CHAPTER ONE

INTRODUCTION TO MANAGEMENT INFORMATION SYSTEM (MIS)

Introduction

 Nowadays, MIS applications are vital to make managerial

decision and to deal with real world business problems.
 Moreover, some organizations are heavily dependent on
MIS and cannot do their tasks without MIS applications.
 In this chapter we will be discussing six important issues
related to MIS.
In this chapter we will discussing six important issues related to MIS.
 First the meaning and importance of MIS will be discussed.
 Secondly, there will be discussion regarding the components and activities
of MIS.
 In the third section, different resources of MIS discipline will be discussed.
 The fourth section is about contemporary approaches of MIS whereas
 The fifth section deals about the evolution and characteristics of the
information age.
 Finally, there will be discussion about the definition of Information
Technology (IT) and its career sides.
 1. Definition and Importance of MIS
 Management: Management is the art of getting things done through and with the people
in formally organized groups.
 The basic functions performed by a manager in an organization are: Planning,
Organizing, Staffing, Directing, and Controlling.
 Information: Information is considered as valuable component of an organization.
 Information is data that is processed and is presented in a form which assists decision
maker.

Data Processing Information

Figure 1.1 Information Generation

 System: A system is defined as a set of elements which
are joined together to achieve a common objective.
 The elements are interrelated and interdependent.

 Thus, every system is said to be composed of subsystems.

 A system has one or multiple inputs, these inputs are

processed through a transformation process to convert
these input(s) to output.
What is Management Information System?
 A Management Information System (MIS) provides information
that is needed to manage organizations efficiently and
effectively.

 Management information systems are not only computer systems

 These systems encompass three primary components:

technology, people (individuals, groups, or organizations), and
data/information for decision making.
In other words, MIS can be defined as is a planned system of
collecting, storing and disseminating data in the form of
information needed to carry out the functions of management.
 MIS is an organized method of providing past, present
and projection information relating to internal
operations and externals intelligence.
 It supports the planning, control and operational
functions of an organization by furnishing uniform
information in proper time frame to help the process of
decision-making.
 The system utilizes computer hardware and software, manual
procedure, models for analysis.
 Information is viewed as a resource much like land, labor and
capital.
 It must be obtained, processed, stored, manipulated and
analyzed, distributed etc.
 An organization with a well-defined information system will
generally have a competitive advantage over organization with
poor MIS and no MIS.
Importance of MIS
Although there are very many reasons and importance for MIS
to be practiced in organizations, some of the major importance
for MIS are mentioned below:
It Minimizes Information Overload: MIS change the larger
amount of data into summarized form and thereby avoids
the confusion which may arise when information officer are
flooded with detailed facts.
MIS Encourages Decentralization: Decentralization of authority is
possible when there is a system for monitoring operations at lower
levels.
MIS is successfully used for measuring performance and making
necessary change in the organization plans and procedures.
It Brings Co-ordination: MIS facilities integration of specialized
activities by keeping an organization aware of the problem and
requirements of various kind of work.
It connects all decision centres in the organization.
 It Makes Control Easier: MIS serves as a link between planning
and control by a system manager in an organization.
 It improves the ability of management system of an organization to
evaluate and improve performance.
 It Helps in Decision-Making: MIS is a decision support tool
which stores, processes, and provides valid information for the
decision-makers at right time.
 It also helps managers to evaluate the success of their decision.
1.2 Components and Activities of MIS (Sub-Systems of
MIS)
 MIS is considered as a sub-system of an organization which has
its own subsystems and activities.
 The major subsystems of MIS are:
Input:
 For input in a system there is a need to collect the data.
 For collection of data there is a need of raw material, energy
and data.
Processing: The process includes manufacturing process, human ability
process and mathematical calculations but the data should be processed as
follow:
- Entering the data.
- Modify and organize the data.
- Transforming the data.
- To make all data usable in form of information.
- Store all data in secured form.
- Control the data and in a system there is no repetition of data and use of
unnecessary data.
Output: The third component of a system is output.
 The output of a data is to be very important to work or to give
information.
 The output of a data should be accurate and on time.
Retrieval of Information: MIS retrieves information from its stores as
and when required by various users.
Dissemination of Information: Information, which is a finished
product of MIS, is disseminated to the users in the organization.

 It is periodic or online through computer terminal.

 1.3 Resources of Management Information System
 To work on a management information system there is a need of some resources.
 In MIS we include all Kind of machine resources and human resources also but
we listed the MIS resources as follows:
A.People Resources:
 People are the essential ingredient for the successful operation of all
information systems.
 There is a need of people resources to operate and organize all Management
Information System.
 These people resources have two categories:
i. End Users: (also called users or clients) are people who use an information system
or the information it produces.
 They can be customers, salesperson, engineers, clerks, accountants, or
mangers.
 Most of us are information system end users. And most end users in business are
knowledge workers, that is, people who spend most of their time communicating
and collaborating in teams and workgroups and creating, using, and distributing
information.
ii. Information System Specialists: It is second category of people resource.
 Specialists are those people who develop and operate a system; we can include
systems analysts, system operators and software developers in this category.
B. Hardware Resources: Hardware recourses are the one of the major resource in
Management Information System.

 In hardware resources we can include all kind of physical device and material
which used to process the information.

 Specifically, it includes not only machines, such as computers and other

equipment, but also all data media, that is, tangible objects on which data are
recorded, from sheets of paper to magnetic or optical disks.

 For example: C.P.U., Key-Board, Mouse, Desktop, Printer, Floppy, CD-ROM

etc.

 Examples of hardware in computer-based information systems are:

i. Computer Systems: consist of central processing units containing
microprocessors, and a variety of interconnected peripheral devices.
Examples are handheld, laptop, or desktop microcomputer systems,
midrange computer systems, and large mainframe computer systems.

ii. Computer Peripherals: Which are devices such as a keyboard or

electronic mouse for input of data and commands, a video screen or
printer for output of information, and magnetic or optical disks for
storage of data resources.
C. Software Resources: The concept of software resources
includes all sets of information processing instructions.
 This generic concept of software includes not only the
sets of operating instructions called programs, which
direct and control computer hardware, but also the sets
of information processing instructions called procedures
that people need.
 The following are examples of software resources:
i. System Software: Such as operating system program, which
controls and supports the operations of a computer system.
ii.Application Software: are programs that direct processing for a
particular use of computers by end users. Examples are a sales
analysis program, a payroll program, and a word processing
program.
iii.Procedures: are operating instructions for the people who will
use an information system. Examples are instructions for filling out
a paper form or using a software package.
D. Data Resources: Data is unorganized and raw material in an
information system.
 Data has been taken in any form like numerical, alphabetical or in any
other form, but the collection of data should be proper and
meaningful.
 All the data organized and stored as well as accessed properly by the
users.
 Data are the lifeblood of today's organizations and the effective and
efficient management of data is considered an integral part of
organizational strategy.
Data versus Information:
 Data are raw facts or observations, typically about physical
phenomena or business transactions.
 More specifically, data are objective measurements of the attributes
(the characteristics) of entities (such as people, places, things, and
events).
 People often use the terms data and information interchangeably.
 However, it is better to view data as raw material resources that are
processed into finished information products.
 Then, we can define information as data have been
converted into meaningful and useful context for specific
end users.
 Thus, data are usually subjected to a value-added process
(data processing or information processing) where (1) its
form is aggregated, manipulated, and organized; (2) its
content is analysed and evaluated; and (3) it is placed in a
proper context for a human user.
E. Networking Resources: Telecommunications
technologies and networks like the Internet,
intranets and extranets are essential to the
successful electronic business and commerce
operations of all types of organizations and their
computer-based information systems.
 Telecommunications networks consist of computers,
communications processors, and other devices
interconnected by communications media and
controlled by communications software.
 The concept of network resources emphasizes that
communications technologies and networks are a
fundamental resource component of all information
systems.
A.Network resources include:
i. Communications Media: Examples include twisted-
pair wire, coaxial and fiber-optic cables; and
microwave, cellular, and satellite wireless
technologies.
ii. Network Infrastructure: This generic category emphasizes
that many hardware, software, and data technologies are
needed to support the operation and use of a communications
network.
Examples, include communications processors such as
modems and internetwork processors, and communications
control software such as network operating systems and
Internet browser packages.
 1.4 Contemporary Approaches to MIS
 When an information system is being developed, much
importance should be given to the structure of the
organization, culture of the organization, etc.

 But along with these, especial attention should also be

given to the technical side of MIS.

 The various contemporary approaches to MIS development

can be summarized as:
A. The Technical Approach
 The technical approach to information systems emphasizes
mathematically based models to study information
systems, as well as the physical technology and formal
capabilities of these systems.
 The disciplines that contribute to the technical approach
are computer science, management science, and
operations research.
B. The Behavioural Approach
 An important part of the information systems field is concerned
with behavioural issues that arise in the development and long-
term maintenance of information systems.
 Issues such as strategic business integration, design,
implementation, utilization, and management cannot be
explored usefully with the models used in the technical
approach.
• Other behavioral disciplines contribute important concepts and methods.
• For instance, sociologists study information systems with an eye toward
how groups and organizations shape the development of systems and
also how systems affect individuals, groups, and organizations.
• Psychologists study information systems with an interest in how human
decision makers perceive and use formal information.
• Economists study information systems with an interest in what impact
systems have on control and cost structures within the firm and
within markets.
C. The Socio Technical Approach
 It combined the Technical and Behavioural Approaches to
make the base.

 In the beginning, this approach was finding it hard to survive

– but now it is being accepted worldwide and is also being
implemented at a very large scale.

 It stands for improving the performance of the information

system as a whole.
 1.6 What Is Information Technology?
 Information Technology (IT) is the branch of engineering that
deals with the use of computers and telecommunications to
retrieve, store and transmit information.
 In a business context, the Information Technology Association of
America has defined information technology (IT) as "the study,
design, development, application, implementation, support or
management of computer-based information systems".
Some of the careers in Information Technology include:
- Software engineers
- Software developers
- Programmers
- Systems engineers
- Information Technology consultants
- Information Technology managers
END OF CHAPTER ONE
 CHAPTER TWO
FOUNDATIONAL CONCEPTS IN MIS

Chapter objectives

After completing this chapter, students will be able to:

 Define the concepts of data, information, knowledge & wisdom

 Describe the information needs & source of manpower.

 Understand frame work for information systems

 Explain the business systems

•2.1 Understanding Management
• Management is the process of getting a work done effectively by
using limited resources.
•Although there are many definitions of management, some of the
famous definitions are:
•a) “Management is the art of getting things done through people” ~
By Mary Parker.
•b) “To manage is to forecast, to plan, to organize, to command,
coordinate and control” ~ Henry Fayol (Father of Principles of
Management).
•c) “Management is knowing exactly what you want to do
and then seeing that they do it in the best and cheapest way.”
~ Frederick Winslow Taylor (Father of Scientific
Management).
•d) “Management is a multipurpose organ that manages a
business, manages managers and manages worker and
work.” ~ Peter Drucker.
•2.2 Business and Management Functions
• Although different authors describe distinct set of managerial functions, the
most accepted set of managerial functions can be defined as POSDCoRB.

 P– Planning: Deciding what needs to happen in the future (today, next week,
next month, next year, over the next five years, etc.) and generating plans for
action.
 O– Organizing: Arranging necessary resources for the work to be done,
pattern of relationships among resources, making optimum use of the
resources required to enable the successful carrying out of plans.
 S– Staffing: Assessing manpower requirements, recruiting and hiring for the
available job positions.
 D– Directing: Determining what needs to be done in a situation and getting
people to do it.
 Co– Coordinating: Checking progress against plans and linking the courses
to a common goal.
 R– Reporting: Give a spoken or written account of something that one has
observed, heard, done, or investigated.
 B– Budgeting: To provide a forecast of revenues and expenditure to be met
by the organization within a specific future.
•Organizations differ considerably in their activities.

•However, their strategies and the way in which they seek to add value we
can identify some functions which they usually have in common.
•There may be many functions for an organization, like
Production/Operations, Marketing, Finance,
•Human Resource Management, Logistics, Information Technology &
Communications, etc.
•Some of the most common business functions in Organizations are
A. Operations: This involves the actual production and delivery of the product or
service.

• In the primary sector this may mean growing the product (e.g. farming) or extracting it
(e.g. oil); in the secondary sector this involves activities such as assembly, manufacture
and construction and in the tertiary sector this involves providing a service such as
tourism, education and insurance. Operational decisions include deciding where to
produce, how to produce (e.g. what combination of resources to use and how much to
produce yourself compared to how much to buy in), what volume and range of
products to produce and what quality and cost targets to achieve. It also involves
research and development into new products and processes.
A. Marketing: The marketing activities of a business begin with identifying customer needs
and wants. This may be through primary market research (which involves collecting new
data e.g. through surveys) or secondary market research (which uses data that already
exists such as government statistics or industry surveys). Having identified customers'
requirements marketing activities aim to satisfy these needs through ensuring the firm
provides the right products, at the right place and price and at the right time. Firstly, a
marketing strategy must be decided: for example, managers must decide on what markets
to compete in and what range of products to offer. Secondly, the strategy is implemented
via the marketing mix. The marketing mix involves the 4Ps: deciding on the product to be
produced, the price, the promotion (what is communicated about the product and how it is
communicated) and the place (i.e. how it is distributed from the firm to the customers).
A. Finance: Organizations need to raise finance to get started and to invest into new projects.
For example, a company may raise finance by selling shares to investors or by taking out a
loan. The former involves a loss of control as the number of owners is increased. The latter
will incur interest charges as the loan will have to be repaid. Firms also need to set financial
targets and allocate money within the business; this is known as budgeting. Budgets will be
set for a given period in the future and then compared with the actual outcomes to examine
why differences occurred; this is known as variance analysis. Organizations will also
produce financial reports to their investors such as balance sheets (which show what a firm
owns and owes on a given day) and the profit and loss account (which shows the revenues
and profit of a company over the last year or operation period).
A.Human Resource Management (HRM): All organizations rely on their
employees and HRM refers to the way in which people are managed.

HRM involves activities such as the recruitment and selection of staff, the
training of people and the development and implementation of appropriate
reward systems. The nature of these activities can have a big impact on the way
people perform. A payment system based on commission, for example, will
inevitably make employees focus on sales; a profit sharing scheme might make
them focus on costs as well. The way that people are managed will influence
whether they turn up for work, how productive they are and their openness to
change.
 3.Data, Information, Knowledge and Wisdom (DIKW
Pyramid)
•

•The DIKW Pyramid, also known variously as the "DIKW Hierarchy",

"Wisdom Hierarchy", the "Knowledge Hierarchy", the "Information
Hierarchy", and the "Knowledge Pyramid", refers loosely to a class of
models for representing purported structural and/or functional
relationships between data, information, knowledge, and wisdom.
•The presentation of the relationships among data, information,
knowledge, and sometimes wisdom in a hierarchical arrangement
has been part of the language of information science for many years.

•Although it is uncertain when and by whom those relationships were

first presented, the ubiquity of the notion of a hierarchy is embedded
in the use of the acronym DIKW as a shorthand representation for the
data-to-information-to-knowledge-to-wisdom transformation.
•Data: is conceived as symbols or signs, representing
stimuli or signals, that are of no use until...in a usable (that
is, relevant) form.
•Data consists of representations of events, people,
resources, or conditions.
•The representations can be in a variety of forms, such as
numbers, codes, text, graphs, or pictures.
Information: is useful facts extracted from
data which is used for decision-making.
Information is contained in descriptions, and is
differentiated from data in that it is "useful".
Information is defined as data that are endowed
with meaning and purpose.
•Information is a result of processing data.

•It provides the recipient with some understanding,

insight, conclusion, decision, confirmation, or
recommendation.
•The information may be a report, an analysis, data
organized in a meaningful output, a verbal response, a
graph, picture, or video.
•Knowledge: is a fluid mix of framed experience, values,
contextual information, expert insight and grounded
intuition that provides an environment and framework
for evaluating and incorporating new experiences and
information.
•Wisdom: is the ability to increase effectiveness.

•Wisdom adds value, which requires the mental function that we

call judgment.

•The ethical and aesthetic values that this implies are inherent to the
actor and are unique and personal.

•We can say that wisdom is the practical application of knowledge

into problem-solving.
•Knowledge may be procedural (how to do
something), formal (general principles, concepts,
and procedures), tacit (expertise from experience
that is somewhat hidden), and Meta knowledge
(knowledge about where knowledge is to be
found).
Figure 2.1 DIKW Pyramid
•Characteristics of Information:

•I) Timeliness: Timeliness means that information must reach the

recipients within the prescribed timeframes.
•For effective decision-making, information must reach the decision-
maker at the right time, i.e. recipients must get information when
they need it.
•Delays destroy the value of information.
•The characteristic of timeliness, to be effective, should also include
up-to-date, i.e. current information.
II) Accuracy: Information should be accurate.
It means that information should be free from mistakes,
errors &, it should be clear.
Accuracy also means that the information is free from bias.
Wrong information given to management would result in
wrong decisions.
As managers’ decisions are based on the information supplied
in MIS reports, all managers need accurate information.
•III) Relevance: Information is said to be relevant if it answers
especially for the recipient what, why, where, when, who and why?
•In other words, the MIS should serve reports to managers which are
useful and the information helps them to make decisions.
•IV) Adequacy: Adequacy means information must be sufficient in
quantity, i.e.
•MIS must provide reports containing information which is required
in the processes of decision-making.
•V) Completeness: The information which is given to a manager must
be complete and should meet all his/her needs.
•Incomplete information may result in wrong decisions and thus may
prove costly to the organization.
•VI) Explicitness: A report is said to be of good quality if it does not
require further analysis by the recipients for decision making.
•VII) Impartiality: Impartial information contains no bias and has
been collected without any distorted view of the situation.
•The Information Needs and Sources of Managers
• Businesses and other organizations need information for many purposes. Anyhow, we can
summarize the five main uses of information in business firms as below:

A. Planning: To plan properly, a business needs to know what resources it has (e.g. cash, people,
machinery and equipment, property, customers). It also needs information about the markets in
which it operates and the actions of competitors. At the planning stage, information is important as
a key ingredient in decision-making. Hence, information regarding external environment and
internal environment are essential at planning stage.

B. Executing: Executing is the stage where the plans are being implemented at organizations. Even
during the phase of execution, managers require information about the operational environment to
make sure that the process of implementation is taking place in the right path.

Moreover, information is essential at this stage to assess the effects of execution.

A.Reporting: Information is essential to be used at reporting,
especially reporting to the superiors within the organization and
reporting to external bodies such as government authorities.

B.Resource Appraisal: At the stage of resource appraisal, especially

employee appraisal, information about the resource performances
are vital to managers and their organization.
Decision-making: Information used for decision-making is often categorized
into three types:
I. Strategic information: used to help plan the objectives of the business
as a whole and to measure how well those objectives are being
achieved.
II.Tactical Information: this is used to decide how the resources of the
business should be employed.
III. Operational Information: this information is used to make sure that
specific operational tasks are carried out as planned/intended (i.e.,
things are done properly).
•When it comes to the sources of information, we can broadly classify various sources of
information into
•Primary Sources: are the original materials that the A. ecision-maker has gathered
specifically for the purpose of solving the particular problem. This includes information
collected through surveys, observations, questionnaires, experiments, opinion polls, etc.
A. Secondary Sources: are that information gathered by the decision-maker from already
existing sources.

They are not specifically gathered for his existing problem, but reused by the decision-

maker from other sources such as magazines, newspapers, reports,

archives, databases, etc.
•2.5 Business Systems and e-Business
• A business system, also known as a business information system, is a
structure put in place within an organization with the purpose of improving
effectiveness and efficiency.

•There are many kinds of business systems within an organization, with

some touching on only one specific area of the business.

•Business systems help organizations function on a daily basis and in the long
term.

•Some of the most common Business Systems are as below:

A.Decision Support System (DSS): Also known as executive support
systems, this type of business system enables higher management
and executives to make long-term strategic decisions on the
direction of the business.

This type of system is flexible as it is not required for the daily

operation of the business and only applies to particular situations. It
collects, analyses and sums up key internal and external data that is
then used in the business by senior executives when developing their
strategic plans.
A.Knowledge Management System (KMS): A knowledge management system
is put in place in businesses to allow for easier creation and sharing of
information.

This type of business system is typically used in organizations where

employees create new knowledge and expertise to be shared by their
colleagues.

A good knowledge management system allows for efficient classification and

distribution of knowledge.

Intranets are examples of knowledge management systems.

A.Transaction Processing System (TPS): As its name implies, a transaction
processing systems exists to process routine transactions.

A single organization usually has several types of transaction processing

systems including a billing system, an accounting system, a payroll system,
an inventory control system and so on.

They normally help improve employee productivity, and are vital to the
daily operations of the business.

This type of business system can be customized to the nature of the

organization.
 CHAPTER THREE
INFORMATION TECHNOLOGY
•3.1 Introduction to IT
•Information Technology (IT) is the branch of engineering that
deals with the use of computer and telecommunication to handle
data, information, and processes.

•IT plays a vital role in the lives of people.

•Every field of human activity, may it be his/her daily life, official

life, everything is now influenced under the cover of information
technology
• Business process under the IT revolution which
is transforming the way we do the business.

• Basic business operations like decision making,

customer service, marketing strategies, human
resource management, etc are being reformed
with the use of information technology.
•Information technology can be defined in various ways, but is
broadly considered to encompass the use of computers and
telecommunications equipment to store, retrieve, transmit and
manipulate data.

•In a business context, the Information Technology Association of

America has defined information technology (IT) as "the study,
design, development, application, implementation, support or
management of computer-based information systems."
•Businesses use IT in four ways.

•These are to support:

1.Information-processing tasks,
2.Decision-making tasks,
3.Shared information through decentralized computing, and

4.Innovation.
•1. Supporting Information-Processing Tasks

•First and foremost, businesses are using IT to support basic

information-processing tasks.
•These tasks range from computing and printing payroll
checks, to creating presentations, to setting up web sites from
which customers can order products.
•The following are the 5 C's of information-processing tasks:
Capturing information- at the point of origin with input devices.
Conveying information- in its most useful form with output
devices.
Creating information- to obtain new information with the CPU and
internal memory (RAM).
Cradling information- for use at a later time with storage devices.
Communicating information- to other people or another location
with telecommunications technologies.
Table 3.1: The 5 C's: Categories of Information-Processing Tasks and IT Tools

Information-Processing Task Description IT Tools

Capturing information Obtaining Input technologies:

information at its  Mouse
point of origin  Keyboard
 Bar code reader
Conveying information Presenting Output technologies:
information on its  Screen
most useful form  Printer
 Monitor
Creating information Processing Computer’s brain:
information to create  CPU
new information  RAM
Cradling information Storing information Storage technologies:
for later use  Hard disk
 CD-ROM
 DVD
Communicating information Sending information Telecommunications
to other people or technologies:
another location  Modem
 Satellite
 Digital pager
•Supporting Decision–Making Tasks

•When businesses use IT to process information such as

payroll or sales order, we refer to it as online transaction
processing.

•Online Transaction Processing (OLTP) involves gathering

input information, processing that information, and
updating existing information to reflect the gathered
processed information.
Businesses also use IT to support decision-making
tasks, what we call online analytical processing.

Online Analytical Processing (OLAP) is the

manipulation of information to support decision
making.
•OLAP can range from performing simple queries on a database to
determine which customers have overdue accounts to employing
sophisticated artificial intelligence tools such as neural networks
and genetic algorithms to solve a complex problem or take
advantage of an opportunity.

•So, we say that OLTP supports efficiency (doing things the right
way-the cheapest, the fastest, and so on) while OLAP supports
effectiveness (doing the right things or making the right decisions).
•Support Shared Information through Decentralized Computing

•Decentralized computing is an environment in which an

organization splits computing power and locates it in
functional business areas as well as on the desktops of
knowledge workers.
•This is possible because the proliferation of less expensive,
more powerful, and smaller systems including desktop
computers, laptop computers, and minicomputers.
•Shared information- is an environment in which
an organization’s information is organized in one
central location, allowing anyone to access and
use it as they need to.
•Supporting Innovation

•IT tools not only support information-processing tasks,

decision-making tasks, and shared information through
decentralized computing, they also enable innovation.
•Consider FedEx-the first package freight company to offer
package of delivery software that its customers can use to
electronically request package pickup and check the status of
packages during delivery.
•All the other major package delivery services were
forced to quickly develop similar software or risk
losing their customer base to a company that
provided a more innovative and efficient way to
handle information– processing tasks related to
delivering packages.
•The Functions of Information Technology
•Information Technology is made up of nine (9) major functions,
namely;

•Capture, Verifying, Processing/Manipulation, Storage, Retrieval,

Data Update, Reproducing, Transmit /Communication, and
Generation.
 Capture: The process of compiling detailed
records of activities.
 This could be by recording of data from an
event or occurrence, in some form such as sales
slips, personnel forms, purchase orders, meters,
course registration forms, etc.
 Verifying: Is the operation for checking or validating of
data to ensure it was captured and recorded correctly.
 Processing/Manipulation: The process of converting,
analysing, computing, and synthesizing all forms of data
or information.
 Classifying: Is the operation for placing data elements
into specific categories such as size, type, customer, etc.
 Arranging (Sorting): This is placing data elements in a specified
or predefined sequence.

 Calculating: This entails the arithmetic and/or logical

manipulation of data e.g. computations to derive employee’s pay,
customer’s bills etc.

 Summarizing: Reducing data in logical sense. For example the

school principal may only be interested in the total amount of
the development levies collected out of the total school fees.
 Storage: This entails placing data onto some storage
media such as magnetic disk, etc where it can be
retrieved when needed.
 Retrieval: This entails searching out and gaining access
to specific data elements from the medium where it was
stored for further processing or for transmission to
another user.
 Transmission/Communication: The computer process of
distributing information over a communications network.

 This entails transfer of data from one place to another example

data can be transferred from a device to a user in form of a
report or a display on the screen of a computer controlled
terminal.

Electronic Mail, or E-Mail

Voice Messaging, or Voice Mail
• Generation: The process of organizing information
into a useful form, whether as numbers, text, sound, or
visual image
The Benefits of Information Technology
The benefits of IT are information processing speed, consistency, accuracy and reliability.

Why is a Computer so Powerful?

What makes a computer powerful?

Storage Reliability Speed

Accuracy Communications Consistency

5
•The Opportunities of Information Technology
•• Helping People
•• Solving Problems:

•Problem is a perceived difference between an existing condition and a desired condition.

Problem Solving: The process of recognizing a problem, identifying alternatives for solving it,
and successfully implementing the chosen solution.
•Information technology is all around us, improving our lives especially in areas such as:
•• Media
•– Print (Newspaper, Magazines, Posters and Billboard).
•– Electronic (Television, Radio and Internet).

•Education, training, entertainment, shipping, paperwork, money and investments, agriculture,

taxation and accounting, health and medicine, manufacturing, journalism, energy, and sports.
•Computer: An electronic system that can be instructed to accept data as an input,
process it and gives a result as an output, and in turn stores the data for retrieval in
the long run is a computer. Computer is an electronic device operating under the
control of instructions stored in its memory. That is, a computer is a device that:
A.Is electronic- means it can do processing quickly
B.Can store data- data is available for processing when needed
C.Can store and follow a set of software instructions, called program, that tell the
computer what to do.

That is, it can perform processing without human intervention.

•Computer System: The computer system is made up of
two component parts (Hardware and Software).
•These components integrate and interrelate.
•They do this independently by interacting together to
perform the basic operations of the computer system.
•A system is a set of components that interact to
accomplish a purpose.
 Single-User System (Personal Computer): An IT system
used by only one person.
A system that stands alone and is not interconnected with
other companies or shared by other people.
 Multi-user System: A communication system in which more
than one user share computer, hardware, software, programs,
information, people, and procedures and so on
•3.2 Hardware: Computing, Storing and Communicating

•The hardware component is the physical component of a

computer system, i.e., those parts of the computer that
can be touched, felt and seen physically.
•.A computer has 5 basic hardware components: the
input devices, output devices, primary storage, the mother
board, and secondary storage.
 Input devices: accept data from outside the computer and convert
 It into an electronic form that the computer can understand.
•The data that it accepts is input data.
•For example, to compute employee payment in a business, the
input data would include the employees’ names, pay rates, and
hours worked.
•Common input devices are Keyboard, Mouse, Scanner, Camera,
Touch Screen, etc.
a)Output devices: perform the opposite of input devices.
They convert data from electronic form inside the computer to
a form that can be used outside the computer.
This converted data is the output data or information.
For example, the output from payroll computation would
include pay cheques, with employees’ names and pay.
Common output devices are screens, monitors, printers, etc.
•Primary Storage: also called internal storage, is the “memory” of the
computer. Primary Storage/Primary Memory/Main Memory/Internal Memory:
Storage within the computer itself. Primary memory holds data only
temporarily, as the computer executes instructions. Primary or main memory is
always connected to the processor. In a computer it is usually in the same box
as the processor. When you type instructions on the keyboard of your
computer, they are put into the main memory. There are two parts of the main
memory:
o Random Access Memory (RAM).
o Read Only Memory (ROM), and
 Random-Access Memory (RAM): Memory that permits data
or information to be written into or read from memory only as
long as the computer is turned on. It is the memory used to
store instructions and data needed by the Central Processing
Unit (CPU).
 Read-Only Memory (ROM): A type of storage that offers
random access to memory and can hold data and information
after the electric current to the computer has been turned off.
•An input device converts input data into electronic
form and sends the data to the primary storage, where
the data is stored.
•It is a volatile storage, i.e., when if the power to the
computer is turned off, all data in the primary storage
will be lost.
•Example, RAM (Random Access Memory).
d)The motherboard: The motherboard is the
main component inside the computer.
It is a large rectangular board with integrated
circuitry that connects the other parts of the
computer including the CPU, the RAM, the
disk drives (CD, DVD, hard disk, or any others)
as well as any peripherals connected via the
ports or the expansion slots
•The Central Processing Unit (CPU): the CPU, also called the
processor, carries instructions in the program.
•The CPU or processor is the computer hardware that executes
program instructions and performs the computer’s processing
actions.
•The CPU is known to be the brain and the computational unit of
the System Unit (SU).
•It performs the following major functions:
•Coordinating the activities of all units or devices
associated with the computer system.
•– Accepting and executing instructions to cause the
computer system unit to perform tasks.
•It contains electronic circuits that perform arithmetic
(e.g., hrs*pay rate) and logical operations (e.g., how
much income tax each employee should pay).
•e) Secondary storage: also called auxiliary storage, which stores
data not currently being processed by the computer and programs not
currently being performed.
•Its function differs from that of the primary storage, which stores the
data and instructions that are currently processed by the computer.
•For example, if the computer is currently doing payroll processing, it
stores the employee data and the payroll computation program in the
primary storage.
•The computer stores other data and programs that are not currently
being used in the secondary storage and brings them into the primary
storage when needed.
•Secondary storage is permanent storage. Common types of secondary
storage are magnetic disk (hard disk, floppy disk, flash disk) and
optical disk (CD-ROM).
•Secondary storage and input & output device are often called
peripheral equipment because they are located outside the central part
of the computer, that is the CPU and the primary storage.
•The Differences between Storage and Memory
•Although the functions of storage and memory are similar, they work in different
ways.
•There is more room in storage than in memory, just as there is more space in a
file cabinet than on a table top.
•Contents are retained in storage when the computer is turned off, whereas the
program or data you put into memory disappear when you shut down the
computer.
•Storage is very slow compared to memory, but it is much cheaper than memory.
•3.3 Software (Programs): In Charge of the Hardware

•Computer software, or just software, is a collection of

computer programs and related data that provides the
instructions for telling a computer what to do and how to do
it.

•In other words, software is a set of programs, procedures,

algorithms and its documentation concerned with the operation
of a data processing system.
•Program software performs the function of the program it
implements, either by directly providing instructions to the digital
electronics or by serving as input to another piece of software.

•The term was coined to contrast to the old term hardware

(meaning physical devices).

•In contrast to hardware, software "cannot be touched".

•Anything that can be stored electronically is software.

•Computer software is a computer program that
govern/determine/control the operation of the computer.

•A program is a set of instructions that tells the

computer what to do.

•Software can be a single program or a group of

programs needed to perform several functions.
• The most fundamental of the software functions is the operating
system (OS) that runs the computer.

• Examples of the operating system include Windows XP, Windows

2000, Linux, Mac OC, and Unix.

• These provide different processes through which we operate and

work on our computer systems.

• The software directs the computer to perform very specific tasks

such as creating a financial spreadsheet/statement/model,
preparing a slide presentation, or writing a document on a word
processing program.
•The distinction between software and hardware is sometimes
confusing because they are so integrally linked.
•Clearly, when you purchase a program, you are buying software.

•But to buy the software, you need to buy the disk (hardware)
on which the software is recorded.
•Computer software is typically classified into three major
types of programs:
•I. Systems Software: Programs that manage and support the resources and
operations of a computer system as it performs various information processing
tasks. These programs can be classified as:

•a) System Management Programs: programs that manage the hardware,

software, and data resources of the computer system during its execution of the
various information processing jobs of users. The most important system
management programs are operating systems.

•b) System Support Programs: programs that support the operation and
management of a computer system by providing a variety of support services.
Major support programs are system utilities.
•c) System Development Programs: programs that help users develop information system programs and
procedures and prepare user programs for computer processing. Major development programs are language
translators, programming tools, and CASE (Computer- Aided Software Engineering).

•II. Applications Software: Programs that direct the

performance of a particular use, or application of
computers that meet the information processing needs of end
users.

•Application software can be classified as general and specific

purpose application programs.
•a) General purpose application programs: are programs that
perform common information processing jobs for end users. For
example, word processing programs, spread sheet programs,
database management programs, and graphics programs.
• b) Application specific programs: thousands of application
software package are available to support specific applications
of end users. Major categories of such application specific
programs are Business application programs (Accounting,
marketing-sales analysis, human resource management-
employee benefits analysis),
•III. IT Procedures: Are operating instructions for the
people who will use an information system.
•Examples are instructions for filling out a paper form.

•A procedure is a step-by-step process or a set of

instructions for accomplishing specific results.
•Procedures include the strategies, policies, methods, and
rules for using the computer-based information systems.
•Procedures can be Operations, Backup and Recovery, Security, Development.
•a) Operations Procedure: A procedure that describes how a computer system or
application is used, how often it can be used, who is authorized to use it, and where the
results of processing should go.
•b) Backup Procedure: A procedure that describes how and when to make extra copies of
information or software to protect against losses.
•c) Recovery Procedure: An action taken when information or software must be restored.
•d) Security Procedure: A procedure designed to safeguard data centres, communications
networks, computers, and other IT components from accidental intrusion or intentional damage.
•e) Development Procedure: A procedure that explains how IT professionals should describe
user needs and develop applications to meet those needs.
•3.4 People: The Most Important Element; and Procedures
i. End User: End user is the client of a Management Information System.

The people who use an information system or produced information.

In this category we include all kind of a worker or employee of an organization

or library users as an end users.

i. Information System Specialists: It is second category of people resource.

Specialists are those people who developed and operate a system; we can
include systems analysts, system operators and software developers in this
category.
•Information: The Reasons for Using Information Technology

• A popular approach for describing information systems is

that proposed by Harsh and colleagues.
•They define information as one of four types and all these
types are important component of a management information
system.
•Furthermore, the various types build upon and interact with
each other.
•A common starting level is Descriptive Information..
• This type of information portrays the “what is” condition of a
business, and it describes the state of the business at a
specified point in time.

• Descriptive information is very important to the business

manager, because without it, many problems would not be
identified.

• Descriptive information includes a variety of types of

information including financial results, production records, test
results, product marketing, and maintenance records
• The second type of information is Diagnostic
Information,

• This information portrays “what is wrong”

condition, where “what is wrong” is measured as
the disparity between “what is” and “what ought
to be
• Predictive Information is generated from an analysis
of possible future events and is exceedingly valuable
with “desirable” outcomes.
• With predictive information, one either defines
problems or avoids problems in advance
• Prescriptive Information is directed toward answering
the “what should be done” question.
• Provision of this information requires the utilization of
the predictive information.
• Predictive information by itself is not adequate for
decision making
•Characteristics of Information
Quality information has 3 basic dimensions:

Time dimension
Content dimension
Form dimension
•Time Dimension

•A. Timeliness: Information should be provided when it's needed.

•B. Currency: Information should be up to date when it's
provided.
•C. Frequency: Information should be provided as often as
needed.
•D. Time Period: Information can be provided about past,
present, and future time periods.
•Content Dimension
•A. Accuracy: Information should be free from errors and information should be
accurate.
•B. Relevance: Information should be related to the information needs of a specific
recipient for a specific situation.
•C. Completeness: All the information that is needed should be provided.
•D. Conciseness: Only the information that is needed should be provided.
•E. Scope: Information can have a broad or narrow scope, or an internal or external
focus.
•F. Performance: Information can reveal performance by measuring activities
accomplished, progress made, or resources accumulated.
•3. Form Dimension
•A. Clarity: Information should be provided in a form that is easy to
understand.
•B. Detail: Information can be provided in detail or summary form.
•C. Order: Information can be arranged in predetermined sequence.
•D. Presentation: Information can be presented in narrative,
numeric, graphic, or other forms.
• E. Media: Information can be provided in the form of printed
paper documents, video displays, or other media.
•Communication Technologies
• Telecommunication is the exchange of information in any form (voice, data, text, images, audio, and

video) over networks. Early telecommunications networks did not use computers to route traffic and, as
such, were much slower than today's computer-based networks. Major trends occurring in the field of
telecommunications have a significant impact on management decisions in this area. You should thus be
aware of major trends in telecommunications industries, technologies, and applications that significantly
increase the decision alternatives confronting business managers and professionals.

•Technology trends- Toward extensive use of Internet, digital fiber-optic, and wireless technologies to
create high-speed local and global internet works for voice, data, images, audio, and video
communications.

•Application trends- Toward the pervasive use of the Internet, enterprise intranets, and inter
organizational extranets to support electronic business and commerce, enterprise collaboration, and
strategic advantage in local and global markets.
 • CHAPTER FOUR
• COMMON BUSINESS APPLICATIONS OF INFORMATION TECHNOLOGY
•Lower or Operational level Management

 They make structured decisions (Operational decisions).

 It is a predictable decision that can be made following a well defined set of routine
procedures.

 Most decisions at this level require easily defined information that relates to the
current status and activities within the basic business functions ( Structured decision).

 Information is gained from detailed reports which contain information about routine
activities.

 Detailed tasks defined by middle management are carried out by people at operational
level
•Middle or Tactical Management

 Acquire and arrange the resources (Computers, people etc) to meet the goals of an organization.

 Define the detailed tasks to be carried out at the operational level.

 Information needed involves review, summarization and analysis of data to help plan and control
operations and implement policy that has been formulated by upper management.

 Information is usually given to middle managers as summarized reports.

 Deals with semi structured decisions (Tactical decisions).

 Semi structured decisions that must be made without a base of clearly defined informational
procedures.

 In most cases a semi structured decision is complex, requiring detailed analysis and extensive
computations.
•Upper or Top or Strategic Management

 Decides on the broad objectives of an organization

 Make unstructured decisions. (Strategic decision)

 Unstructured decisions are the most complex type of

decisions and are rarely based on predetermined routine
procedures.

 They involve subjective judgments of the decision maker.

 1. FINANCIAL ACCOUNTING INFORMATION SYSTEMS (FAIS)

•The finance function is responsible for managing the firm’s financial assets, such as cash, stocks, bonds, and other
investments to maximize the return on these financial assets.

•The heart of an organization's financial operating information system is the accounting system.

•A computerized accounting system is composed of a series of software modules or subsystems that may be used separately
or in an integrated fashion.

•The subsystem modules include;

1. General ledger

2. Fixed assets
3. Sales order processing
4. Accounts receivable
5. Accounts payable
6. Inventory control
7. Purchase order processing
8. Pay roll
•MARKETING INFORMATION SYSTEM (MKIS)
• The basic goal of the marketing function in any organization is
to satisfy the needs and wants of existing and potential
customers.

• The marketing functions includes planning, buying, merchandising

(standardization and grading and pricing), selling (advertising, sales
promotion, packaging, publicity and personal selling), physical
distribution (transporting and storing) and facilitating (financing,
risk bearing and obtaining information).
• On other hand, tactical planning (marketing mix
decisions) includes product decisions, physical
distribution decisions, adverting and promotion
decisions and pricing decisions

• Marketing information systems support the major

activities of a marketing organization.
•4.3 MANUFACTURING AND PRODUCTION INFORMATION
SYSTEMS (MAPIS)
•The manufacturing and production function is responsible for
actually producing the firm’s goods and services.
• MAPIS refers to the planning, development, and maintenance
of production facilities; the establishment of production goals;
the acquisition, storage, and availability of production
materials; and the scheduling of equipment, facilities,
materials, and labour required to fashion finished products.
•4.4 HUMAN RESOURCES INFORMATION SYSTEMS (HRIS)

•HRIS refers to the system of gathering, classifying, processing,

recording and dismantling the information required for efficient and
effective management of human resource in an organization.

•HRIS is defined as a system used to acquire, store, manipulate,

analyse, retrieve, and distribute information regarding an organization’s
human resources.

•Although an HRIS includes hardware and software, it also includes

people, forms, policies and procedures, and data.
•4.5.1 Characteristics of the Decision Making Process
•Before learning about the purpose and features of
decision support systems, you should become acquainted
with the decision making process, the types of problems
addressed in decision making, the attributes of decision
makers, and the strategies for decision making.
•4.5.2 Attributes of the Decision Maker

•The attributes of decision makers also affect the types of decision strategies used.

•These attributes include perceptual ability, information capacity, risk-taking

propensity, and aspiration level (Mac Grimmon and Taylor, 1976).

•Perceptual ability refers to the ways a decision maker perceives a decision

problem.

•If a decision maker has experience dealing with a similar problem, the problem-
solving situation will not seem as complex and as uncertain as in a case where his
or her background with a similar situation is limited.
•Information capacity is important, because all decision making requires an
information base.

•In risky situations, decision makers are more uncertain about outcomes and
possible loss of resources.

•The aspiration level of decision makers also influences their effectiveness in

identifying problems, evaluating alternatives, and making choices. In general,
decision makers attempt to achieve optimal standard and prior experiences of
success or failure and knowledge of results both influence this standard.
•4.5.3 Strategies for decision making
•Maximizing when the outcome of a decision is clear, and the
alternatives are well established, the decision maker will make
the decision that maximizes the desired outcome.

•The maximizing approach assumes that the decision maker is

rational and is aware of the probabilities of each alternative.
•Satisfying Since many decisions are made in situations of uncertainty, decision
makers are willing to settle for less than maximum utility.

•According to Simon (1960), decision makers display rationality only within

limits imposed by their experience, background, and awareness of alternatives in a
given decision situation.

•A decision maker will set up a reasonable aspiration level and will reach for
possible alternatives until she or he finds one that achieves this level.

•Simon calls this satisfying because the decision maker will terminate his or her
search as soon as a satisfactory alternative is found.
•Incremental zing In the third decision-making strategy,
the decision maker attempts to take small steps away
from the existing state toward a desired state.

•This approach may neglect important outcomes because

the alternatives considered are generally familiar to the
decision maker.
 CHAPTER FIVE
INTRODUCTION TO KNOWLEDGE MANAGEMENT
•Knowledge refers to interconnected information on what something is, why
something happens, and how to do something.
- What: definitions of concepts and relationships, taxonomies
- Why: understanding cause-effect relationships
- How-to, know-how: analysis/synthesis; methods, procedure for generating new
knowledge
• Knowledge can be thought of as information in action.
•“Knowledge will remain information unless attitudes, systems, and skills exist to
retrieve the information and share it in a new context”
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 For example:

 Data: 32, 3, 15, 2019

 Information: 32 new cases of tuberculosis have been reported in
the last three months which is up from 15 from the same time in
2019.
 Knowledge: You know this trend is alarming and signals a need to
understand it and take corrective action.
• Wisdom: You undertake a literature review; convene an expert
panel to generate recommendations for immediate and long-term
action.
•5.1 HISTORY OF KNOWLEDGE MANAGEMENT (KM)

• The origins of knowledge management can be traced back to the

late 1970s.
•The concept of how knowledge is created, implemented, and
integrated throughout an organization.
 In the 1980s, knowledge became a focal point to increasing the
competitive edge for companies.
 The primary object during this time was improving business in
general.
 In the 1990s, knowledge management was introduced
into mainstream business management publications

 In the mid 1990’s, the Internet became the channel

where knowledge management expanded greatly.

 2000 the first KM programs is started in universities

•5.2 DEFINITIONS OF KNOWLEDGE MANAGEMENT(KM)

 "Knowledge Management is the discipline of

enabling individuals, teams and entire
organizations to collectively and systematically
create, share and apply knowledge, to better
achieve their objectives" ~ Ron Young.
•
•5.3 KNOWLEDGE MANAGEMENT THEORIES
•Organizational knowledge management theory primarily focuses on
organizational structures and how an organization is designed culturally and
hierarchically to manage knowledge and knowledge processes.
•Ecological knowledge management theory focuses on people, relationships, and
learning communities, including interactions among individuals and organizations
and the internal and external factors that draw people together to share knowledge.
•Techno-centric theory focuses on technology and the process of designing
technology enablers to help facilitate the flow of knowledge and the storage of
information
•
•5.4 UNDERSTANDING TYPES OF KNOWLEDGE
I. Explicit Knowledge:

•This type of knowledge is formalized and codified, and is

sometimes referred to as know-what (Brown & Duguid 1998).
•It is therefore fairly easy to identify, store, and retrieve (Wellman 2009).

•Examples are the policies, procedural guides, white papers, reports, designs,
products, strategies, goals, mission, and core competencies of the enterprise
and the information technology infrastructure.
•It is the knowledge that has been codified (documented)
I. Tacit Knowledge
•It is sometimes referred to as know-how is usually in the domain of subjective, cognitive, and
experiential learning; it is highly personal and difficult to formalize.

•Tacit knowledge is the cumulative store of the experiences, judgement, mental maps,
insights, acumen, expertise, know-how, trade secrets, skill sets, rule of thumb,
understanding and learning that an organization has.

•Tacit knowledge is found in the minds of human stakeholders.

•It includes cultural beliefs, values, attitudes, mental models, etc. as well as skills,
capabilities and expertise (Botha et al 2008).
 Table 5.1 Properties of Tacit and Explicit Knowledge

Explicit Knowledge Tacit Knowledge

Tangible Intangible

Physical objects, e.g. in documents or databases Mental objects, i.e. it's in people's head's

Context independent Context affects meaning

Easily shared Sharing involves learning

Reproducible Not identically replicated

•5.5 KNOWLEDGE MANAGEMENT SYSTEMS

• KMS refer to a class of information systems applied to managing

organizational knowledge.

•That is, they are IT-based systems developed to support and enhance the
organizational process of knowledge creation, storage and retrieval, transfer,
and application.

•There are essentially three major types of knowledge management systems:

1. Enterprise-wide knowledge management systems,

2. Knowledge work systems, and

3. Intelligent techniques.
Fig 5.2 MAJOR TYPES OF KNOWLEDGE MANAGEMENT SYSTEMS
•5.5.3 Intelligent Techniques
•Dear students what did you know about robots? What do you think their impact
on the human beings?

•Intelligent techniques provide a number of techniques that organizations can

use to capture individual and collective knowledge and to extend their
knowledge base.

•They include such as data mining, expert systems, neural networks, fuzzy logic,
genetic algorithms, intelligent agents and artificial intelligence.
 Data mining and neural networks- Focus on discovering
knowledge.

 They can discover underlying patterns, categories, and

behaviours in large data sets that could not be discovered by
managers alone or simply through experience.

 Neural networks are used for solving complex, poorly

understood problems for which large amounts of data have
been collected.
 Expert systems are an intelligent technique for capturing tacit
knowledge in a very specific and limited domain of human expertise.

 Fuzzy logic is a rule-based technology that can represent such

imprecision by creating rules that use approximate or subjective values.

 It can describe a particular phenomenon or process linguistically and

then represent that description in a small number of flexible rules.

 Organizations can use fuzzy logic to create software systems that

capture tacit knowledge where there is linguistic ambiguity.
 Genetic algorithms focus on discovering optimal
solutions for problems.

 They are used for generating solutions to problems

that are too large and complex for human beings to
analyse on their own.
 Artificial intelligence (AI) technology, which consists of computer-
based systems (both hardware and software) that attempt to emulate
human behaviour.

 Such systems would be able to learn languages, accomplish physical

tasks, use a perceptual apparatus, and emulate human expertise and
decision making.

 Although AI applications do not exhibit the breadth, complexity,

originality, and generality of human intelligence, they play an
important role in contemporary knowledge management.
•5.7 THE KNOWLEDGE MANAGEMENT SYSTEM CYCLE
• 1. Create knowledge. Knowledge is created as people determine new ways of doing things or develop
know-how. Sometimes external knowledge is brought in.
•2. Capture knowledge. New knowledge must be identified as valuable and be represented in a
reasonable way.

•3. Refine knowledge. New knowledge must be placed in context so that it is actionable. This is where
human insights (tacit qualities) must be captured along with explicit facts.

•4. Store knowledge. Useful knowledge must then be stored in a reasonable format in a knowledge
repository so that others in the organization can access it.

•5. Manage knowledge. Like a library, the knowledge must be kept current. It must be reviewed to verify
that it is relevant and accurate.

•6. Disseminate knowledge. Knowledge must be made available in a useful format to anyone in the
 Create Capture

Refine
Knowledge

Disseminate
Disseminate Store
Store
Manage
Manage

Fig 5.4 The knowledge management cycle

•5.8 BENEFITS OF A KNOWLEDGE MANAGEMENT SYSTEM
• Creating an enterprise-wide knowledge management system is not a simple task. However, the
benefits of a well-designed system are immense:

•Awareness: Everyone knows where to go to find the organization’s knowledge, saving people time
and effort.

•Accessibility: All individuals can use the organization’s combined knowledge and experience in
the context of their own roles.

•Availability: Knowledge is usable wherever it is needed whether from the home office, on the road
or at the customer’s side. This enables increased responsiveness to customers, partners and co-
workers.

•Timeliness: Knowledge is available whenever it is needed, eliminating time-wasting distribution of

information, just in case, people are interested.
•5.9 KNOWLEDGE MANAGEMENT APPLICATION IN ORGANIZATION
• The value of a firm’s products and services is based not only on its physical
resources but also on intangible knowledge assets. Some firms perform better than
others because they have better knowledge about how to create, produce, and
deliver products and services. This firm knowledge is difficult to imitate, unique,
and can be leveraged into long-term strategic benefit. Knowledge management
systems collect all relevant knowledge and experience in the firm and make it
available wherever and whenever it is needed to support business processes and
management decisions. They also link the firm to external sources of knowledge.
• The following are knowledge management applications in the organization:
•Knowledge Acquisition
•Organizations acquire knowledge in a number of ways, depending on the type of
knowledge they seek. The first knowledge management systems sought to build
corporate libraries of documents, reports, presentations, and best practices and
encouraged employees to create documents based on their experiences. These
efforts have been extended to include unstructured documents (such as e-mail). In
other cases organizations acquire knowledge by developing online expert
networks so that employees can “find the expert” in the company who has the
knowledge in his or her head.
•Knowledge Storage
•Once they are discovered, documents, patterns, and expert rules must be stored so
they can be retrieved and used by employees. Knowledge storage generally
involves the creation of a database. Document management systems that digitize,
index, and tag documents according to a coherent framework are large databases
adept at storing collections of documents. Management must support the
development of planned knowledge storage systems, encourage the development
of corporate-wide schemas for indexing documents, and reward employees for
taking the time to update and store documents properly.
•Knowledge Dissemination
•Portal, e-mail, instant messaging, and search engine technology have resulted in
an explosion of “knowledge” and information dissemination. These technologies
have added to an existing array of groupware technologies and office systems for
sharing calendars, documents, data, and graphics. Rather than a shortage of
information and knowledge, contemporary technology seems to have created a
deluge of information and knowledge. Here, management and organizational
activities play a critical role. Training programs, informal networks, and shared
management experience communicated through a supportive culture help
managers focus their attention on the important knowledge and information.
•Knowledge Application
•Regardless of what type of knowledge management system is involved, knowledge that is not
shared and applied to the practical problems facing firms and managers does not add business
value. To provide a return on investment, organizational knowledge must become a systematic
part of management decision making and become situated in existing and new decision support
systems. Ultimately, new knowledge must be built into a firm’s business processes and key
application systems, including enterprise applications for managing key internal business
processes and relationships with customers and suppliers. Management supports this process
by creating-based on new knowledge-new business practices, new products and services, and
new markets for the firm. More important, management helps to create a cultural environment
where decisions and processes are based on informed knowledge, not guesswork.