Chapter Summary: Using Technology to Manage Information

Because most jobs today depend on managing information – obtaining, using, creating, and sharing it – this chapter begins with the role of information in decision making and the relationship between computers and information systems. Information technology (IT) includes the equipment and techniques used to manage and process information. Information is at the heart of all organizations. Without information about the processes of and participants in an organization – including orders, products, inventory, scheduling, shipping, customers, suppliers, and employees—a business cannot operate.

Management information systems methods and equipment that provide information about all aspects of a firm’s operations provide managers with the information they need to make decisions. Businesses collect a great deal of data – raw, unorganized facts that can be moved and stored – in their daily operations. Databases are electronic filing systems that collect and organize data and information. Using software called database management systems (DBMS), managers can quickly and easily enter, store, organize, select, and retrieve data in a database.

A computer network is a group of two or more computer systems linked together by communications channels to share data and information. Networks make it possible for companies to run enterprise software, large programs with integrated modules that manage all the corporation’s internal operations. Two basic types of networks are distinguished by the area they cover. A local area network (LAN) lets people at one site exchange data and share the use of hardware and software from a variety of computer manufacturers. A wide area network (WAN) connects computers at different sites via telecommunications media such as phone lines, satellites, and microwaves.

Like LANs, intranets are private corporate networks. One type of intranet is an enterprise portal, an internal website that provides proprietary corporate information to a defined user group. Wireless technology allows us to use devices such as cellular phones, mobile devices, garage door openers, and television remote controls – without thinking of them as examples of wireless technology. Businesses use wireless technologies to improve communications with customers, suppliers, and employees.

Virtual private networks (VPNs) connect two or more private networks (such as LANs) over a public network, such as the internet. VPNs include strong security measures to allow only authorized users to access the network and its sensitive corporate information. Application service providers (ASP) offer a different approach to this problem. Companies subscribe, usually monthly, to an ASP and use the applications much like you would use telephone voice mail, the technology for which resides at the phone company.

Whereas individuals use business productivity software such as word processing, spreadsheet, and graphics programs to accomplish a variety of tasks, the job of managing a company’s information needs falls to management information systems: users, hardware, and software that support decision-making. Information systems collect and store the company’s key data and produce the information managers need for analysis, control, and decision-making. A firm’s integrated information system starts with its transaction processing system (TPS). The TPS receives raw data from internal and external sources and prepares these data for storage in a database like a microcomputer database but vastly larger.

Management support systems (MSS) use the internal master database to perform high-level analyses that help managers make better decisions. A data warehouse combines many databases across the whole company into one central database that supports management decision-making. Data warehouses may contain many data marts, special subsets of a data warehouse that each deal with a single area of data. Data marts are organized for quick analysis.

A decision support system (DSS) helps managers make decisions using interactive computer models that describe real-world processes. It is a tool for answering “what if” questions about what would happen if the manager made certain changes. Although like a DSS, an executive information system (EIS) is customized for an individual executive. An expert system gives managers advice like what they would get from a human consultant. Artificial intelligence enables computers to reason and learn to solve problems in much the same way humans do, using what-if reasoning.

Knowledge management (KM) focuses on researching, gathering, organizing, and sharing an organization’s collective knowledge to improve productivity, foster innovation, and gain competitive advantage. Some companies are even creating a new position, chief knowledge officer, to head up this effort.

In response to mounting security concerns, companies have increased spending on technology to protect their IT infrastructure and data. Along with specialized hardware and software, companies need to develop specific security strategies that take a proactive approach to prevent security and technical problems before they start. Creating formal written information security policies to set standards and provide the basis for enforcement is the first step in a company’s security strategy.

Sophisticated database applications that look for hidden patterns in a group of data, a process called data mining, increase the potential for tracking and predicting people’s daily activities. Increasingly, consumers are fighting to regain control of personal data and how that information is used. The challenge to companies is to find a balance between collecting the information they need while at the same time protecting individual consumer rights.

Trends in information technology include digital forensics, the distributed workforce, and grid computing.