Chapter 1

Information Needs, Technologies,

and Systems

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Key to chapter content ICONS

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CHAPTER 1: Information Needs, Technologies, and
Systems

MANAGING INFORMATION

 Information Systems
 Information Technology
 Principal Controls
 Confidential Information

SOURCES OF INFORMATION INFORMATION SYSTEMS AND

DATA ANALYTICS
 Principal Sources
  Accounting Information
Use of Information in
Control  Information Systems
 Direct Costs of  Big Data
Information
 Indirect Costs of
Information

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Information Systems
Policies and Procedures

Information:
 Collect
 Store
 Process
 Communicate

Stakeholders
Hardware and IT
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Management

Planning
Control

Decision-
making

Management
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Management Levels

Strategic

Tactical

Operational
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Activity 1

 Think about what kind of actions are performed by each

level in the organization.

 What kind of plans could be implemented to control those

actions, and make sure they are done right?

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Activity 1 suggested solution
Plans Controls

Board of directors • Five-year financial plan • Actual profits v plan

• New hotel openings • monitoring progress

Management team • Annual budget • Compare actual against

• Staff head count budget
• Occupancy rates
• Actual v plan

Restaurant manager • Menus • Food wasted

• Staff rotas • Staff attendance

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Benefits and Costs of Information Systems

Benefits Better decision- Initial set up;

making; Data
Efficient Conversion;
reporting; Staff Training;
Efficient data IT investment
management

costs
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Information Technology
IT Personnel
Internet and
cloud

Software and WIFI, LAN, and

Hardware networking

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Information Controls

 Authorized distribution lists

 Passwords and PINs  Staff training
 Physical security  Segregation of duties
 Authorization  IT monitoring
 Encryption

 Firewalls
 Costs vs benefits of  Hacking prevention
information  Internet controls
 Costs vs benefits of  Anti-virus / anti-malware
security  Email security

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Sources of Information
Primary

External
Sources of Secondary
Information

Internal

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Types of Information Systems

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Transaction Processing System (TPS)

 A TPS captures, records and stores all

the transactional data of a firm.

 It is the fundamental source for most

of the higher-level information
systems.

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Management Information System

 A MIS processes and displays

information in a useable format to
support management information
needs.

 Managers query the MIS for the

information they need.

 MIS may source its information

internally (e.g., TPS) or externally
(e.g., supplier price portal)
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Decision Support System (DSS)

 A DSS takes user input (variables)

and applies them to an analytical
model (algorithm) to provide decision
guidance.

 A spreadsheet is an example of a
DSS.

?
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Enterprise Resource Planning System (ERPS)

 An ERPS provides information to

support enterprise activities (e.g.,
production).

 It automates many data collection,

analysis, and basic reporting tasks
and allows for an enterprise-wide view
of processes.

 Contains elements of TPS and MIS.

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Customer Relationship Management System (CRMS)

 A CRMS supports the management of

customer relationships and informs
users on the state of the customer
relationship.

 It collects and reports on the customer

acquisition journey, its past purchases,
and any significant matters, criticisms,
or potential business opportunities.

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Executive Information System (EIS)
 An EIS provides a high-level
overview of enterprise activities
and performance in a visual
context.

 Contains graphical, data

manipulation, and “drill-down”
capabilities.

 Data for EIS obtained from both

internal and external sources.

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Information Systems Use Example

• Question: Should I invest in a second production

site?
Strategic • Info from EIS: Investment analysis including
comparison with external benchmark.

• Question: What was the performance of the

Tactical factory this month?
• Info from MIS: Monthly variance report

• Question: How many units did I make today?

Operational • Info from TPS: Daily production report

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Activity 2

Suggest examples of information that

would be required from an information
system for each of the following:

(a) A market trader working in a fruit market;

and

(b) Materials purchasing department in a

factory.

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 Activity 2 Suggested Answer
Entity Market Trader Materials Purchasing Department

Information • forecasts of demand for each type of fruit • Existing quantities of all materials in the
needs • prices customers are willing to pay warehouse
• prices competitors are charging. • Expected use during the forthcoming
• cash has been taken each day. period. This will be based on production
schedules and bills of materials for each
product that is made.
• Information about economic order
quantities to ensure that purchasing
decisions
• minimise the costs of holding and
ordering inventory.
Information Probably a TPS for daily transactions; other An ERP or MIS would be useful in managing
System information may be obtained informally, or the large quantities and careful risk
from public sources. management required.

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Big Data

Variety Volume
Data Analytics:
 Data testing
 Data mining
 Predictive analytics
 Statistical analytics

Value
Veracity

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Velocity
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Big Data Pyramid
• Make correct predictions
Wisdom about the future

• Know about what’s

Knowledge happening

• Find meaning in
Information data

Data

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Chapter 1: Summary
• An information system is an integrated set of components that collect, store,
process and communicate information.
• Control procedures ensure the security of confidential data
• Sources of information are classified as internal or external, primary or
secondary.
• Various information systems include MIS, EIS, ERP, DSS, TPS, and CRM and
support the information needs of different management levels.
• The "Vs" of big data are volume, variety, velocity, veracity and value.
• Data analytics refers to using various techniques to analyse big data to reveal
patterns, trends and associations, to improve business performance.

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 Chapter 1: Practice questions

Study Question Bank

Hotel Co 30 mins

For PM
Attempt the Study Question Bank questions listed above after studying this chapter
Attempt Revision Question Bank questions in your revision phase, after studying all chapters

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Thank you

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