"The MGMT Solution," Vocabulary from Chapter 17

Today, a generation later, computer hardware and software are an integral part of managing business information.

Whereas raw data consist of facts and figures, information is useful data that can influence someone’s choices and behavior. One way to think about the difference between data and information is that information has context.

In today’s hypercompetitive business environments, information is as important as capital (i.e., money) for business success, whether it’s about product inventory, pricing, or costs.

First-mover advantage is the strategic advantage that companies earn by being the first in an industry to use new information technology to substantially lower costs or to differentiate a product or service from that of competitors.

If all the firms have access to the same information technology and use it in the same way, then no firm has an advantage over another (i.e., there is competitive parity).

Third, is it difficult for another company to create or buy the information technology used by the firm? If so, then the firm has established a sustainable competitive advantage over competitors through information technology.

If not, then the competitive advantage is just temporary, and competitors should eventually be able to duplicate the advantages the leading firm has gained from information technology.

Incomplete or missing information makes it difficult to recognize problems and identify potential solutions.

You can have accurate, complete information, but it’s not very useful if it doesn’t pertain to the problems you’re facing.

Companies often have massive amounts of data, but not in the form or combination they need.

Storage cost is the cost of physically or electronically archiving information for later retrieval and use.

Retrieval cost is the cost of accessing already-stored and processed information. One of the most common misunderstandings about information is that it is easy and cheap to retrieve once the company has it.

For example, as companies move toward paperless office systems, how will employees quickly and easily retrieve archived emails, file records, website information, word processing documents, or images?

Manual capture of information is a slow, costly, labor-intensive, and often inaccurate process, which entails recording and entering data by hand into a data storage device.

They use electronic storage devices such as bar codes, radio frequency identification tags, and document scanners to capture and record data electronically.

Bar codes represent numerical data by varying the thickness and pattern of vertical bars. The primary advantage of bar codes is that the data they represent can be read and recorded in an instant with a handheld or pen-type scanner.

Radio frequency identification (RFID) tags contain minuscule microchips and antennas that transmit information via radio waves.

Electronic scanners, which convert printed text and pictures into digital images, have become an increasingly popular method of capturing data electronically because they are inexpensive and easy to use.

Text that has been digitized cannot be searched or edited like the regular text in your word processing software, however, so the second requirement for a good scanner is optical character recognition software to scan and convert original or digitized documents into ASCII (American Standard Code for Information Interchange) text or Adobe PDF documents.

Processing information means transforming raw data into meaningful information that can be applied to business decision making.

Data mining is carried out using complex algorithms such as neural networks, rule induction, and decision trees.

Data mining typically splits a data set in half, finds patterns in one half, and then tests the validity of those patterns by trying to find them again in the second half of the data set.

Whereas association or affinity patterns look for database elements that seem to go together, predictive patterns help identify database elements that are different.

Data clusters occur when three or more database elements occur together (i.e., cluster) in a significant way.

Protecting information is the process of ensuring that data are reliably and consistently retrievable in a usable format for authorized users but no one else.

One is authentication, that is, making sure users are who they claim to be. The other is authorization, that is, granting authenticated users approved access to data, software, and systems.

Hackers can access files, run programs, and control key parts of computers if precautions aren’t taken. To reduce these risks, companies use firewalls, hardware or software devices that sit between the computers in an internal organizational network and outside networks such as the Internet.

With new viruses appearing all the time, users should update their antivirus software weekly or, even better, configure their virus software to automatically check for, download, and install updates.

Now, virtual private networks (VPNs) have solved this problem by using software to encrypt all Internet data at both ends of the transmission process.

Alternatively, many companies are now adopting web-based secure sockets layer (SSL) encryption to provide secure off-site access to data and programs.

An executive information system (EIS) uses internal and external sources of data to provide managers and executives the information they need to monitor and analyze organizational performance.

Intranets are evolving to include:
• collaboration tools, such as wikis, where team members can post all relevant information for a project they’re working on together
• customizable email accounts
• presence awareness (information on whether someone you are looking for on the network is in the office, in a meeting, working from home, etc.)
• instant messaging
• simultaneous access to files for virtual team members

While an EIS provides managers and executives with the information they need to monitor and analyze organizational performance, and intranets help companies distribute and publish information and forms within the company, corporate portals allow company managers and employees to access customized information and complete specialized transactions using a web browser.

With electronic data interchange, or EDI, two companies convert purchase and ordering information to a standardized format to enable direct electronic transmission of that information from one company’s computer system to the other company’s system.

By contrast, the tools underlying web services such as extensible markup language (or XML) automatically do the describing and transcribing so that data with different structures can be shared across very different computer systems in different companies.

Finally, companies are reducing paperwork and manual information processing by using the Internet to electronically automate transactions with customers; this is similar to the way in which extranets are used to handle transactions with suppliers and distributors.

Importantly, knowledge does not reside in information. Knowledge resides in people.

Whereas an executive information system speeds up and simplifies the acquisition of information, a decision support system (DSS) helps managers understand problems and potential solutions by acquiring and analyzing information with sophisticated models and tools.

Furthermore, whereas EIS programs are broad in scope and permit managers to retrieve all kinds of information about a company, DSS programs are usually narrow in scope and targeted toward helping managers solve specific kinds of problems.

Expert systems are created by capturing the specialized knowledge and decision rules used by experts and experienced decision makers. They permit nonexpert employees to draw on this expert knowledge base to make decisions. Most expert systems work by using a collection of “if-then” rules to sort through information and recommend a course of action.