McGraw-Hill/Irwin © The McGraw-Hill Companies, All Rights Reserved CHAPTER 6 Valuing Organizational Information

6-2 LEARNING OUTCOMES 6.1Explain how information differs throughout an organization 6.2 Assess the impact of low-quality information on an organization and the benefits of high-quality information on an organization

6-3 LEARNING OUTCOMES 6.3 List, describe, and provide an example of each of the five characteristics of high quality information

6-4 ORGANIZATIONAL INFORMATION Information is everywhere in an organization Employees must be able to obtain and analyze the many different levels, formats, and granularities of organizational information to make decisions Information granularities refers to extent of details within the information (fine or coarse) Successfully collecting, compiling, sorting, and analyzing information can provide tremendous insight into how an organization is performing

6-5 ORGANIZATIONAL INFORMATION Levels, formats, and granularities of organizational information

6-6 THE VALUE OF TRANSACTIONAL AND ANALYTICAL INFORMATION Transactional information verses analytical information

6-7 Transactional information Transactional information encompasses all of the information contained within a single business process or unit of work, and its primary purpose is to support the performing of daily operational tasks. Examples of transactional information are withdrawing cash from an ATM, making an airline reservation, or purchasing stocks

6-8 Analytical Information Analytical Information encompasses all organizational information, and its primary purpose is to support the performing of managerial analysis tasks. Analytical information includes transactional information along with other information such as market and industry information. Examples of analytical information are trends, sales, product statistics, and future growth projections.

6-9 THE VALUE OF TIMELY INFORMATION Timeliness is an aspect of information that depends on the situation –Daily monitoring of flight delays. –Weekly sales forecasts. –Annual reviews of production facility capacities Real-time information – immediate, up- to-date information Real-time system – provides real-time information in response to query requests

6-10 Real-Time Info. Questions: Is credit card transaction a real-time one? Is bank card transaction a real-time one? Timeliness is relative and should be to the point for correct and efficient decision making. Real-time info has its own pitfalls. It may not speed up decision making.

6-11 THE VALUE OF QUALITY INFORMATION Business decisions are only as good as the quality of the information used to make the decisions –Garbage In  Garbage Out You never want to find yourself using technology to help you make a bad decision faster –The automation of a useless system leads to a faster, state-of-the-art … useless system.

6-12 THE VALUE OF QUALITY INFORMATION Characteristics of high-quality information include:

6-13 THE VALUE OF QUALITY INFORMATION Low quality information example

6-14 Understanding the Costs of Poor Information The four primary sources of low quality information include: 1.Online customers intentionally enter inaccurate information to protect their privacy 2.Information from different systems have different entry standards and formats (e.g. date) 3.Call center operators enter abbreviated or erroneous information by accident or to save time 4.Third party and external information contains inconsistencies, inaccuracies, and errors

6-15 Understanding the Costs of Poor Information Potential business effects resulting from low quality information include: –Inability to accurately track customers –Difficulty identifying valuable customers –Inability to identify selling opportunities –Marketing to nonexistent customers –Difficulty tracking revenue due to inaccurate invoices –Inability to build strong customer relationships

6-16 Understanding the Benefits of Good Information High quality information can significantly improve the chances of making a good decision Good decisions can directly impact an organization's bottom line