{"id":11247,"date":"2018-05-29T23:31:30","date_gmt":"2018-05-29T23:31:30","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/?post_type=chapter&#038;p=11247"},"modified":"2018-07-10T16:07:11","modified_gmt":"2018-07-10T16:07:11","slug":"reading-data-vs-information","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/chapter\/reading-data-vs-information\/","title":{"raw":"Reading: Data vs. Information","rendered":"Reading: Data vs. Information"},"content":{"raw":"<h2>Data vs. Information<\/h2>\r\n<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/750\/2015\/06\/23083025\/shield-229112_1280.jpg\"><img class=\" wp-image-3646 alignright\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2018\/05\/29222217\/shield-229112_1280-300x225.jpg\" alt=\"Sign showing that data becomes information, which leads to knowledge, which leads to learning\" width=\"243\" height=\"182\" \/><\/a>By the time the company took the plunge and committed $100 million to marketing-related information technology (IT), Caesars had been collecting and storing data about customers for almost a decade. \u201cWhile the company thought it important to collect customer information,\u201d recalls a senior marketing executive, \u201cthe problem was we had millions of customers to collect information on, but we had no systematic way of turning it into a marketing decision. We didn\u2019t know what to do with it.\u201d In other words, Caesars was collecting a lot of <strong><em class=\"im_emphasis\">data<\/em> <\/strong>but not necessarily any <strong><em class=\"im_emphasis\">information<\/em><\/strong>. So what\u2019s the difference?\r\n\r\nAs an example, suppose that you want to know how you\u2019re doing in a particular course. So far, you\u2019ve taken two 20-question multiple-choice tests. On the first, you got questions 8, 11, and 14 wrong; on the second, you did worse, missing items 7, 15, 16, and 19. The items that you got wrong are merely <span class=\"im_margin_term\"><span class=\"im_glossterm\">data<\/span><\/span>\u2014unprocessed facts. What\u2019s important is your total score. You scored 85 on the first exam and 80 on the second. These two numbers constitute <span class=\"im_margin_term\"><span class=\"im_glossterm\">information<\/span><\/span>\u2014data that have been processed, or turned into some useful form. Knowing the questions that you missed simply supplied you with some data for calculating your scores.\r\n\r\nNow let\u2019s fast-forward to the end of the semester. At this point, in addition to taking the two tests, you\u2019ve written two papers and taken a final. You got a 90 and 95 on the papers and a 90 on the final. You now have more processed data, but you still want to organize them into more useful information. What you want to know is your average grade for the semester. To get the information you want, you need yet more data\u2014namely, the weight assigned to each graded item. Fortunately, you\u2019ve known from day one that each test counts 20 percent, each paper 10 percent, and the final exam 40 percent. A little math reveals an average grade of 87.\r\n\r\nThough this is the information you\u2019re interested in, it may be mere data to your instructor, who may want different information: an instructor who intends to scale grades, for example, will want to know the average grade for the entire class. You\u2019re hoping that the class average is low enough to push your average of 87 up from a B+ to an A\u2013 (or maybe even an A\u2014it doesn\u2019t hurt to hope for the best). The moral of the story is that what constitutes <em class=\"im_emphasis\">information<\/em> at one stage can easily become <em class=\"im_emphasis\">data<\/em> at another: or, one person\u2019s information can be another person\u2019s data.\r\n\r\nAs a rule, you want information; data are good only for generating the information. So, how do you convert data into information that\u2019s useful in helping you make decisions and solve problems? That\u2019s the question we\u2019ll explore in the next section.\r\n<div id=\"collins-ch15_s01_s01\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">Information Systems<\/h2>\r\nTo gather and process data into information and distribute it to people who need it, organizations develop an <span class=\"im_margin_term\"><span class=\"im_glossterm\">information system (IS)<\/span><\/span>\u2014the combination of technologies, procedures, and people who collect and distribute the information needed to make decisions and coordinate and control company-wide activities. In most large organizations, the IS is operated by a senior management team that includes a <span class=\"im_margin_term\"><span class=\"im_glossterm\">chief information officer (CIO)<\/span><\/span> who oversees information and telecommunications systems. There may also be a <span class=\"im_margin_term\"><span class=\"im_glossterm\">chief technology officer<\/span><\/span> who reports to the CIO and oversees IT planning and implementation. As for <span class=\"im_margin_term\"><span class=\"im_glossterm\">information managers<\/span><\/span>, their tasks include the following:\r\n<ul id=\"collins-ch15_s01_s01_l01\" class=\"im_itemizedlist im_editable im_block\">\r\n \t<li>Determining the information needs of members of the organization<\/li>\r\n \t<li>Collecting the appropriate data<\/li>\r\n \t<li>Applying technology to convert data into information<\/li>\r\n \t<li>Directing the flow of information to the right people<\/li>\r\n<\/ul>\r\n<div id=\"collins-ch15_s01_s01_s01\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">Differences in Information Needs<\/h2>\r\nThe job is complicated by the fact that information needs vary according to different levels, operational units, and functional areas. Consider, for instance, the following information needs of managers at several levels:\r\n<ul id=\"collins-ch15_s01_s01_s01_l01\" class=\"im_itemizedlist im_editable im_block\">\r\n \t<li><em class=\"im_emphasis\">Top managers<\/em> need information for planning, setting objectives, and making major strategic decisions.<\/li>\r\n \t<li><em class=\"im_emphasis\">Middle managers<\/em> need information that helps them allocate resources and oversee the activities under their control.<\/li>\r\n \t<li><em class=\"im_emphasis\">First-line managers<\/em> require information that helps them supervise employees, oversee daily operations, and coordinate activities.<\/li>\r\n<\/ul>\r\nFigure 1, \"Information Needs and Flows,\" illustrates a hypothetical hierarchy of information needs at Caesars. The president, for example, needs information to determine whether profitability is up or down or if the organization is facing any new competitive threats. At the vice-presidential level, executives need information that will help them in controlling and planning for specific areas of operations. The VP of casino operations, for example, might need to know which operations are most profitable\u2014slots, table games, or other gaming activities. The VP of hotel operations might want to know whether room revenues are going up or down.\r\n\r\n[caption id=\"attachment_11362\" align=\"aligncenter\" width=\"1282\"]<img class=\"size-full wp-image-11362\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2018\/05\/10160608\/5b54a190896bc0f1d5bde16e07681ed8.jpg\" alt=\"A pyramid chart. At the top of the pyramid is the president. Is profitability up or down? On the next tier of the pyramid is the VP of casino operations. Are slots or table games more profitable? Also on the second tier is the VP of hotel operations. Are room revenues going up or down? On the next tier of the pyramid is the slots manager. Are slot machines located for optimal profitability? Also on the third tier is the table-games manager. Do all games conform to state regulations? The bottom tier of the pyramid has four pit bosses. Are dealers ehaving suspiciously? Are there cheaters on the floor?\" width=\"1282\" height=\"899\" \/> Figure 1. Information Needs and Flows[\/caption]\r\n\r\n<div id=\"collins-ch15_s01_s01_s01_f01\" class=\"im_figure im_large im_editable im_block\"><\/div>\r\nThe information needs of middle-level and lower-level managers are different still. The slot-machine manager might want to know whether the placement of machines on the casino floor affects profitability. The poker manager might want to know whether all table games comply with state regulations. At a lower level, the pit manager (who\u2019s in charge of table games in a particular area) needs to know whether there\u2019s a card-counter at his blackjack table or whether a dealer\u2019s activities are suspicious.\r\n\r\nEven at a given level, information needs can vary. A manager on the hotel side of the business, for instance, doesn\u2019t care much about profitability at the poker tables, while a pit manager doesn\u2019t have much use for hotel housekeeping reports. The reports that an accountant needs would hardly be the same as those needed by a human resources manager.\r\n\r\n<\/div>\r\n<div id=\"collins-ch15_s01_s01_s02\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">The Need to Share Information<\/h2>\r\nHaving stressed the differences in information needs, we should pause to remind ourselves that the managerial levels, operations, and functions of every organization are intertwined, to a greater or lesser degree. If you\u2019ll glance again at Figure 1 above, you\u2019ll be reminded that organizations need to share information, that information must flow, and that it must flow in both directions, bottom-up and top-down. At Caesars, for instance, both casino and hotel managers are concerned about security, which is also of interest to managers in different functional areas. Information supplied by the security group is obviously vital to managers in the gaming areas, but HR managers also need it to screen potential employees. Marketing information is clearly important to both casino and hotel operations: to maximize overall profits, the company uses marketing data to fill hotel rooms with customers who spend big in the casinos.<span id=\"collins-5300-20111128-121247-982512\" class=\"im_footnote\">[footnote]Jim Kilby, Jim Fox, and Anthony F. Lucas, <em class=\"im_emphasis\">Casino Operations and Management<\/em>, 2nd ed. (Hoboken, NJ: John Wiley &amp; Sons, 2005), 183\u201384.[\/footnote]<\/span>\r\n\r\nCaesars\u2019s information needs entail more than allowing individuals in a given casino to share information; information has to be shared among all of Caesars\u2019s thirty-nine casinos. Thus, Caesars relies on an <em class=\"im_emphasis\">integrated IT system<\/em> that allows real-time communication among all its properties. Installing the system (in the mid-1990s) was complicated, and not everyone in the organization liked the idea. Some managers felt that information sharing threatened their independence. Others, including some in the IT group, doubted that a large number of separate IT systems could be adequately integrated. To get everyone on board, John Bushy, then senior VP of information technology, pledged that he wouldn\u2019t cut his hair until the system was up and running. By the time it was operational in 1997, Bushy had hair down to his shoulders, but it was worth it: Caesars\u2019s ability to share real-time information across all its properties has been a major factor in the company\u2019s success. Caesars\u2019s new system cut costs by $20 million a year, increased brand recognition, and increased the number of customers playing at more than one Caesars property by 72 percent.<span id=\"collins-5300-20111205-140758-355699\" class=\"im_footnote\">[footnote]Meridith LeVinson, \u201c<a href=\"http:\/\/www.cio.com\/archive\/020101\/harrah.html\" target=\"_blank\" rel=\"noopener\">Jackpot! Harrah\u2019s Big Payoff Came from Using IT to Manage Customer Information<\/a>,\u201d <em class=\"im_emphasis\">CIO Magazine<\/em>, February 1, 2001, (accessed June 2, 2006); \u201c<a href=\"http:\/\/www.gsb.stanford.edu\/scforum\/login\/pdfs\/Harrah.pdf\" target=\"_blank\" rel=\"noopener\">Harrah\u2019s Entertainment Inc.: Real-Time CRM in a Service Supply Chain<\/a>,\u201d Global Supply Chain Management Forum, Stanford Graduate School of Business, (accessed November 14, 2011).[\/footnote]<\/span>\r\n\r\n<\/div>\r\n<div id=\"collins-ch15_s01_s01_s03\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">Enterprise Systems<\/h2>\r\nMany large and mid-size companies rely on a highly integrated system called an <span class=\"im_margin_term\"><span class=\"im_glossterm\">enterprise resource planning (ERP) system<\/span><\/span> to channel information to multiple users. To understand what an ERP system does, forget about the P for <em class=\"im_emphasis\">planning<\/em> (it really doesn\u2019t have much to do with planning) and the R for <em class=\"im_emphasis\">resource<\/em> (it\u2019s an imprecise term). Focus on the E for <em class=\"im_emphasis\">enterprise<\/em>.<span id=\"fwk-collins-fn15_004\" class=\"im_footnote\">[footnote]Christopher Koch, \u201c<a href=\"http:\/\/wikifab.dimf.etsii.upm.es\/wikifab\/images\/d\/da\/The_ABCs_of_ERP.pdf\" target=\"_blank\" rel=\"noopener\">The ABCs of ERP<\/a>,\u201d <em class=\"im_emphasis\">CIO.com<\/em>, (accessed November 14, 2011).[\/footnote]<\/span> An ERP system integrates the computer needs of all activities <em class=\"im_emphasis\">across the enterprise<\/em> into a single system that serves all users. Such broad integration isn\u2019t a simple task, and you wouldn\u2019t be the first person to wonder whether it wouldn\u2019t be easier to give each department its own computer system. Salespeople, for example, need a system that tracks sales and generates sales reports. Meanwhile, manufacturing personnel don\u2019t need to track sales but do need to track inventory. What\u2019s the problem with stand-alone computer systems? Quite simply, users in various departments can\u2019t share information or communicate with each other.\r\n\r\n<\/div>\r\n<div id=\"collins-ch15_s01_s01_s04\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">What If You Don\u2019t Have ERP?<\/h2>\r\nImagine that you\u2019re a sales manager for a fairly large manufacturing company that produces and sells treadmills. Like every other department in the organization, you have your own computer system. A local sporting-goods store orders one hundred treadmills through a regional sales representative. It\u2019s your job to process the order. It wouldn\u2019t be much of a problem for you to go into your computer and place the order. But how would you know if the treadmills were actually in stock and when they could be delivered? How would you know if the customer\u2019s credit was any good? You could call the warehouse and ask if the treadmills are in stock. If they are, you\u2019d tell the warehouse manager that you\u2019re placing an order and hope that the treadmills are still in stock by the time your order gets there two days later. While you\u2019re at it, you\u2019d better ask for an expected delivery date. As a final precaution, you should probably call the finance department and ask about your customer\u2019s credit rating. So now you\u2019ve done your job, and it can hardly be your fault that because the cost of manufacturing treadmills has gone up, accounting has recommended an immediate price increase that hasn\u2019t shown up in your computer system yet.\r\n\r\n<\/div>\r\n<div id=\"collins-ch15_s01_s01_s05\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">What If You Do Have ERP?<\/h2>\r\nWouldn\u2019t it be easier if you had an ERP system like the one illustrated below in Figure 2, \"ERP System\"\u2014one that lets you access the same information as every other department? Then you could find out if there were one hundred treadmills in stock, the expected delivery date, your customer\u2019s credit rating, and the current selling price\u2014without spending most of the day exchanging phone calls, e-mails, text messages, and faxes. You\u2019d be in a better position to decide whether you can give your customer credit, and you could promise delivery (at a correct price) on a specified date. <em class=\"im_emphasis\">Then<\/em>, you\u2019d enter the order into the system. The information that you entered would be immediately available to everyone else. The warehouse would know what needs to be shipped, to whom, and when. The accounting department would know that a sale had been made, the dollar amount, and where to send the bill. In short, everyone would have up-to-date information, and no one would have to reinput any data.\r\n\r\n[caption id=\"attachment_11363\" align=\"aligncenter\" width=\"1411\"]<img class=\"size-full wp-image-11363\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2018\/05\/10160653\/adda2ce207c76b75e7d01f7e894a4922.jpg\" alt=\" A web chart with ERP software at the center. ERP software manages information flow among all database applications. One branch of the web is human resources, which recruits, trains, evaluates, and compensates salespeople. Another branch is operations, which controls inventory throughout the supply chain, from procurement to distribution. Another branch is accounting, which records sales and payments and tracks business performance. Another branch is marketing, which coordinates sales activities and handles customer-relationship management. The last branch is finance, which reports customers\u2019 credit rating and current selling prices.\" width=\"1411\" height=\"949\" \/> Figure 2. ERP System[\/caption]\r\n\r\n<div id=\"collins-ch15_s01_s01_s05_n01\" class=\"im_key_takeaways im_editable im_block\">\r\n<div class=\"keytakeaways\">\r\n<h3>KEY TAKEAWAYS<\/h3>\r\n<ul id=\"collins-ch15_s01_s01_s05_l01\" class=\"im_itemizedlist\">\r\n \t<li><strong class=\"im_emphasis im_bold\">Data<\/strong> are unprocessed facts. <strong class=\"im_emphasis im_bold\">Information<\/strong> is data that have been processed or turned into some useful form.<\/li>\r\n \t<li>To gather and process data into information and distribute it to people who need it, an organization develops an <strong class=\"im_emphasis im_bold\">information system (IS)<\/strong>\u2014the combination of technologies, procedures, and people who collect and distribute the information needed to make decisions and to coordinate and control company-wide activities.<\/li>\r\n \t<li>In most large organizations, the information system is operated by a senior management team that includes a <strong class=\"im_emphasis im_bold\">chief information officer (CIO)<\/strong> who oversees information and telecommunications systems.<\/li>\r\n \t<li>There may also be a <strong class=\"im_emphasis im_bold\">chief technology officer<\/strong> who reports to the CIO and oversees IT planning and implementation.<\/li>\r\n \t<li>The tasks of <strong class=\"im_emphasis im_bold\">information managers<\/strong> include the following:\r\n<ul>\r\n \t<li>Determining the information needs of people in the organization<\/li>\r\n \t<li>Collecting the appropriate data<\/li>\r\n \t<li>Applying technology to convert data into information<\/li>\r\n \t<li>Directing the flow of information to the right people<\/li>\r\n<\/ul>\r\n<\/li>\r\n \t<li>The job is complicated by the fact that information needs vary according to different levels, operational units, and functional areas.<\/li>\r\n \t<li>In addition, information must be shared. To channel information to multiple users, large and mid-size companies often rely on a highly integrated system called an <strong class=\"im_emphasis im_bold\">enterprise resource planning (ERP) system<\/strong>.<\/li>\r\n \t<li>An ERP system integrates the computer needs of all business activities <em class=\"im_emphasis\">across the enterprise<\/em> into a single computer system that serves all users.<\/li>\r\n<\/ul>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>","rendered":"<h2>Data vs. Information<\/h2>\n<p><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/750\/2015\/06\/23083025\/shield-229112_1280.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-3646 alignright\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2018\/05\/29222217\/shield-229112_1280-300x225.jpg\" alt=\"Sign showing that data becomes information, which leads to knowledge, which leads to learning\" width=\"243\" height=\"182\" \/><\/a>By the time the company took the plunge and committed $100 million to marketing-related information technology (IT), Caesars had been collecting and storing data about customers for almost a decade. \u201cWhile the company thought it important to collect customer information,\u201d recalls a senior marketing executive, \u201cthe problem was we had millions of customers to collect information on, but we had no systematic way of turning it into a marketing decision. We didn\u2019t know what to do with it.\u201d In other words, Caesars was collecting a lot of <strong><em class=\"im_emphasis\">data<\/em> <\/strong>but not necessarily any <strong><em class=\"im_emphasis\">information<\/em><\/strong>. So what\u2019s the difference?<\/p>\n<p>As an example, suppose that you want to know how you\u2019re doing in a particular course. So far, you\u2019ve taken two 20-question multiple-choice tests. On the first, you got questions 8, 11, and 14 wrong; on the second, you did worse, missing items 7, 15, 16, and 19. The items that you got wrong are merely <span class=\"im_margin_term\"><span class=\"im_glossterm\">data<\/span><\/span>\u2014unprocessed facts. What\u2019s important is your total score. You scored 85 on the first exam and 80 on the second. These two numbers constitute <span class=\"im_margin_term\"><span class=\"im_glossterm\">information<\/span><\/span>\u2014data that have been processed, or turned into some useful form. Knowing the questions that you missed simply supplied you with some data for calculating your scores.<\/p>\n<p>Now let\u2019s fast-forward to the end of the semester. At this point, in addition to taking the two tests, you\u2019ve written two papers and taken a final. You got a 90 and 95 on the papers and a 90 on the final. You now have more processed data, but you still want to organize them into more useful information. What you want to know is your average grade for the semester. To get the information you want, you need yet more data\u2014namely, the weight assigned to each graded item. Fortunately, you\u2019ve known from day one that each test counts 20 percent, each paper 10 percent, and the final exam 40 percent. A little math reveals an average grade of 87.<\/p>\n<p>Though this is the information you\u2019re interested in, it may be mere data to your instructor, who may want different information: an instructor who intends to scale grades, for example, will want to know the average grade for the entire class. You\u2019re hoping that the class average is low enough to push your average of 87 up from a B+ to an A\u2013 (or maybe even an A\u2014it doesn\u2019t hurt to hope for the best). The moral of the story is that what constitutes <em class=\"im_emphasis\">information<\/em> at one stage can easily become <em class=\"im_emphasis\">data<\/em> at another: or, one person\u2019s information can be another person\u2019s data.<\/p>\n<p>As a rule, you want information; data are good only for generating the information. So, how do you convert data into information that\u2019s useful in helping you make decisions and solve problems? That\u2019s the question we\u2019ll explore in the next section.<\/p>\n<div id=\"collins-ch15_s01_s01\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">Information Systems<\/h2>\n<p>To gather and process data into information and distribute it to people who need it, organizations develop an <span class=\"im_margin_term\"><span class=\"im_glossterm\">information system (IS)<\/span><\/span>\u2014the combination of technologies, procedures, and people who collect and distribute the information needed to make decisions and coordinate and control company-wide activities. In most large organizations, the IS is operated by a senior management team that includes a <span class=\"im_margin_term\"><span class=\"im_glossterm\">chief information officer (CIO)<\/span><\/span> who oversees information and telecommunications systems. There may also be a <span class=\"im_margin_term\"><span class=\"im_glossterm\">chief technology officer<\/span><\/span> who reports to the CIO and oversees IT planning and implementation. As for <span class=\"im_margin_term\"><span class=\"im_glossterm\">information managers<\/span><\/span>, their tasks include the following:<\/p>\n<ul id=\"collins-ch15_s01_s01_l01\" class=\"im_itemizedlist im_editable im_block\">\n<li>Determining the information needs of members of the organization<\/li>\n<li>Collecting the appropriate data<\/li>\n<li>Applying technology to convert data into information<\/li>\n<li>Directing the flow of information to the right people<\/li>\n<\/ul>\n<div id=\"collins-ch15_s01_s01_s01\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">Differences in Information Needs<\/h2>\n<p>The job is complicated by the fact that information needs vary according to different levels, operational units, and functional areas. Consider, for instance, the following information needs of managers at several levels:<\/p>\n<ul id=\"collins-ch15_s01_s01_s01_l01\" class=\"im_itemizedlist im_editable im_block\">\n<li><em class=\"im_emphasis\">Top managers<\/em> need information for planning, setting objectives, and making major strategic decisions.<\/li>\n<li><em class=\"im_emphasis\">Middle managers<\/em> need information that helps them allocate resources and oversee the activities under their control.<\/li>\n<li><em class=\"im_emphasis\">First-line managers<\/em> require information that helps them supervise employees, oversee daily operations, and coordinate activities.<\/li>\n<\/ul>\n<p>Figure 1, &#8220;Information Needs and Flows,&#8221; illustrates a hypothetical hierarchy of information needs at Caesars. The president, for example, needs information to determine whether profitability is up or down or if the organization is facing any new competitive threats. At the vice-presidential level, executives need information that will help them in controlling and planning for specific areas of operations. The VP of casino operations, for example, might need to know which operations are most profitable\u2014slots, table games, or other gaming activities. The VP of hotel operations might want to know whether room revenues are going up or down.<\/p>\n<div id=\"attachment_11362\" style=\"width: 1292px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-11362\" class=\"size-full wp-image-11362\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2018\/05\/10160608\/5b54a190896bc0f1d5bde16e07681ed8.jpg\" alt=\"A pyramid chart. At the top of the pyramid is the president. Is profitability up or down? On the next tier of the pyramid is the VP of casino operations. Are slots or table games more profitable? Also on the second tier is the VP of hotel operations. Are room revenues going up or down? On the next tier of the pyramid is the slots manager. Are slot machines located for optimal profitability? Also on the third tier is the table-games manager. Do all games conform to state regulations? The bottom tier of the pyramid has four pit bosses. Are dealers ehaving suspiciously? Are there cheaters on the floor?\" width=\"1282\" height=\"899\" \/><\/p>\n<p id=\"caption-attachment-11362\" class=\"wp-caption-text\">Figure 1. Information Needs and Flows<\/p>\n<\/div>\n<div id=\"collins-ch15_s01_s01_s01_f01\" class=\"im_figure im_large im_editable im_block\"><\/div>\n<p>The information needs of middle-level and lower-level managers are different still. The slot-machine manager might want to know whether the placement of machines on the casino floor affects profitability. The poker manager might want to know whether all table games comply with state regulations. At a lower level, the pit manager (who\u2019s in charge of table games in a particular area) needs to know whether there\u2019s a card-counter at his blackjack table or whether a dealer\u2019s activities are suspicious.<\/p>\n<p>Even at a given level, information needs can vary. A manager on the hotel side of the business, for instance, doesn\u2019t care much about profitability at the poker tables, while a pit manager doesn\u2019t have much use for hotel housekeeping reports. The reports that an accountant needs would hardly be the same as those needed by a human resources manager.<\/p>\n<\/div>\n<div id=\"collins-ch15_s01_s01_s02\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">The Need to Share Information<\/h2>\n<p>Having stressed the differences in information needs, we should pause to remind ourselves that the managerial levels, operations, and functions of every organization are intertwined, to a greater or lesser degree. If you\u2019ll glance again at Figure 1 above, you\u2019ll be reminded that organizations need to share information, that information must flow, and that it must flow in both directions, bottom-up and top-down. At Caesars, for instance, both casino and hotel managers are concerned about security, which is also of interest to managers in different functional areas. Information supplied by the security group is obviously vital to managers in the gaming areas, but HR managers also need it to screen potential employees. Marketing information is clearly important to both casino and hotel operations: to maximize overall profits, the company uses marketing data to fill hotel rooms with customers who spend big in the casinos.<span id=\"collins-5300-20111128-121247-982512\" class=\"im_footnote\"><a class=\"footnote\" title=\"Jim Kilby, Jim Fox, and Anthony F. Lucas, Casino Operations and Management, 2nd ed. (Hoboken, NJ: John Wiley &amp; Sons, 2005), 183\u201384.\" id=\"return-footnote-11247-1\" href=\"#footnote-11247-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a><\/span><\/p>\n<p>Caesars\u2019s information needs entail more than allowing individuals in a given casino to share information; information has to be shared among all of Caesars\u2019s thirty-nine casinos. Thus, Caesars relies on an <em class=\"im_emphasis\">integrated IT system<\/em> that allows real-time communication among all its properties. Installing the system (in the mid-1990s) was complicated, and not everyone in the organization liked the idea. Some managers felt that information sharing threatened their independence. Others, including some in the IT group, doubted that a large number of separate IT systems could be adequately integrated. To get everyone on board, John Bushy, then senior VP of information technology, pledged that he wouldn\u2019t cut his hair until the system was up and running. By the time it was operational in 1997, Bushy had hair down to his shoulders, but it was worth it: Caesars\u2019s ability to share real-time information across all its properties has been a major factor in the company\u2019s success. Caesars\u2019s new system cut costs by $20 million a year, increased brand recognition, and increased the number of customers playing at more than one Caesars property by 72 percent.<span id=\"collins-5300-20111205-140758-355699\" class=\"im_footnote\"><a class=\"footnote\" title=\"Meridith LeVinson, \u201cJackpot! Harrah\u2019s Big Payoff Came from Using IT to Manage Customer Information,\u201d CIO Magazine, February 1, 2001, (accessed June 2, 2006); \u201cHarrah\u2019s Entertainment Inc.: Real-Time CRM in a Service Supply Chain,\u201d Global Supply Chain Management Forum, Stanford Graduate School of Business, (accessed November 14, 2011).\" id=\"return-footnote-11247-2\" href=\"#footnote-11247-2\" aria-label=\"Footnote 2\"><sup class=\"footnote\">[2]<\/sup><\/a><\/span><\/p>\n<\/div>\n<div id=\"collins-ch15_s01_s01_s03\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">Enterprise Systems<\/h2>\n<p>Many large and mid-size companies rely on a highly integrated system called an <span class=\"im_margin_term\"><span class=\"im_glossterm\">enterprise resource planning (ERP) system<\/span><\/span> to channel information to multiple users. To understand what an ERP system does, forget about the P for <em class=\"im_emphasis\">planning<\/em> (it really doesn\u2019t have much to do with planning) and the R for <em class=\"im_emphasis\">resource<\/em> (it\u2019s an imprecise term). Focus on the E for <em class=\"im_emphasis\">enterprise<\/em>.<span id=\"fwk-collins-fn15_004\" class=\"im_footnote\"><a class=\"footnote\" title=\"Christopher Koch, \u201cThe ABCs of ERP,\u201d CIO.com, (accessed November 14, 2011).\" id=\"return-footnote-11247-3\" href=\"#footnote-11247-3\" aria-label=\"Footnote 3\"><sup class=\"footnote\">[3]<\/sup><\/a><\/span> An ERP system integrates the computer needs of all activities <em class=\"im_emphasis\">across the enterprise<\/em> into a single system that serves all users. Such broad integration isn\u2019t a simple task, and you wouldn\u2019t be the first person to wonder whether it wouldn\u2019t be easier to give each department its own computer system. Salespeople, for example, need a system that tracks sales and generates sales reports. Meanwhile, manufacturing personnel don\u2019t need to track sales but do need to track inventory. What\u2019s the problem with stand-alone computer systems? Quite simply, users in various departments can\u2019t share information or communicate with each other.<\/p>\n<\/div>\n<div id=\"collins-ch15_s01_s01_s04\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">What If You Don\u2019t Have ERP?<\/h2>\n<p>Imagine that you\u2019re a sales manager for a fairly large manufacturing company that produces and sells treadmills. Like every other department in the organization, you have your own computer system. A local sporting-goods store orders one hundred treadmills through a regional sales representative. It\u2019s your job to process the order. It wouldn\u2019t be much of a problem for you to go into your computer and place the order. But how would you know if the treadmills were actually in stock and when they could be delivered? How would you know if the customer\u2019s credit was any good? You could call the warehouse and ask if the treadmills are in stock. If they are, you\u2019d tell the warehouse manager that you\u2019re placing an order and hope that the treadmills are still in stock by the time your order gets there two days later. While you\u2019re at it, you\u2019d better ask for an expected delivery date. As a final precaution, you should probably call the finance department and ask about your customer\u2019s credit rating. So now you\u2019ve done your job, and it can hardly be your fault that because the cost of manufacturing treadmills has gone up, accounting has recommended an immediate price increase that hasn\u2019t shown up in your computer system yet.<\/p>\n<\/div>\n<div id=\"collins-ch15_s01_s01_s05\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">What If You Do Have ERP?<\/h2>\n<p>Wouldn\u2019t it be easier if you had an ERP system like the one illustrated below in Figure 2, &#8220;ERP System&#8221;\u2014one that lets you access the same information as every other department? Then you could find out if there were one hundred treadmills in stock, the expected delivery date, your customer\u2019s credit rating, and the current selling price\u2014without spending most of the day exchanging phone calls, e-mails, text messages, and faxes. You\u2019d be in a better position to decide whether you can give your customer credit, and you could promise delivery (at a correct price) on a specified date. <em class=\"im_emphasis\">Then<\/em>, you\u2019d enter the order into the system. The information that you entered would be immediately available to everyone else. The warehouse would know what needs to be shipped, to whom, and when. The accounting department would know that a sale had been made, the dollar amount, and where to send the bill. In short, everyone would have up-to-date information, and no one would have to reinput any data.<\/p>\n<div id=\"attachment_11363\" style=\"width: 1421px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-11363\" class=\"size-full wp-image-11363\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2018\/05\/10160653\/adda2ce207c76b75e7d01f7e894a4922.jpg\" alt=\"A web chart with ERP software at the center. ERP software manages information flow among all database applications. One branch of the web is human resources, which recruits, trains, evaluates, and compensates salespeople. Another branch is operations, which controls inventory throughout the supply chain, from procurement to distribution. Another branch is accounting, which records sales and payments and tracks business performance. Another branch is marketing, which coordinates sales activities and handles customer-relationship management. The last branch is finance, which reports customers\u2019 credit rating and current selling prices.\" width=\"1411\" height=\"949\" \/><\/p>\n<p id=\"caption-attachment-11363\" class=\"wp-caption-text\">Figure 2. ERP System<\/p>\n<\/div>\n<div id=\"collins-ch15_s01_s01_s05_n01\" class=\"im_key_takeaways im_editable im_block\">\n<div class=\"keytakeaways\">\n<h3>KEY TAKEAWAYS<\/h3>\n<ul id=\"collins-ch15_s01_s01_s05_l01\" class=\"im_itemizedlist\">\n<li><strong class=\"im_emphasis im_bold\">Data<\/strong> are unprocessed facts. <strong class=\"im_emphasis im_bold\">Information<\/strong> is data that have been processed or turned into some useful form.<\/li>\n<li>To gather and process data into information and distribute it to people who need it, an organization develops an <strong class=\"im_emphasis im_bold\">information system (IS)<\/strong>\u2014the combination of technologies, procedures, and people who collect and distribute the information needed to make decisions and to coordinate and control company-wide activities.<\/li>\n<li>In most large organizations, the information system is operated by a senior management team that includes a <strong class=\"im_emphasis im_bold\">chief information officer (CIO)<\/strong> who oversees information and telecommunications systems.<\/li>\n<li>There may also be a <strong class=\"im_emphasis im_bold\">chief technology officer<\/strong> who reports to the CIO and oversees IT planning and implementation.<\/li>\n<li>The tasks of <strong class=\"im_emphasis im_bold\">information managers<\/strong> include the following:\n<ul>\n<li>Determining the information needs of people in the organization<\/li>\n<li>Collecting the appropriate data<\/li>\n<li>Applying technology to convert data into information<\/li>\n<li>Directing the flow of information to the right people<\/li>\n<\/ul>\n<\/li>\n<li>The job is complicated by the fact that information needs vary according to different levels, operational units, and functional areas.<\/li>\n<li>In addition, information must be shared. To channel information to multiple users, large and mid-size companies often rely on a highly integrated system called an <strong class=\"im_emphasis im_bold\">enterprise resource planning (ERP) system<\/strong>.<\/li>\n<li>An ERP system integrates the computer needs of all business activities <em class=\"im_emphasis\">across the enterprise<\/em> into a single computer system that serves all users.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-11247\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Revision and adaptation. <strong>Authored by<\/strong>: Linda Williams and Lumen Learning. <strong>Provided by<\/strong>: Tidewater Community College. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-sa\/4.0\/\">CC BY-NC-SA: Attribution-NonCommercial-ShareAlike<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Sign showing data to information to knowledge to learning. <strong>Authored by<\/strong>: geralt. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/pixabay.com\/en\/shield-transport-panel-board-229112\/\">https:\/\/pixabay.com\/en\/shield-transport-panel-board-229112\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/cc0\">CC0: No Rights Reserved<\/a><\/em><\/li><li>An Introduction to Business. <strong>Authored by<\/strong>: Anonymous. <strong>Provided by<\/strong>: Anonymous. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/2012books.lardbucket.org\/books\/an-introduction-to-business-v2.0\/s19-managing-information-and-techn.html\">http:\/\/2012books.lardbucket.org\/books\/an-introduction-to-business-v2.0\/s19-managing-information-and-techn.html<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-sa\/4.0\/\">CC BY-NC-SA: Attribution-NonCommercial-ShareAlike<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section><hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-11247-1\">Jim Kilby, Jim Fox, and Anthony F. Lucas, <em class=\"im_emphasis\">Casino Operations and Management<\/em>, 2nd ed. (Hoboken, NJ: John Wiley &amp; Sons, 2005), 183\u201384. <a href=\"#return-footnote-11247-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><li id=\"footnote-11247-2\">Meridith LeVinson, \u201c<a href=\"http:\/\/www.cio.com\/archive\/020101\/harrah.html\" target=\"_blank\" rel=\"noopener\">Jackpot! Harrah\u2019s Big Payoff Came from Using IT to Manage Customer Information<\/a>,\u201d <em class=\"im_emphasis\">CIO Magazine<\/em>, February 1, 2001, (accessed June 2, 2006); \u201c<a href=\"http:\/\/www.gsb.stanford.edu\/scforum\/login\/pdfs\/Harrah.pdf\" target=\"_blank\" rel=\"noopener\">Harrah\u2019s Entertainment Inc.: Real-Time CRM in a Service Supply Chain<\/a>,\u201d Global Supply Chain Management Forum, Stanford Graduate School of Business, (accessed November 14, 2011). <a href=\"#return-footnote-11247-2\" class=\"return-footnote\" aria-label=\"Return to footnote 2\">&crarr;<\/a><\/li><li id=\"footnote-11247-3\">Christopher Koch, \u201c<a href=\"http:\/\/wikifab.dimf.etsii.upm.es\/wikifab\/images\/d\/da\/The_ABCs_of_ERP.pdf\" target=\"_blank\" rel=\"noopener\">The ABCs of ERP<\/a>,\u201d <em class=\"im_emphasis\">CIO.com<\/em>, (accessed November 14, 2011). <a href=\"#return-footnote-11247-3\" class=\"return-footnote\" aria-label=\"Return to footnote 3\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":163,"menu_order":3,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"Sign showing data to information to knowledge to learning\",\"author\":\"geralt\",\"organization\":\"\",\"url\":\"https:\/\/pixabay.com\/en\/shield-transport-panel-board-229112\/\",\"project\":\"\",\"license\":\"cc0\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"An Introduction to Business\",\"author\":\"Anonymous\",\"organization\":\"Anonymous\",\"url\":\"http:\/\/2012books.lardbucket.org\/books\/an-introduction-to-business-v2.0\/s19-managing-information-and-techn.html\",\"project\":\"\",\"license\":\"cc-by-nc-sa\",\"license_terms\":\"\"},{\"type\":\"original\",\"description\":\"Revision and adaptation\",\"author\":\"Linda Williams and Lumen Learning\",\"organization\":\"Tidewater Community College\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by-nc-sa\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"8ca0c073-b63b-4daf-a1e6-bb49b46f054a","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-11247","chapter","type-chapter","status-publish","hentry"],"part":11240,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapters\/11247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/wp\/v2\/users\/163"}],"version-history":[{"count":3,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapters\/11247\/revisions"}],"predecessor-version":[{"id":11364,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapters\/11247\/revisions\/11364"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/parts\/11240"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapters\/11247\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/wp\/v2\/media?parent=11247"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapter-type?post=11247"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/wp\/v2\/contributor?post=11247"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/wp\/v2\/license?post=11247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}