Chapter 13

The Management of Information and Knowledge

for Better Decisions

Topics to be DiscussedIntroduction

The Evolution of Data, Information, and Knowledge Management

Knowledge Management Tools

ERP, EDI and E-Business

IntroductionThe business environment has changed dramatically. These changes require more effective management of knowledge within an organization. Knowledge is power and must be managed for companies to remain competitive.

IntroductionData: Financial statements, customer lists, inventory records and the number and type of products and services sold.

Information: Data that has been organized, processed and summarized

Knowledge: Information that is shared and exploited so that it adds value to an organization

Introduction

Key ConceptData becomes information when organized, processed, and summarized, and information becomes knowledge when it is shared and exploited to add value to an organization.

The Evolution of Data, Information, and Knowledge

ManagementData and information management has evolved since the introduction of mainframe computers in the 1960s. Although access to information is now faster and easier, exploiting that information as usable knowledge is still difficult.

The Internet and Electronic Commerce

E-Business

The first widespread application involved direct sales of products to customers over the Internet. Today a wide variety of products and services are sold online via electronic catalogs.

The Internet and Electronic Commerce

An online business has the ability to:

Increase sales

Reduce customer response time

Increase efficiency

Decrease new product’s time to market

Decrease transaction costs

The Internet and Electronic Commerce

Key ConceptE-business can be used to support an organization’s entire value chain. One of the key benefits of e-business is the ability to quickly access and share knowledge in and outside an organization.

The Value Chain

Research and Development

Product Development

Experiment Materials

Staff

Design Specs

Staff

The Value Chain

Production Marketing

Direct Materials

Direct Labor

Manufacturing Overhead

Advertising and Promotions

Staff

The Value Chain

DistributionCustomer Service

Vendors

Trucks

Drivers

Call Center Personnel

Phone and Computer Equipment

The Internet and Electronic Commerce

Even with the technological innovations in data and information management, Ernst & Young estimates that up to 80% of a company’s accumulated knowledge is not utilized in business decisions.

The Internet and Electronic Commerce

The Contemporary View of Accounting Information:

Traditional Accounting Information

Financial/MonetaryInformation

Qualitative InformationNon-financialInformation

Non-monetaryQuantitative

Data

Accounting InformationFinancial InformationBalance Sheet

Income Statement

Cost of Goods Manufactured

Gross Margin

Operating Expenses

Accounting Information

Qualitative Information

Customer Satisfaction

Employee Satisfaction

Product or Service Quality

Knowledge Management Tools

Data Warehouses: the central depositories for electronic data. May contain years of transactions, which can be accessed and browsed electronically.

Knowledge Management Tools

Data Mining: the way a manager can search for and extract information from the corporate computer system, much like a coal miner searches for and extracts coal from a mine.

Data Mining

When you make a purchase with a value card, the store collects data on:

What you purchase

How much you purchase

Whether you use coupons

Whether you pay with cash, check, or credit card

Data Mining

Pause and Reflect

Think of other ways that data can be collected on your buying habits to help marketing efforts.

Enterprise Resource Planning Systems (ERP)

ERP systems collect, organize, report, and distribute data throughout an organization and transform the data into usable knowledge necessary for managers to make proper business decisions.

Enterprise Resource Planning Systems (ERP)

ProsProvides real-time information.Goal is to get the right info to the right people at the right time.Can allow higher levels of profitability.

ConsInvolves large-scale financial, human resources, time, and information technology costs.The average implementation time is 23 months.

ERP, EDI and E-Business

Electronic Data Interchange (EDI): The electronic transmission of data such as purchase orders and invoices.Increases the speed and quality of information exchangeReduces lead timesReduces processing costs

ERP, EDI and E-Business

Supply Chain Management: Includes a variety of activities centered around making the purchase of materials and inventory more efficient and less costly.

ERP, EDI and E-BusinessKey Concept

The combination of ERP, EDI, and e-business via the Internet has vastly changed the traditional supply chain allowing organizations to link employees, suppliers, and customers into a communications network whose benefits extend well beyond simple exchanges of data.

ERP, EDI and E-BusinessCustomer Relationship Management (CRM): designed to bring a company closer to its customers in order to serve them better. Using the Internet makes it possible to more accurately and consistently forecast, manage, and meet customer expectations.

ERP, EDI and E-Business

Who owns customer information?

Is collecting customer information without the customer’s knowledgeand sharing that information with

other parties ethical?

ERP, EDI and E-Business

Key ConceptThe use of the Internet facilitates CRM by allowing data to be gathered, stored, accessed, and shared more easily and by providing a feedback loop from customers to companies.

End of Chapter 13

The boss says thatI’m in trouble if

I can’t grab hold ofour data!!

Can you help me?