Slide 1.

Part 1
Introduction to business
information systems

Chapter 1
Basic concepts –
understanding information

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.2

Learning objectives

• After this lecture, you should be able to:

– distinguish between data, information and
knowledge;
– describe and evaluate information quality in terms
of its characteristics;
– classify decisions by type and organisational level;
– identify the information needed to support
decisions made at different organisational levels;
– identify some of the tools and techniques used to
help make decisions.

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.3

Management issues

• From a managerial perspective, this chapter

addresses the following areas:
– The importance of managing information and
knowledge as a key organisational asset.
– The transformation process from data to
information of high quality.
– The process and constraints of decision making.
– The different kinds of decisions that managers
make and how these affect the organisation.

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Slide 1.4

What is data?

• Data are raw facts or observations that are

considered to have little or no value until they have
been processed and transformed into information.
• Example definitions:
(a) a series of non-random symbols, numbers, values or
words;
(b) a series of facts obtained by observation or research
and recorded;
(c) a collection of non-random facts;
(d) the record of an event or fact.

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.5

What is information?

• Information: Data that have been processed so that

they are meaningful.
• Example definitions:
(a) data that have been processed so that they are
meaningful;
(b) data that have been processed for a purpose;
(c) data that have been interpreted and understood
by the recipient.

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Slide 1.6

Figure 1.2 Transforming data into information using a data process

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Slide 1.7

Information – summary

• Information:
– involves transforming data using a defined process;
– involves placing data in some form of meaningful
context;
– is produced in response to an information need and
therefore serves a specific purpose;
– helps to reduce uncertainty, thereby improving
decision behaviour.

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.8

Activity

• What types of information processing are

involved when a national retailer summarises
the national sales formation nationally?

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.9

Types of information processing

• Classification: This involves placing data into categories,

for example, categorising an expense as either a fixed or
a variable cost.
• Rearranging/sorting: This involves organising data so that
items are grouped together or placed into a particular order.
Employee data, for example, might be sorted according to
the last name or payroll number.
• Aggregating: This involves summarising data, for example,
by calculating averages, totals or subtotals.
• Performing calculations: An example might be calculating
an employee’s gross pay by multiplying the number of hours
worked by the hourly rate of pay.
• Selection: This involves choosing or discarding items of data
on the basis of a set of selection criteria. A sales organisation,
for example, might create a list of potential customers by
selecting those with incomes above a certain level.

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.10

Activity 1.1 – Data v. information

• From the point of view of a student at university,

which of the following might be examples of
information? Which might be examples of data?
(a) the date;
(b) a bank statement;
(c) the number 1355.76;
(d) a National Insurance number;
(e) a balance sheet;
(f) a bus timetable;
(g) a car registration plate.

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.11

Information value

•Tangible value:
Value of information – Cost of gathering information

•Intangible value:
Improvements in decision behaviour – Cost of
gathering information.

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.12

Activity 1.2 – Tangible and

intangible information
• When information is used effectively, it can bring
about many of the improvements listed below. State
and explain why each of the items listed illustrates a
tangible or intangible value of information.
(a) improved inventory control;
(b) enhanced customer service;
(c) increased production;
(d) reduced administration costs;
(e) greater customer loyalty;
(f) enhanced public image.

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.13

Use of Information
• Successful organizations, large and small leverage on available
technologies to manage business activities and assist in decisions
making.

• They use information systems to collect data and process it

according to the needs of the analyst, manager or business
owner.

Examples

 Communication

This is done in two ways; formal and Informal Communication

• In academics, formal and informal communications are commonly

used in the context of organizational communications, an area of
study that examines interactions among people within any
organization. Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.14

Importance of two forms

of information?
• Formal communication: Formal communication
involves presenting information in a structured
and consistent manner.

• Informal communication: This describes less

well-structured information that is transmitted by
informal means, such as casual conversations
between members of staff.

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Slide 1.15

Information quality dimensions

Table 1.1 Summary of attributes of information quality

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Slide 1.16

Information and the Organisation

The business environment of an organisation and the main factors that

Figure 1.3
influence it
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Slide 1.17

Data types
There are multiple types of data and they usually run
under two categories namely, hard and soft data

• Hard data, also known as quantitative data, tend to

make use of figures, such as statistics. Hard data are
often collected in order to measure or quantify an
object or situation.
• Soft data, often known as qualitative data, tend to
focus on describing the qualities or characteristics of
an object or situation. Interviews, for example, are
often used to collect qualitative data related to a
person’s opinions or beliefs.

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.18

The relation between e-business

and IT
• Definitions

i. The European Commission

• e-business is a term that covers both e-commerce (buying
and selling online) and the restructuring of business
processes to make the best use of digital technologies.

ii. In general
• e-business is concerned with making day-to-day business
activities more efficient by improving information exchanges
within the organisation and between the organisation and its
partners.
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Slide 1.19

How does information support

managers?
• Henri Fayol (1841–1925) devised a classic
definition of management that is still widely
used in both industry and academia.

‘To manage is to forecast and plan, to organise,

to command, to coordinate and to control.’

• Above all, information helps managers in decision

making
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Slide 1.20

Types of Decisions
• Decision behaviour: Describes how managers
make decisions and the factors that influence them.
• Structured decisions: Situations where the rules and
constraints governing the decision are known.
• Unstructured decisions: Complex situations, where
the rules governing the decision are complicated or
unknown.
• Cognitive style: This describes the way in which a
manager absorbs information and reaches decisions.
A manager’s cognitive style will fall between analytical
and intuitive styles.

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Slide 1.21

Decision characteristics and

management level

Table 1.2 Decision characteristics and management level

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.22

Figure 1.4 Levels of managerial decision making

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Slide 1.23

Information characteristics for decisions

by management levels

Table 1.3 Information characteristics for decisions by management levels

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Slide 1.24

A model of decision making

Table 1.4 A model of decision making

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015
Slide 1.25

Business rules

• Business rule: A rule describing what action the

organisation should take when a particular
situation arises.

• As an example, a bank might have a rule

specifying that customers applying for a loan will
only be considered if they have held an account
for three years or more.

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Slide 1.26

Business rule example

Figure 1.5 Decision tree notation for checking loan application

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Slide 1.27

Framework for decisions

Figure 1.6 Framework for a decision table

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Slide 1.28

Decision tree example

Figure 1.7 Decision tree for the loan application example

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Slide 1.29

Knowledge management
• Bergeron (2003), defines knowledge
management as:

Knowledge Management (KM) is a deliberate,

systematic business optimisation strategy that
selects, distils, stores, organises, packages, and
communicates information essential to the
business of a company in a manner that
improves employee performance and corporate.

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Slide 1.30

Knowledge management
(Continued)
• Many organisations have adapted to the knowledge
economy by adopting new structures and by creating
new roles for managers.
• The term knowledge worker describes a person
whose role is based around creating, using, sharing
and applying knowledge.
• The work of a knowledge engineer focuses on
eliciting knowledge from experts so that it can be
recorded and shared with others within the
organisation.

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Slide 1.31

Knowledge management
(Continued)
• Knowledge can be thought of as the combined result of a person’s
experiences and the information they possess.
• In general, knowledge can be described as explicit or tacit.
– Explicit knowledge is easily captured and stored within documents and
other media. This type of knowledge tends to be highly detailed, formal
and systematic. It is often stored in the form
of manuals, documents, procedures and database files.
– Tacit knowledge is characterized by factors such as perceptions,
beliefs, values, intuition and experience. Since a great deal of
tacit knowledge may be held unconsciously, it is difficult to elicit,
describe or record.
• Knowledge management is involved with collecting (eliciting)
knowledge and converting (codifying) it into a form that allows it to
be shared across the organisation. A key part of this process
involves gathering tacit knowledge and converting it into explicit
knowledge.

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Slide 1.32

Competitive intelligence (CI)

Definition
The process of gathering actionable information on
your business's competitive environment .

• Competitive intelligence essentially means understanding and

learning what's happening in the world outside your business
so you can be as competitive as possible.

• It means learning as much as possible -- as soon as

possible -- about your industry in general, your competitors,
or even your county's particular zoning rules.

In short, it empowers you to anticipate and face challenges head

on.
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Competitive intelligence (CI)

Cont’

• CI involves collecting data from a number of

disparate sources and converting it into useful
information about an organisation’s competitors.

• The information gathered is used to support

decision making within the organisation, allowing
it to respond more effectively to competition.

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Slide 1.34

END

Bocij, Greasley and Hickie, Business Information Systems PowerPoints on the Web, 5th edition © Pearson Education Limited 2015