CHAPTER 22
Managing Information and Information
Technology
CHAPTER SUMMARY
This chapter deals with the management of information and information technology. It first relates
information to the manager’s job, then describes the basic kinds of information systems used by
organizations. The management of information systems is then discussed. The chapter concludes with
a description of the impact of information systems on organizations.
LEARNING OBJECTIVES
After covering this chapter, students should be able to:
1. Describe the role and importance of information in the manager’s job and identify the basic building
blocks of information technology.
Snopes.com is an Internet fact-checking site that aims to put a damper on the growth of the hoax and
misinformation business via the Internet. Run by David and Barbara Mikkelson, Snopes scrutinizes
Internet claims to determine if they are genuine.
Discussion Starter: What do students think about the reliability of the information via email or the
Internet?
LECTURE OUTLINE
I. INFORMATION AND THE MANAGER
A. Role of Information in the Manager’s Job
Managers process data and information as they communicate, make decisions, work with
Teaching Tip: Point out to students that while the study of management is not all that old (around one
Chapter 22: Managing Information and Information Technology
Teaching Tip: Using data from The Wall Street Journal, list two or three stock prices as examples
of data. Then describe how these prices reflect gains or losses from the previous day to illustrate
information.
2. Information is data presented in a way or form that has meaning.
3. Information technology, or IT, refers to the resources an organization uses to manage
the information it needs to carry out its mission.
B. Characteristics of Useful Information
1. Information needs to be accurate, that is, to provide a valid and reliable reflection
of reality.
2. Information must be available in time for appropriate managerial action.
Teaching Tip: Using grades, registration information, or degree requirements, illustrate for students
how and why they need information that is accurate, timely, complete, and relevant.
Teaching Tip: Point out to students, however, that it is possible to become too concerned with the
Discussion Starter: Ask students for examples of when they received information that was
not accurate, timely, complete, and/or relevant.
C. Information Management as Control
Information is a vital component of the control process.
Extra Example: One reason for the Enron scandal is that the Board of Directors, outside auditors, and
D. Building Blocks of Information Technology
Whether information technology is manual or computer-based, it generally relies on five basic
parts.
1. An input medium gets information into the system.
Teaching Tip: Many colleges and universities today have complex information technology systems.
If yours does, use it as an example to illustrate the various kinds of information technology.
II. TYPES OF INFORMATION SYSTEMS
Chapter 22: Managing Information and Information Technology
A. User Groups and System Requirements
1. There are four user groups: top managers, middle managers, first-line (or operational)
Extra Example: In contrast, younger managers are much more comfortable with computers and are
Extra Example: Many organizations today have invested in elaborate human resource information
systems. These systems allow managers to quickly determine who in the organization is best prepared
information needs.
B. Major Systems by Level
These systems are described in order from simplest to most complex.
1. A transaction-processing system, or TPS, is an application of information-processing for
2. Systems for knowledge workers and office applications include programming and data
processing systems as well as systems for clerical support and communication.
Teaching Tip: Management information systems are still the most common form of information
technology in organizations today.
Global Connection: International businesses have been especially committed to developing
management information systems as a way to link their myriad global operations.
5. A decision support system, or DSS, is an interactive system that locates and presents
Chapter 22: Managing Information and Information Technology
6. Executive support systems, or ESS, are a quick-reference, easy-access application of
Global Connection: The cargo harbor at Singapore uses an elaborate expert system to guide
C. The Internet
The Internet is a gigantic network of networks serving millions of computers offering
information on business, science, and government and providing communication flows among
Discussion Starter: Ask your students about their Internet use. Ask how and when they use it, how
often they use it, and so forth. In addition, ask those students who do not use it why they don’t.
1. The World Wide Web (WWW) is a universally accepted format for storing, retrieving, and
displaying information on the Internet. It uses Uniform Resource Locator (URL) codes
to identify unique web addresses.
Extra Example: Many search engines were developed by academics, computer scientists who were
interested in researching search algorithms. For example, Google.com was founded by two Stanford
Ph.D. candidates, Page and Brin, who developed an improved algorithm.
4. Intranets are communication networks similar to the Internet but operating within the
boundaries of a single organization. These private networks operate on the Internet, but
III. MANAGING INFORMATION SYSTEMS
A. Creating Information Systems
There are six steps in establishing an information system.
1. Determine information needs, establish goals, and select task force members.
Chapter 22: Managing Information and Information Technology
Extra Example: Big computer companies like IBM sell fully developed and integrated information
systems. Alternatively, Accenture will take basic hardware purchased from other vendors and write
custom software to create an integrated information system for its customers.
Group Exercise: Have small groups of students describe how they would develop and implement
an information system for your class.
B. Integrating Information Systems
Extra Example: Quaker State uses an IBM system to integrate its various internal information
systems. The firm bought the entire system from IBM, and IBM installed the system and trained
Quaker State employees in its use.
Extra Example: Exxon’s information system also uses IBM equipment. However, the operating
software was written for the firm by EDS.
C. Using Information Systems
1. Ideally, an information system should be simple to use and nontechnical.
D. Managing Information Security
Information security is an area of growing concern to today’s managers.
1. Firewalls are software and hardware systems that allow employees access to both the
Internet and the company’s internal computer network while barring access by outsiders.
2. Encryption is a system for scrambling data, using a secret code, so that unauthorized
viewers will not be able to understand the information they see. Encryption protects
information contained in electronic communication such as email.
3. People are the weakest link in any information system. Violations of security procedures
can have disastrous consequences.
E. Understanding Information System Limitations
1. Information systems are expensive and difficult to develop and implement .
2. Information systems are not suitable for all tasks problems.
Chapter 22: Managing Information and Information Technology
Extra Example: Computer scientists have long had a term to describe the concept that any system’s
output is only as good as its input. They say, “GIGO,” which stands for “Garbage In; Garbage Out.”
IV. THE IMPACT OF INFORMATION SYSTEMS ON ORGANIZATIONS
A. Leaner Organizations
Extra Example: Dell Computers is one company that has built its business almost entirely upon mass–
customization. Customers order PCs directly from the company’s web site, specifying the options and
features they desire. The PCs are then assembled one at a time and shipped to customers.
C. Increased Collaboration
Electronic communications make it cheaper and easier for employees to communicate with
others both inside and outside the organization.
D. More Flexible Work Sites
Telecommuting, virtual businesses, and e-businesses that subcontract most of their work are
all examples of changes in work locations that have resulted from the explosive growth of
automation and the Internet.
END OF CHAPTER QUESTIONS
Questions for Review
1. What are the differences between data and information? Give three examples of data, and then show
how those data can be turned into information.
Information is raw data that has been processed, analyzed, interpreted, or presented in a way that
2. Who uses information systems in organizations? What types of functions do the systems perform for
each type of user?
Virtually anyone in an organization, from the lowest-level hourly wage earners to the CEO, may use
3. Describe each of the levels of major information technology systems. Give an example of each,
other than the examples in the text.
Transaction-processing systems gather basic business information An example would be a retailer’s
“smart” cash register. Knowledge-worker and office applications provide support for data processing
4. What are some of the positive impacts that information technology can have on organizations?
What are some of the negative impacts?
Information technology can increase an organization’s efficiency, improve coordination, improve
Questions for Analysis
5. Very often managers making decisions in real organizations have to work with information that does
not perfectly meet all four criteria for useful information. In that case, should the manager use the
imperfect information? What can the manager do to increase the usefulness of imperfect information?
Clearly, managers should use whatever information they have, even if that information is inaccurate,
6. At higher organizational levels, the information technology tools used become more sophisticated.
Yet, in many organizations, higher-level managers are the least sophisticated and experienced with
hands-on use of information technology. How can unsophisticated users effectively employ
a sophisticated IT tool? What are some of the potential problems they should be aware of?
Training in IT usage is certainly one good suggestion, but many top managers may not want to
Chapter 22: Managing Information and Information Technology
Another possibility is to seek out IT solutions that do not require user expertise, and this is
7. It has been said that the information revolution is like the Industrial Revolution in terms of the
magnitude of its impact on organizations and society. What leads to such a view? Why might that
view be an overstatement?
The Industrial Revolution fundamentally changed the way business works and totally revamped
Questions for Application
8. Interview a business manager about the use of information in his or her organization. How is the
information managed? Is a computer system used? How well is the information system integrated
with other aspects of organizational control?
The responses will vary significantly by the size of the organization the students choose to
9. Visit a local organization, such as a university administration office, a restaurant, or a supermarket.
Stand in its facility and look around you. How many different information systems can you spot?
Do not look just for “computers”; also look for less obvious examples, such as the digital thermostat
on the wall or the electronic cash register. What type of information system is each?
10. A knowledge worker can be defined as “someone who creates, transforms, or repackages
information.” Choose a knowledge worker occupation that interests you. Use the Internet
to investigate the job qualifications for that occupation. What skills, knowledge, and experience are
needed? How do the qualifications for knowledge workers differ from the qualifications of white
collar workers?
One good source for students to find occupation information is the Bureau of Labor Statistics home
Chapter 22: Managing Information and Information Technology
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END OF CHAPTER EXERCISES
Building Effective Technical Skills
I. Purpose
This technical skills exercise requires students to think through issues related to automating a
manual process.
II. Format
Students must observe a business and then access the Internet, so this exercise must be done outside
III. Follow-Up
A. Observe a business that currently relies on a manual process to perform some information
function say, a hospital that maintains patient records on paper or a receptionist who answers
and routes calls.
B. Use the Internet to find an example of a company that uses information technology to perform
a comparable process. (Hint: Look for organizations of the same type, such as another hospital.
D. Explain the benefits that the business would realize if it automated the process currently being
performed manually. Then explain the costs, limitations, or potential problems that it might
encounter in making the switch.
Automation would typically reduce errors, save time, increase efficiency, and perhaps allow
Building Effective Time Management Skills
I. Purpose
This exercise enables students to evaluate the time efficiency of their use of information technology.
II. Format
This exercise requires each student to note or think back on their usage of information technology.
III. Follow-Up
A. List every form of technology that you used or do use over the course of the week. Note how
frequently you used or do use it and for how long.
Chapter 22: Managing Information and Information Technology
B. Which form did you use most often? Least often? Which did you use for the longest total
amount of time? For the shortest amount of time? Which did you use to perform “critically
C. For each device, list alternative, less technologically sophisticated ways of performing the
same function – say, picking up a newspaper instead of checking out the news on the Internet,
or simply calling someone on the phone rather than sending an email.
D. Decide whether each form of technology was in fact a time-saver. Did it actually perform its
function more efficiently than the “lower-tech” alternative? Did any form of IT at your
disposal actually contribute to wasted time?
MANAGEMENT AT WORK
THE WIKI WORLD OF JIMMY WALES
Wikipedia is an online encyclopedia that is unique in that its content is created entirely by thousands
of unpaid volunteers. Founder Jimmy Wales envisioned a world where “every person is given free access
to the sum of all human knowledge.” Contributions are constantly added to the database of the
encyclopedia. Wikipedia is run by the Wikipedia Foundation, a nonprofit organization.
Discussion Starter: What do students think about the reliability of the information in Wikipedia?
As the case points out, academics are skeptical about the information in this site. Are there professors
who will allow Wikipedia to be used as a source for term papers?
1. Case Question 1: Do you use Wikipedia? Why or why not? Do you think Wikipedia will
ultimately eliminate the need for traditional reference sources? Why or why not?
Student responses will vary depending on their approach to sourcing information on the Internet.
Chapter 22: Managing Information and Information Technology
2. Case Question 2: Think of three topics that interest you. Locate the articles on these topics on
Wikipedia and comment on their usefulness and accuracy. Which article is the most reliable?
Which is the least reliable?
3. Case Question 3: Because they support collaboration so conveniently, wikis are becoming
increasingly common in business. Think of two potential applications of wiki sites in a business
context and describe the way each would work.
4. Case Question 4: Why is integrity of content so important to services like those offered by
Wikipedia? What sort of factors can render information unreliable? Can you think of an example in
which unreliable information could affect someone using it for business purposes?
Wikipedia is an online encyclopedia. People use encyclopedias when they want definitive