meaningful to the person who receives it.
Note the two words highlighted in red -"processed" and
"meaningful". It is not enough for data simply to be
processed. it has to be of use to someone -otherwise
why bother?!
Uses of Information in a Business
Businesses and other organizations need information
for many purposes
We Learn – A Continuous Learning Forum

6. Welingkar’s Distance Learning Division
Need for information Systems in
organization
Use Planning Description
To plan properly, a business needs to know what
resources it has (e.g. cash, people, machinery and
equipment, property, customers). It also needs
information about the markets in which it operates and
the actions of competitors. At the planning stage,
information is important as a key ingredient in decision-
making.
We Learn – A Continuous Learning Forum

7. Welingkar’s Distance Learning Division
Need for information Systems in
organization
Use Recording Description
Information about each transaction or event is
needed. Much of this is required to be collected
by law -e.g. details of financial transactions. Just
as importantly, information needs to be recorded
so that the business can be properly managed.
We Learn – A Continuous Learning Forum

8. Welingkar’s Distance Learning Division
Need for information Systems in
organization
Use Controlling Description
Once a business has produced its plan it needs to
monitor progress against the plan -and control
resources to do so. So information is needed to
help identify whether things are going better or
worse than expected, and to spot ways in which
corrective action can be taken
We Learn – A Continuous Learning Forum

9. Welingkar’s Distance Learning Division
Need for information Systems in
organization
Use Measuring Description
Performance must be measured for a business to
be successful. Information is used as the main
way of measuring performance. For example,
this can be done by collecting and analyzing
information on sales, costs and profits
We Learn – A Continuous Learning Forum

10. Welingkar’s Distance Learning Division
Need for information Systems in
organization
Decision-making
Information used for decision-making is often categorized into
three types:
1. Strategic information: used to help plan the objectives of the
business as a whole and to measure how well those
objectives are being achieved. Examples of strategic
information include:-
-Profitability of each part of the business-Size, growth and
competitive structure of the markets in which a business
operates-Investments made by the business and the
returns (e.g. profits, cash inflows) from those investments
We Learn – A Continuous Learning Forum

11. Welingkar’s Distance Learning Division
Need for information Systems in
organization
2. Tactical Information:
This is used to decide how the resources of the
business should be employed. Examples include:
- Information about business productivity (e.g.
units produced per employee; staff turnover)
- Profit and cash flow forecasts in the short term
- Pricing information from the market
We Learn – A Continuous Learning Forum

12. Welingkar’s Distance Learning Division
Need for information Systems in
organization
3. Operational Information: this information is used
to make sure that specific operational tasks are
carried out as planned/intended (i.e. things are
done properly). For example, a production
manager will want information about the extent
and results of quality control checks that are
being carried out in the manufacturing process.
We Learn – A Continuous Learning Forum

13. Welingkar’s Distance Learning Division
Need for information Systems in
organization
In summary managers require information for at
least four reasons
Self control
To know how they have performed & what needs to
be done
To manage performance of others
To coordinate across functions
Report his performance to his superiors
We Learn – A Continuous Learning Forum

14. Welingkar’s Distance Learning Division
IS at the Organizational Level
KIND OF SYSTEM GROUPS SERVED
STRATEGIC LEVEL SENIOR MANAGERS
MANAGEMENT LEVEL MIDDLE MANAGERS
KNOWLEDGE LEVEL KNOWLEDGE &
Data workers
OPERATIONAL OPERATIONAL
LEVEL MANAGERS
SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN
MARKETING RESOURCES
We Learn – A Continuous Learning Forum

15. Welingkar’s Distance Learning Division
Need for information
Systems in organization
End of Chapter 3
We Learn – A Continuous Learning Forum