Value – Ed, December 2020, PM Batch

Chapter - 2
Information, technologies and
systems for organizational
performance
Concept of data and information

Data

Facts or figures in a raw and unprocessed format. It includes numbers, letters, symbols, raw facts,
events and transactions

Information

To become useful for a decision maker, data must be transformed into information
Characteristics of good information – ‘Concept of ACCURATE’

Accurate

Complete

Cost effective

Understandable

Relevant

Accessible

Timely

Easy to use
Data processing

Data processing - Conversion of data into information by classifying, sorting or producing total
figures, manually or by automated means

Data may be transformed into information by:

❖ bringing together related pieces of data

❖ summarizing data
❖ basic processing of data
❖ using tabulation and diagrammatic techniques
❖ using statistical analysis
❖ financial analysis
Sources and types of management information

Types of Information –

❖ Internal information and

❖ External information (for eg - competitor information, customer and supplier information)

Sources of information –

❖ Internal sources (Sales ledger system, Purchase ledger system, Payroll system, Non-current
asset system, Production, Sales and marketing

❖ External sources (Suppliers, newspapers and journal, government, customers, employees,

banks, business enquiry agents, internet, etc.)
Information technology and information systems

Information Technology (IT) - equipment concerned with the capture, storage, transmission or
presentation of information.

Information Systems (IS) - refers to the provision and management of information to support
the running of the organization. These are a valuable strategic source which help an
organization gain competitive advantage by:

❖ linking the organization to customers or suppliers

❖ effectively integrating the use of information in a value-adding process
❖ developing, producing, marketing and delivering new products and/or services based on
information
❖ giving information to senior management to help develop and implement strategy
What is the need of information?

❖ Documentation of transactions can be used as evidence in a case of dispute

❖ There may be a legal requirement to record transactions

❖ Information on production costs is used to assess the profitability of a business

Costs of a new systems
Cost-benefit analysis must be used to assess the expected costs and benefits of the new Information System
i.e. Benefit of management information > cost of obtaining information

The costs of a new system

Initial costs Running costs

❖ Costs to design and develop the system (in case ❖ Cost of labour time to run the system
of bespoke software)
❖ Cost of materials
❖ Purchase price of software if it is not bespoke
❖ Cost of service support, e.g. IT helpdesk
❖ Purchase cost of new hardware

❖ Cost of testing and implementation of the new

system

❖ Training costs
Cost classification

Costs of internal information Costs of external information

❖ Direct data capture costs ❖ Direct costs

❖ Processing costs ❖ Indirect costs (e.g. wasted time finding useful
❖ Indirect costs information)
❖ Management costs
❖ Infrastructure costs

Indirect costs of producing information - Cost of labour and cost of

training staff on new or changed system
Other indirect costs of providing information

❖ Loss of staff morale

❖ Delays caused in other projects of the business
❖ General dislocation caused by system change
❖ Upsetting customers from system change
❖ Incompatibility with other systems
❖ Unexpected costs of software amendments, tailoring and maintenance
❖ Cost of failure due to inappropriate systems or faulty implementation
❖ Reduced quality of information, due to information overload
❖ Poor decision making, due to information overload
❖ Too many areas to focus on
❖ Focus on the wrong things
Systems architecture and data flows

Network (LANs) – Organizations use LANs to enable them to share data (e.g. via email) and devices
(such as printers)

Wide area networks (WANs) - Used to connect LANs together, so that computer users in one location
can communicate with computer users in another location

Intranet - An internal, private network, contained within an organization, which is used to share
information among employees
Other Concepts

Firewall – It consist of a combination of hardware and software located between the company’s intranet (private
network) and the public network (Internet).

Cloud computing - Cloud computing is the practice of using a network of remote servers hosted on the internet to
store, manage, and process data, rather than a local server or a personal computer. Cloud computing allows on-
demand access to data.

Extranet - A collaborative network which uses internet technology to join organisations, for example to link
businesses with their suppliers. It acts as a private and secure extension of an Intranet.

Internet - A global system of interconnected networks carrying a vast array of information and resources

WiFi (wireless fidelity) - facilitates the mobile use of laptop computers and handheld devices

Data encryption - Encryption is a technique of disguising information to preserve its confidentiality It is a method
of scrambling the data in a message or file so that it is unintelligible unless it is unscrambled (or decrypted)
Direct data capture - Design of the data collection method
Points to consider:

• How to economize on the use of manpower

• How to prevent or detect errors in the source data
• How to achieve data capture at the lowest possible cost
• How to achieve input sufficiently quickly
• How data gets into the system

Input devices

Using a keyboard Using direct input of

the data
Methods of data capture

Optical Character Recognition (OCR) – used to insert financial data into a spreadsheet, or to scan articles
into a word processor

Optical Mark Recognition (OMR) – used to mark multiple-choice questions, to process student enrolment
forms or to process questionnaires

Magnetic Ink Character Recognition (MICR) - used mainly to clear bank cheques

Bar codes - used to check out items at supermarkets, to track stocks in a warehouse, to process the
borrowing and returning of books in a library or to track passenger luggage of an airline

Magnetic strip cards - used to withdraw money at ATMs and to pay goods by credit cards

Voice recognizer – a software that understands spoken commands

Privacy and security - Controls

General controls Application or program controls

Ensure that the organization has Performed automatically by the

overall control over its information system. It includes completeness
systems (for e.g.: Personnel checks, validity checks,
controls, access controls, computer identification and authorization
equipment controls, business checks, problem management
continuity planning) facilities
Potential Threats and their solutions

❖ Fire procedures ❖ Anti-virus software

❖ Insurance cover ❖ Formal security policy and procedures
❖ Choice of proper location ❖ Regular audits to check for unauthorized
❖ Physical environment software
❖ Back up procedures

❖ Firewall software
❖ Passwords and user names
❖ Formal security policy and
❖ Network design to cope with periods procedures
of high volumes ❖ Risk awareness training to
❖ Proper back up procedures employees
❖ Data encryption
Potential Threats and their solutions

Human resource risk (e.g. repetitive strain injury

(RSI), headaches and eye strain from computer
screens, tripping over loose wires)

❖ Data encryption ❖ Ergonomic design of Workstations

❖ Passwords and user names ❖ Anti-glare screens reduce eye strain
❖ Cables should be in ducts

Training to staff
Controls over processing and output

Controls over processing

Passwords and software audit trails so that it can be tracked what processing was carried out
No alteration to programmes without authorization and testing

Controls over output

Keeping password systems

Proper safeguards for sensitive printed output
Value – Ed, December 2020, PM Batch

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