Chapter 13 The Management of Information and Knowledge for Better Decisions

Topics to be Discussed Introduction The Evolution of Data, Information, and Knowledge Management Knowledge Management Tools ERP, EDI and E-Business

Introduction The 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.

Introduction Data: 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 Concept Data 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 Management Data 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 Concept E-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 ProductionMarketing Direct Materials Direct Labor Manufacturing Overhead Advertising and Promotions Staff

The Value Chain Distribution Customer 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/Monetary Information Qualitative Information Non-financial Information Non-monetary Quantitative Data

Accounting Information Financial Information Balance 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) Pros Provides real-time information. Goal is to get the right info to the right people at the right time. Can allow higher levels of profitability. Cons Involves 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 exchange Reduces lead times Reduces 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-Business Key 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-Business Customer 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 knowledge and sharing that information with other parties ethical?

ERP, EDI and E-Business Key Concept The 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 that I’m in trouble if I can’t grab hold of our data!! Can you help me?