Module 2. Information systems

Lesson 2

DATA, INFORMATION AND KNOWLEDGE

2.1  Introduction

This lesson introduces the concept of data, information, knowledge and wisdom. Different types of information and the quality of information are also discussed in the lesson. These topics will be useful for students to develop an understanding of basic difference among data – information – knowledge.

Man learns from its surrounding environment. This has led to accumulation of knowledge since beginning of human history. Creation of knowledge is a complex process and takes a long time to build up knowledge base about any particular subject. Knowledge is dynamic and it is stored in the brain and also embedded in the practice of livelihood of a person. Knowledge is a personal map/ model of the world. Information and data are two major sources to build knowledge base. Data is description of events in understandable coding form. Description of data through coding patterns is in practice even before the Stone Age. People were used to communicate through codes, which were understandable to other party also. For example, pebbles were being used for counting purpose during the early period. After that symbols were developed for counting and recording facts. The recorded data were used to extract meaningful information. Thus, information can be defined as data that is meaningful or useful to the recipient. Information tries to provide answers to "who", "what", "where", and "when" type of questions. Information allows us to expand our knowledge beyond the range of our senses. Knowledge is basically an application of data and information for answering "how" questions. For example, with reference to a dairy plant, data may be daily milk receipt and milk sale figures recorded in registers for many years. Information may be extracted from this data as what is the average milk procurement and milk sale month and year wise? Knowledge drawn from the recorded data may be “low procurement during summer period is due to most of the animals getting dry during this period. Therefore, some breeding policy or strategy may be drawn so that the dry animals are equally distributed throughout the year instead of summer period only” and “keep sufficient stock of dry milk and butter to reconstitute the milk to meet the demand during lean period”.

2.2  Types of Information

Information can be classified on the basis of the purpose for which it is being utilized into following three broad categories:

2.2.1  Strategic information the course of actions to be taken up by a business. For example whether to diversify the business, open a new branch etc.  For such decisions one has to obtain information on trend

This is the information needed for long term planning and directing s, impact of advertising, effect of reduction or increase in prices, impact of adverting etc. This type of information is highly unstructured i.e. not well defined. Further, the volume of information in strategic planning is small and difficult to obtain.

2.2.2  Tactical information

This is the information needed to take short term decisions to run business efficiently. For example, should credit limits of customer be changed? How much of each item should be stocked in inventory? Tactical information requires specifically designed processing of data. Most of it is obtainable from day to day collection of routine data. The volume of tactical information is more than strategic information.

2.2.3  Operational information

This is the information needed for day to day operations of a business organization. For example, list of items to be reordered in inventory management system, list of defaulting customers, list of the suppliers who did not supply the material on time to send remainders to them etc. Operational information is easy to obtain by straight forward clerical processing of data. Further the volume of such information is much more than tactical information.

In addition to the above mentioned types of information, there is another type of information called as statutory information required by laws and to be sent to government departments. Statutory information pertains to the information relating to a statute, code, or written law, which helps to understand the particular law. The procedures for producing such information are normally clearly specified and required straight forward processing of data.

Different levels of management in an organization require different type of information as per their functional need. Though there is no specific demarcation line to distinguish between the levels or layers of management, however, the management structure of an organization can be described broadly into three levels to carry out the business operations. In a large business organization like a dairy plant it is essential to delegate responsibilities to specialists in each area and make them accountable for their efficient functioning. For example a dairy may have number of sections like procurement, processing, production, sale and marketing, human resource development (HRD), accounts and finance, etc. Each section is headed by a middle level manager and they report to General Manager who is overall in-charge of the organization. Middle level managers in turn will have many assistants who are responsible for specific day-to-day operations. These are called line managers. Further line managers are assisted by the clerical staff to perform clerical and routine tasks. Thus the management structure can be shown using a pyramid shape as (fig. 2.1) given below. Information required at different level of management is also shown in the same figure.

Fig. 2.1 Management structure and information required at different levels

2.3  Quality of Information

The quality of information refers to its suitability or its reliability. Quality is not an absolute concept; rather it is defined within a context. Some important attributes of information which may affect the quality of information are described as follows:

Quality	How to ensure quality
Accuracy	Ensure correct input and processing rule
Completeness	Include all data
Trustworthy	Do not hide unpleasant information
Adequacy	Information required for taking decisions must be available in sufficient quantity and in concise form
Tailor-made	It is essential to give brief summarized information to ensure quick assimilation and action as per requirement
Timely	Information should be given to the consumer when he needs it. Delayed information may sometimes be of no value.
Up-to-date	It should include all data available at the time of processing. In other words, timely information does not mean in time only rather it means timely as well as up-to-date information.
Relevant	Information should satisfy needs of the users and must be useful in taking decisions
Explicitness	Recipient should be able to extract required information from the report without wasting any time on further processing
Authority	Information should be given to right person with correct permission
Cost	Generation of information costs to producer/ user therefore, it must be produced and used judicially.
Brief	Summarize relevant information
Understandable	Use attractive format and graphical charts.

2.4  Information Systems

Information is a vital resource to an individual as well as to an organization for efficient operation and management. It is regarded as a resource just like other traditional ‘four Ms’ – men, money, material and machines. Information is not a natural resource such as water and minerals, nor is it a resource that can be purchased from the market such as man power or raw materials. It is generated within the organization from data collected over a period of time. Sometimes it is also acquired from external sources. At every stage, we need information to take decisions either at individual or group level. The decision making process becomes more complex at an organizational level. Accurate and reliable information must be available timely for taking rational decisions. Managers have the responsibility for solving the larger problems of a company and making decisions among alternative solutions. In the past, they sought information from miscellaneous haphazard sources and processed the information on a personal basis. In today’s world, the complexities in the functioning of business have increased many folds due to globalization. The manager’s task has become more difficult nowadays because of:

· Liberalization and globalization, organizations are required to compete not locally but globally, therefore managers have to take quick decisions to be ahead of other competitors.

· In the information age, data are being doubled in every 2-3 years. Manager has to extract meaningful information and hidden patterns from this large volume of data, failing which he may not be able to take right decisions at the right time.

In view of above mentioned constraints, it has become necessary to have a well planned and designed information system in an organization to provide timely, reliable and useful information to enable the management to take speedy and rational decisions. It is a complex entity which encompasses many areas such as information science, information technologies, foundation concepts, business application areas and non business areas also. Information systems provide following support to an organization

· Business process and operations.

· Decision making process.

· Strategic planning for competitive advantages.

The organizational information system collects, transmits, processes and stores data, and retrieves and distributes information to the various users in the organization. If properly developed, managed and used, information systems can provide the most cost-effective resource for the organizations. Information system provides an interface between human activity systems and information technology.

2.5  Applications of Information System

There is a wide range of applications of information system that are implemented in today's world. Although IS applications are countless but to name a few such as:

· Sales analysis, production performance and cost trend reporting system

· Product Pricing, profitability forecasting and risk analysis system

· Sales and inventory processing and accounting System

· Product manufacturing system

· Milk supply chain management

· Geographic Information systems for agriculture

· Agricultural Resources Information System (http://agris.nic.in) (AgRIS)

· Agricultural Marketing Information System (AGMARKNET)

· M-commerce (Wireless and mobile applications)

2.6  Computer Based Information System

A Computer Based Information System (CBIS) is an information system that uses the power of computers to store, retrieve, process, analyze, and transmit data to the users of the system in an organization. A computer based information system provides fast and centralized access of data to end users so that users can extract and analyze the data as per their requirement. A computer based information systems have number of advantages over manual system. A few characteristics of CBIS are as follows:

· Information coverage: Central information systems provide organizations with the advantages of having large amounts of data, covering many different fields, accessibility via central source. Information coverage is a huge advantage for any organization, because having vast amounts of useful data from different department streamlines data access and increases productivity.

· Centralized data: Management and access of data is centralized. Most large-scale businesses and organizations use some sort of central database to store, manage and retrieve organizational data. For example MySQL, PostgreSQL or Microsoft SQL, Oracle, Ingres, etc., provide centralized database solutions.

· Access efficiency: CBIS improves data access and organizing efficiency which allows workers to focus more on the task rather than managing data manually.

· Extensibility: Computer-based information systems can be customized and extended as per the requirement of an organization.

2.7  Trends in Information Systems

In the last few decades there has been revolutionary change in the use of information and information systems in organizations. Many large business companies are using IS and IT to get competitive edge over other companies. For example, providing services through mobile phones to attract customers, Enterprise Resource Planning (ERP), web based information systems, geographical information systems, global positioning system etc.  Information was regarded as a necessary evil associated with the development, production, and marketing of products or services.  Information was merely considered as by product of transactions in the organizations. Therefore, IS during 1950s were primarily designed for transaction processing and record keeping with the aim to reduce cost of routine data processing activities in accounting areas. Such transaction processing activities were given name as Electronic Data Processing (EDP).

Another role was added, as the concept of Management Information System (MIS) was conceived in data processing domain in early 1960s. By this time organization started recognizing the information as an important tool which could support the general management tasks. This new role focused on developing business applications to provide requisite information for decision making with predefined management reports to managerial end users.

After some time, it was realized by the management that information produced in pre-specified forms were not sufficient to take decision in many decision making situations. So the concept of DSS was initiated by 1970s. The new role of IS was to provide managerial end users with ad hoc and interactive support for their decision making process. This interactive support would be tailored to the unique decision making style of managers as they face specific type of real world problems.

The evolutionary phase of IT continued in 1980s, several new roles of information systems appeared. Following significant developments were occurred during this period:

· Development of microcomputers and application software packages gave new concept of end user computing. The end users were able to process their daily routine work on their personal computer devices without waiting for centralized support.

· Top executives of an organization don’t have time to directly look on MIS report or analytical modeling capabilities of DSS, so to fulfill their requirements new concept of Executive Information System (EIS) came in to picture. This system provided an easy way to top executives to get critical information in desired format.

· Development of new computing paradigm of Artificial Intelligence (AI) opened new avenues in business applications.  A number of information systems developed based on AI techniques such as virtual reality applications, robotics, natural language processing, expert systems (ES), knowledge-based systems (KBS) etc. The application of AI tools tried to replace human interventions in manual and intellectual activities with machines and software, thus, freeing up the knowledge worker for some other complex tasks. Expert systems can work as consultants to users by providing expert advice in limited subject areas in absence of experts. A number of expert systems are available for dairy industry and agriculture for example wheat expert system developed by IASRI, New Delhi to provide expert advice on wheat related problems, touch screen kiosk for cattle health knowledge dissemination among dairy farmers developed by Rajiv Gandhi College of Veterinary and Animal Sciences, Puducherry, animals disease diagnosis system etc.

· By late 1980s, information came into a new role as strategic resource, which was capable of providing competitive advantages or a strategic weapon to fight competition over other competitors. With this concept a new type of information system emerged called as Strategic Information System (SIS). In this concept, IT becomes an integral component of business processes, products, and services that help a company to gain competitive advantage in the global market.

The period of late 1990s observed revolutionary emergence of a new kind of information system called as ERP system. This system is specific to an organization that integrates all facets of the business including planning, manufacturing, sales, inventory control, order tracking, customer service, finance, human resources and marketing etc. virtually every business functions. ERP attempts to integrate all departments and functions across a company onto a single computer system that can serve particular needs of all different departments. The primary advantages of ERP are improved efficiency, information integration for better decision making, faster response time to customer queries, flexible decision making, data sharing, etc., which resulted into better corporate image, improved customer goodwill, customer satisfaction etc.

Rapid growth of ICT during 1990s brought many improvements in communication facilities and infrastructure. The most wonderful research achievement of 21^st century emerged in form of Internet.  Since then it has dramatically changed the capabilities of information systems in business. The Internet based and Web enabled information systems are dominating in the operations and management of today’s business for example e-commerce, online shopping, e-governance, e-agriculture, etc.

Presently (2000 onward) a new era of mobile applications in business is emerging with the advances in wireless and mobile computing technologies. Numbers of companies have started using this technology for developing new applications such as m-commerce on the pattern of e-commerce, providing services through mobile phones as well as managing routine business activities through mobile phones. The development of Android operating system, launched by Google has added new dimensions in development of mobile applications. The future lies in mobile applications. Table 2.1 summarizes the changes taken place in information systems since 1950s onward.

During last few decades it has been observed that the role of information systems in the organization is shifting to support business processes rather than individual functions. The focus is outwards to customers, rather than inwards to procedures. Business functions are changing rapidly. This poses a challenge to existing information systems, which are often inappropriately structured to meet these changing needs. It also poses a challenge to people who design, work and use these systems, since they may hold outdated assumptions.

Table 2.1 Historical trend in information systems