Need for Information Systems in Organization

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Data is like a “raw material” that needs processing. Processed data is called information and only information assists an organization to make effective decisions.

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Need for Information Systems in Organization

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

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