Chapter 2

Information and information technology

1. Information
Information is data with meaning. Data is the raw fact and figures.
Characteristics of good information
High quality information should be accurate.
The information should be complete.
It should be cost beneficial.
It should be user-targeted.
It should be relevant. You shouldnt supply people with more information than they
need otherwise they may overlook the important information.
It should be authoritative. The source of the information should be one which can be
relied upon.
Information should be supplied quickly enough to help you make a better decision.
Information should be easy to use. It should be well presented, well documented. Easy
to use might mean that its more beneficial to see information in the form of graphs than
in the form of tables.

2. Role of information technology

Recent developments in IT have had a massive impact on the way we work:
New communication channels e.g. making telephone calls over the Internet through
VOIP (voice over internet protocol) technologies such as Skype. E-mail.
Office automation. Consider the enormous labor-saving that can be obtained from a
simple spreadsheet, or from being able to look up a database.
Home-working. For example, sales personnel can communicate with the head office at
the end of the day and transmit new orders and make inquiries.

3. Types of IT systems

Transaction processing systems-It processes transactions such as sales, wages, and

salaries. It took a lot of repetitive calculation out of organizations, speeded up
processing. It certainly saved costs.
Management information systems-It was producing information which was going to be
useful for management for making decisions.
Decision support systems-using a spreadsheet where you set up a budget, is going to be
extremely useful in helping you to come to a conclusion about what next years budget
should be. It is supporting your decision-making.
 Executive information systems- 1) it provides very flexible access to information.
2) Executives often need information from outside the organization. So an executive
information system almost certainly has links to external databases or at least to the
Internet. 3) it allows executives to drill down. You are drilling down into successive levels
of detail and more information as required. 4) they are highly graphical. Its very often
easier to see a trend such as growth or decline by looking at a graph rather than looking
at tables or figures.

4. Information technology
Stand-alone -are single computers not connected to any other computers.
LANs-Local area network means that the group of computers are in a relatively
confined area, within a hospital, a school or a single office block. Local area networks use
a special cable link to allow the different computers to communicate with each other.
The immediate benefit is that information can be shared between all users on the
network. It also facilitates the transmission of e-mails. A file server is a computer with a
large capacity disk, where much information is held centrally and then accessed by the
various users of other computers.
WANs-wide area network, computers are spread in a large geographical area
network. It uses wireless network for communication.
Internet-The Internet is a network of networks. The Internet comprises websites.
Navigation through the Internet is by use of something like Internet Explorer or Firefox.
Intranet-An intranet is an internal Internet. Intranets are extremely good ways of
sharing information throughout an organization and often newsletters, personnel
handbooks, product handbooks and customer information is shared in this way.
Extranet-An extranet is an intranet but which can also communicate with the intranet
of another organization. A good example would be an intranet belonging to a
supermarket having access to the intranet belonging to a supplier. When goods at the
supermarket fall below the re-order level, an electronic order is sent over the extranet to
the supplier system and the order is then dispatched.

5. Levels- Types of Information

Strategic level-This can be represented by the board of directors over senior managers. The
information required by these people is usually highly summarized-, they are looking at whole
divisions or whole companies, and part of their summarization will mean that they dont need
 the information in all its accuracy. It may be rounded to the nearest thousand or million.
forward looking- to plan, to try to see where the business will be in one, three or five years
time, ad hoc-Strategic information is often ad hoc, in other words non-routine ,external(and
internal)- They need to know what is happening in their environment, their competitors and the
technical advances taking place in their area of business.

Operational level- An example of someone at the operational level would be an accounts clerk.
People at this level are usually dealing with very detailed information, they are recording
transactions which had already happened, therefore the information is historical, and its
retrospective. The information and the processing are often routine. Every month they do an
aged receivables printout or a slow-moving inventory printout and finally the information is
almost always internal. For example, they might be comparing actual results with budget results.

6. Internal and External Information

Internal sources-

Accounting records are a prime source of internal information. They detail the
transactions of the business in the past, which may be used as the basis for planning for
the future (e.g. preparing a financial budget or forecast).

Daily books such as sales day book, purchase day book and cashbook can provide useful
information to management.

The accounting records are primarily used to record what happens to the financial
resources of a business. For example, how cash is obtained and spent; what assets are
acquired; what profits or losses are made on the activities of the business.

However, accounting records can provide much more than financial information. For
e.g., details of the products manufactured and delivered from a factory can provide
useful information about whether quality standards are being met.

Data analyzed from customer sales invoices provides a profile of what and to whom
products are being sold

Sales analyses
Inventory reports
Debtor ageing
Attendance records

External sources- This is information that is obtained from outside the business
 Government publications such as monetary and fiscal policies,
Press releases such as newspapers, technical magazines, journals
which provide information about share price, technological developments and
information on competitors and their products.
Banks can provide information on potential customers and on nation
markets.
Financial statements of other businesses provide useful information to
the company.
Correspondence received from suppliers, customers and tax authorities
etc.
Internet websites, social networking sites, forums etc.
Databases held by public bodies and businesses e.g. providing online
information on money market interest rates and foreign exchange rates.
Data warehouses which contain data from both internal and external
sources. They store current as well as historical data and are used for creating
trending reports for senior management reporting such as annual and
quarterly comparisons.

Internet
Marketing literature
Conferences and courses
Commercial databases
Government