Chapter 13
Information Management and the Decision-making
process
Why do managers have to “manage” information?
In a complex business environment, the issues or problems are also more complex.
A vast number of options are available to managers, and the cost of errors can be expensive.
It is considered unwise and risky to rely on trial-and-error when making decision.
Consequently, managers need to manage information in order to maintain or sustain the
organisation’s competitive advantage.
Computer-based ISs play a vital role in the operations, management and strategic success of
organisations.
Information systems transform data obtained from an organisation’s external and internal
environments into information that can be used in decision-making.
Managing information for sustaining competitive
advantage
Competitive advantage:
The ability to provide greater value to customers than one’s competitors (in the longer term, this kind
of competitive advantage is called sustainable competitive advantage).
Organisations need to address 3 questions in order to sustain a competitive advantage through
information technology:
1. Does the use of information technology create value for the organisation by lowering costs
or providing a better product or service?
2. Is the information technology the same or different across competing organisations?
3. Is it difficult for another organisation to create or acquire the information technology used by
the organisation?
Basic functioning of an information system
An IS uses the resources of hardware, software and people to perform input, processing, output,
storage and control activities that transform data resources into information products.
Data is first collected for processing (input), then manipulated or converted into information
(processing), stored for future use (storage), or communicated to the ultimate user (output),
according to the correct processing procedures (control).
Data: raw, unanalysed numbers and facts about events or conditions from which information is
drawn.
Management information: Information that is timely, accurate and relevant to a particular situation.
Information system: People, procedures and other resources that collect, transform and
disseminate information in an organisation.
An information system thus includes the people, procedures and other resources used to collect,
transform, and disseminate information in an organisation.
Information Management and the Decision-making
process
Why do managers have to “manage” information?
In a complex business environment, the issues or problems are also more complex.
A vast number of options are available to managers, and the cost of errors can be expensive.
It is considered unwise and risky to rely on trial-and-error when making decision.
Consequently, managers need to manage information in order to maintain or sustain the
organisation’s competitive advantage.
Computer-based ISs play a vital role in the operations, management and strategic success of
organisations.
Information systems transform data obtained from an organisation’s external and internal
environments into information that can be used in decision-making.
Managing information for sustaining competitive
advantage
Competitive advantage:
The ability to provide greater value to customers than one’s competitors (in the longer term, this kind
of competitive advantage is called sustainable competitive advantage).
Organisations need to address 3 questions in order to sustain a competitive advantage through
information technology:
1. Does the use of information technology create value for the organisation by lowering costs
or providing a better product or service?
2. Is the information technology the same or different across competing organisations?
3. Is it difficult for another organisation to create or acquire the information technology used by
the organisation?
Basic functioning of an information system
An IS uses the resources of hardware, software and people to perform input, processing, output,
storage and control activities that transform data resources into information products.
Data is first collected for processing (input), then manipulated or converted into information
(processing), stored for future use (storage), or communicated to the ultimate user (output),
according to the correct processing procedures (control).
Data: raw, unanalysed numbers and facts about events or conditions from which information is
drawn.
Management information: Information that is timely, accurate and relevant to a particular situation.
Information system: People, procedures and other resources that collect, transform and
disseminate information in an organisation.
An information system thus includes the people, procedures and other resources used to collect,
transform, and disseminate information in an organisation.
