Information vs Data Processing

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Section 4 Information Systems in Organisations

Chapter 37 – Management Information Systems
Introduction
Over the past two decades, a transformation to an information society has been taking place, and computers and telecommunications technologies have revolutionised the way that organisations operate. We live in an information age, and no business of any size can survive and compete without embracing information technology. Information has come to be recognised as a resource of fundamental importance to an organisation, in the same way as the more traditional resources of people, materials and finance. It is not enough to be merely ‘computer-literate’ in order to become an expert in information systems. It is also necessary to understand how to apply modern technology in a business, commercial or other environment to achieve the goals of the organisation.

Information systems vs. data processing systems
In the last chapter we looked at the different levels of information system in an organisation. Remember that a data processing system is simply one which records the day-to-day transactions taking place within an organisation. An information system is one which uses this data and turns it into useful information. For example: Data on items sold is collected by the data processing system, using a barcode scanner and an EPOS system, and stored on a computer file; An operational information system then reads this data and produces a list of items that need reordering; A management information system may analyse the sales data to highlight sales trends and use this information to plan a new marketing campaign, adjust price levels or plan an increase or reduction in production facilities.

Internal and external information
Much of the information used by management concerns the internal operations of the company. However, external information about the environment in which the organisation exists is crucial to all organisations. This may include Intelligence gathering about competitors’ activities; Information about population shifts; Economic and social factors; Government legislation. This type of information is of great importance to managers who are trying to shave production costs, find new markets, develop new products, or have strategic decisions to make about the future direction of the company. Information is collected in many ways – through conversations and interpersonal ‘networking’, reading newspapers, trade reviews and magazines, attending conferences and meetings, browsing the Internet. A formal information system relies on procedures for the collecting, storing, processing and accessing of data in order to obtain information.

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Chapter 37 – Management Information Systems

An international car manufacturing company maintains a database holding details of every car that will be made over the next ten years by every other car manufacturer in the world. This data is collected through agencies specialising in information gathering, through trade fairs and reviews, ‘leaks’ and even industrial espionage. A special department exists to collect and collate this information. One of the manager’s jobs is to read every relevant magazine, newspaper article and communication every morning, highlight anything of importance and pass the pile of paper round the department for the others to read prior to the database being updated.

Information flow
Information flows through an organisation through both formal and informal information systems. Informal ways of gathering information include face-to-face conversations, meetings, telephone conversations, reading newspapers and magazines, listening to radio and television and surfing the Internet. Information is also circulated through company newsletters, memos and notice boards. The problem with newsletters and memos is that readers often have so much information to absorb that they quickly forget it. Formal methods of disseminating information around an...
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