Information Systems in Organizations

Laurentiu FRATILA, Ph.D.

Objectives

 Understanding the concepts: data, information, knowledge,

wisdom

 Understanding the role of information system (IS) in

organization

 Understanding the multitude of IS types from organizations

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Data, information, knowledge

 “Now that knowledge is taking the place of capital as the

driving force in organizations worldwide, it is all too easy to
confuse data with knowledge and information technology with
information” – Peter Drucker (1995)

Data Information Knowledge

Pressman , R . ( 2001 ). Software engineering : A practitioner 's approach . Fifth Edition .

Boston , McGraw -Hill

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Data, information, knowledge, wisdom

 Data – represents what the information systems create,

storage and provide (Devlin).

 Information – processed data by adding or creating new

useful meanings

 Knowledge - is a fluid mix of framed experience, values,

contextual information, and expert insight that provides a
framework for evaluating and incorporating new experiences
and information.(Davenport & Prusak)

 Wisdom – is the power to that enables us to use knowledge

for the benefit of ourselves and others (Watson).

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Data, information, knowledge, wisdom

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Data quality

 Data quality is defined as “the totality of features and characteristics of a data

set that bear on its ability to satisfy the needs that result from the intended
use of the data.”

 In a 1994 study, Wang. et. al. analyzed the different attributes of good
quality data and organized them into fifteen different categories.

 There are a lot of attributes that are characteristic of high quality data. The
appropriate set of attributes and acceptable levels of these attributes may
differ depending on the research situation and setting.
 It is also important to note that many of these attributes are interdependent.

 For example, data that arrives too late, or takes too long to gather, will no
longer be relevant. Similarly, data must be interpretable (in the appropriate
language and units) in order for them to be easily understood.

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Data quality

Characteristics of data
Access Security Interpretability

Accessibility Objectivity

Accuracy Relevancy

Appropriate Amount of Data Representational Consistency

Believability Reputation

Completeness Timeliness

Concise Representation Value-Added

Ease of Understanding

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Data quality

 Access Security: Data must be restricted and kept secure to ensure confidentiality
 Accessibility: Data must be available or easily retrievable.
 Accuracy: Data must be correct and free of errors.
 Appropriate Amount of Data: The quantity of data must be appropriate.
 Believability: Data must be regarded as true and credible.
 Completeness: Data must be sufficient in breadth, depth, and scope for its desired use.
 Concise Representation: Data must be represented without being overwhelming.
 Ease of Understanding: Data must be clear.
 Interpretability: Data must be in appropriate language and units.
 Objectivity: Data must be unbiased.
 Relevancy: Data must be applicable to the task at hand.
 Representational Consistency: Data must be presented in a consistent format.
 Reputation: Data must come from a trusted source.
 Timeliness: Data should be recorded as quickly as possible and used within a
reasonable time period.
 Value-Added: Data must provide valuable insight.

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Information - characteristics
 Availability/accessibility

 Accuracy

 Reliability or objectivity

 Relevance/appropriateness

 Completeness

 Level of detail/conciseness

 Presentation

 Timing

 Value of information

 Cost of information
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Information

 Scope: to reduce uncertainty

 Information’s quality metrics:

 Relevance
 Accuracy
 Completeness
 Timeliness
 Validity
 Cost

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Explicit knowledge

 Explicit knowledge is objective and rational knowledge that

can be expressed in words, sentences, numbers or formulas.
Characteristics:

 tangibility

 simplicity

 documented

 can be easily observed during utilization

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Tacit knowledge

 Tacit knowledge is subjective and experience based

knowledge that can not be expressed in words, sentences,
numbers or formulas.
Characteristics:

 intangibility

 complexity

 undocumented

 cannot be observed during utilization

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Modes of Knowledge Conversion

Socialization

Tacit Internalization
knowledge

Externalization
Explicit
knowledge

Combination

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Modes of Knowledge Conversion

 Socialization is the process of creating new common tacit

knowledge by combining the existing experiences and tacit
knowledge.

 Externalization is the process of transformation of tacit

knowledge into explicit knowledge (concepts and/or diagrams)
using metaphors or analogies.

 Combination is the process of converting explicit knowledge

into more complex and systematic set of explicit knowledge.

 Internalization is the process of understanding and

absorbing explicit knowledge into tacit knowledge held by the
individual.
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Information system (IS)

 What is an information system (IS)

 The set of componets that procesing, storing and diseminating
the information and knowledge in order to support the process of
decision making inside the organization.

 Represents the foundament of processes and business models

Input Processing Output

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Types of information systems (IS)

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IS Typology

 Transaction Processing Systems (TPS)

 Management Information Systems (MIS)
 Decision Support Systems (DSS)
 Executive Support Systems (ESS)

Executive Support
Systems (ESS)

Management
Decision Support
Information
Systems (DSS)
Systems (MIS)

Transaction
Processing
Systems (TPS)

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Transaction Processing Systems (TPS)

 Input: Transactions and events

 Processing: Sorting; listing; updating

 Output: Detailed reports, lists

 Users: Operational personnel

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Management Information Systems (MIS)

 Input: Summary transaction data, high-volume data

 Processing: Simple models, low-level analyses

 Output: Summary reports

 Users: Middle managers

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Decision Support Systems (DSS)

 Input: Optimized databases for statistical analyses

 Processing: Simulations and statistics analyses

 Output: Answers to queries, results of statistical tests

 Users: Middle managers

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Executive Support Systems (ESS)

 Input: Aggregate data from inside and outside of the

organization

 Processing: Interactive and graphical simulations

 Output: Forecasts

 Users: Senior managers

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Business Intelligence
Agenda

• What is Business Intelligence (BI)

• Core Capabilities of BI
• Why do Companies need BI
• Benefits of BI
• Examples of BI in use
• BI Golden Rules
What is Business Intelligence (BI)
Definitions:
• Business Intelligence (BI) refers to skills, processes,
technologies, applications and practices used to support
decision making.

• Systems that provide directed background data and

reporting tools to support and improve the decision-making
process.

•A popularized, umbrella term used to describe a set of

concepts and methods to improve business decision making
by using fact-based support systems. The term is
sometimes used interchangeably with briefing books and
executive information systems.

• Business Intelligence is a broad category of applications

and technologies for gathering, storing, analysing, and
providing access to data to help clients make better
business decisions.

• A system that collects, integrates, analyses and presents

business information to support better business decision
making.

• Business Intelligence is an environment in which business

users receive information that is reliable, secure, consistent,
understandable, easily manipulated and timely, facilitating
more informed decision making
What is BI (continued)

Improving organizations by providing

business insights to all employees leading to
better, faster, more relevant decisions

© 2008 Accenture. All Rights Reserved.

Core Capabilities of BI
Why do companies need BI?

What’s the best that can happen?

Optimization
What will happen next?
Competitive Advantage

Predictive Modeling
ANALYTICS
What if these trends continue?
Forecasting/extrapolation (Tactical &
Why is this happening?
Strategic)
Statistical analysis

Alerts
What actions are needed?

Query/drill down DATA

Where exactly is the problem?
ACCESS &
Ad hoc reports REPORTING
How many, how often, where?
(Operational)
Standard reports
What happened?

Sophistication of Intelligence

© 2008 Accenture. All Rights Reserved.

Why do companies need BI?

What’s the best that can happen?

Optimization
What will happen next?
Competitive Advantage

Predictive Modeling
Tactical /
What if these trends continue?
Forecasting/extrapolation Strategic BI
Why is this happening?
Statistical analysis

Alerts
What actions are needed?

Query/drill down Operational BI

Where exactly is the problem?

Ad hoc reports
How many, how often, where?

Standard reports
What happened?

Sophistication of Intelligence

© 2008 Accenture. All Rights Reserved.

Benefits of Business Intelligence

• Improve Management Processes

– planning, controlling, measuring and/or
changing resulting in increased revenues
and reduced costs

• Improve Operational Processes

– fraud detection, order processing,
purchasing.. resulting in increased
revenues and reduced costs

• Predict the Future

 Examples
- EMC

• 1998: Revenue $2.5b

Strategic BI: predictive modelling => decision

made

•2010: Revenue $16b

 EMC Quarter Activity
Typical Activity by Week ($M) (Storage Products)

700 • Factories ship ≈40% of quarterly revenue in last

600 week!
500 • Build to Stock for orders in last two days!
$ Millions

Factory Shipments
400

300
Bookings
200

100

0
1 2 3 4 5 6 7 8 9 10 11 12 13
Fiscal Week
EMC Order Life Cycle

Suspect Prospect Lead Oppty Configure Price Quote Order Produce Ship Invoice Collect Service

Account Planning Quota Channel Integration Project

Commissions
Accounting
Examples
- Walmart

• Average daily sales of American Flags = 6,000

• September 11th 2001

• All competitors ran out of flags

• Nearest rival sold 20,000

• Walmart sold 116,000 flags on that day alone

 Further examples

• Call centres
– e.g. Top Agent awarded bonus -> competition leading to performance improvements
Banks
– jettison walk in customers to encourage online only
Criminal Minds
– Information gathered on previous actions of serial killers allows the team to predict
the actions of future serial killers
• Revenue Service
– who has the yacht but cannot afford it
• Plagiarism detection in colleges
• Customer Loyalty Programs
• Twitter analysis for public mood
• Dell
• Healthcare
– predicting infection in rural parts of third world
BI Golden Rules

• Data Quality & Accuracy

• Data Consistency

• Data Timeliness

“Get the right information to the right

people at the right time”
Gartner BI Maturity Model