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Running head for publication goes here Essay 1. Introduction 3 1. 1. Purpose of Report 3 1. 2. Current Situation 3 1. 3. Identified Problems 4 2. Data and Knowledge 5 2. 1. What makes data good? 5 2. 2. How is information created? 5 2. 3. How is information used? 6 2. 4. How Dell utilized information 6 2. 5. How KAR Vehicles Ltd can benefit 8 3. Using Systems to Convert Data into Information 8 3. 1. Transaction Processing Systems 8 3. 2. Management information systems 9 3. 3. Decision Support Systems 9 3. 4. Expert systems 10 4. Conclusion 11 References 12 INFORMATION SYSTEMS 1. Introduction 1. 1. Purpose of Report This paper is to discuss and analyze the role of information systems in processing raw data such as statistics, sales figure and demographic data, into useful and valuable knowledge which can be used to support decision-making within an organization. Focus will be placed on a case study of Kar Vehicle Hire Limited, from which valuable real life experience and lessons can be drawn from. 1. 2. Current Situation. KAR Vehicle Hire Ltd has recently implemented a transaction processing system called K-VIS which utilizes a database containing details of vehicles, clients, hire bookings, vehicle collections and returns, vehicle maintenance schedules, etc, as well as other relevant information. Bookings are done through K-VIS and the appropriate information such as booking details, driver details and payment details are entered into and stored in the database. This data entry and updating is done manually by the office administrator. Other transactions and procedures such as the collection of vehicle is also carried out in a similar fashion. With the growing amount of information and data available in the new database, the potential for the use of this information to aid managerial decision-making by uncovering patterns or trends, or in other methods, has been discussed. Knowledge creation to support effective key management decision-making is then the primary concern of Kar Vehicle Ltd currently. 1. 3. Identified Problems The main problem here that KAR Vehicle Ltd faces is that of managing data and knowledge creation. Firstly, managing data is a challenging process, because the amount of data expands exponentially over time; is collected from many sources, both external and internal; and is scattered throughout the organization different branches. The introduction of K-VIS has helped to centralize the collection and storage of data in a standardized format and procedure; however, KAR Vehicle Ltd has limited experience in transforming data to information, and information to knowledge via a knowledge creation process. This requires data that can be understood by the managers and analysts of KAR Vehicle Ltd easily, be accessible conveniently, and hence be able to analyzed using a variety of tools according to their needs to produce information. This information can then be used in conjunction with the experience and personal knowledge of the managers and analysts to create knowledge, which should then be stored in a format that all organizational employees can access and apply, creating a flexible and powerful â€Å"learning organization†. (Rainer, Turban and Potter, pg 96-100, 2006) 2. Data and Knowledge 2. 1. What makes data good? Data is simply a collection of raw facts, figures and statistics collected by people and systems, and then stored in various format. By itself, raw data has no real significance and use, but like all raw materials, it has to go through a process to convert it to information about the world, situations and people, which becomes factual statements about the world, which has meaning and can be useful in certain ways. (O’Brien, 1994, pg. 19) But before raw data can be converted to useful information, it has to be good and â€Å"clean†; that is, data without errors (Rainer, pg 101, 2006). What makes data clean? â€Å"Clean† data which is error free should be accurate, complete, timely, consistent, accessible, relevant and concise. â€Å"Clean† data is of high quality and can be used to generate useful information about linkages and facts about the world. 2. 2. How is information created? Information is data that has been converted into a meaningful and useful context that links various facts together in a relationship which can be used to form factual statements about the world. It is the result of data that has gone through a value added process where it is aggregated, manipulated and organized; analyzed and evaluated; and finally placed in a proper context which is suitable for its purpose or designed end user. This value added process, or what we will call â€Å"data processing†, usually occurs in information systems. For example, raw data is entered by the office administrator and front line stuff into K-VIS, which organizes and process the data to form meaningful relationships, such as a customer demographic data, his sales and records history, a vehicular history and transactions history. 2. 3. How is information used? Information that has real value and is accurate and meaningful is very important to any business organization. Without timely and accurate information which is relevant, businesses would not be able to make informed decisions and carry out activities such as risk analysis, cost benefit analysis, demand forecasting and supply chain co-ordination, among other things. For example, Dell business model is entirely based on timely and accurate information about orders, demands, suppliers and inventory. Making use of accurate and timely information flows, Dell is able to exploit a fundamental competitive factor in its industry to its fullest – the value of time. 2. 4. How Dell utilized information Dell use of information technology to gather, process and disseminate information is vital to the success of it’s business model – namely direct sales and build-to-order – enabling it to make highly accurate and timely decisions about market forecasting to drive production and inventories. It kept track directly of customers’ PC inventory, allowing individual business users to order PCs directly rather than going through a middleman, allowing Dell to build a relationship with customers and making the collection of useful data automated and painless. This data, which was processed into meaningful information, helped Dell to segment its customers into different primary categories. This categorization helps Dell to respond to changes in different customer segments, and make decisions on which customer segment is the most profitable to develop and grow, and hence the segment in which to concentrate its resources on, offering highly customized services to gain and keep their business. In short, meaningful information helped tell to make decisions regarding its most profitable customers, and where its resources would be most efficiently expended on. Dell is also able to minimize part inventories by requiring suppliers to restock parts only as they are needed, and to have available specific components as they are needed to fill an incoming order. This is made possible through very close coordination between Dell’s sales and manufacturing arm, and between Dell and its suppliers. This is achieved by refining its business processes, developing close relationships with a limited number of key suppliers, all the while making heavy and extensive use of information technology systems to facilitate communication within and outside the company, making this close coordination possible and successful. (Kraemer, Dedrick and Yamashiro, 2000) 2. 5. How KAR Vehicles Ltd can benefit KAR Vehicles Ltd can benefit from the information stored in K-VIS as well in many ways. For example, customer demographic information could be used to foster closer customer relationships and to keep and retain profitable and valuable customers. In turn, profitable and valuable customers can be identified from their sales records, which can be analyzed to pick put high value and high volume customers. This information can also be used to create customers segments like Dell did, in order to make decisions as to how KAR Vehicles Ltd can distribute their resources most efficiently. Furthermore, KAR Vehicles Ltd can also make use of the information gathered in K-VIS to minimize inventory turn over rates, and to maximize resource usage. For example, KAR Vehicle managers could analyze sales history and periods, and then determine where and when car inventories should be kept and retained in order to meet demand. This can help KAR Vehicles to reduce its inventory stock, by making each car in its inventory more utilized. 3. Using Systems to Convert Data into Information 3. 1. Transaction Processing Systems. This is what the K-VIS basically is, a system that supports the monitoring, collection, storage and processing of data from the organization business transactions, each of which generates data. The TPS collects data continuously in real time, and are considered critical to the success of any enterprise because they support core operations. It is hence obvious that K-VIS is essential to the continued and efficient operations of KAR Vehicles business operations. 3. 2. Management information systems Management information systems summarize data and prepare reports. These reports are mostly for middle and low level managers, and concern a specific functional area. K-VIS is also a management information system, as we can see that K-VIS is used by the office administrator to print out multipart forms or VIF. 5 forms for all collections due for a particular day. These forms are then used for business transactions as appropriate, and also used to update K-VIS with any new information or details. 3. 3. Decision Support Systems Decision support systems provide computer-based support for complex, non-routine decisions, for both managers and knowledge workers. There are typically two categories of Decision Support Systems – Business Intelligence Systems and Data Mining Systems. These are usually used in conjunction with a data warehouse and allow users to perform their own data analysis. For example, K-VIS enabled with a decision support system module, could be used to conduct what-of analysis to test the impact of bringing in new inventories of cars, relocation of branch offices, or expanding their varieties of cars offered. 3. 4. Expert systems Simply put, expert systems can be thought of as a collection of rules as defined by an expert. These rules can then be used as â€Å"†¦information processors whose applications address highly specialized and restricted areas of expert human knowledge†, as stated by Murray and Murray (1988, pp. 3). The potential benefits of expert systems are enormous, and their applications highly flexible. Watkins and Eliot (1993) identify some of the benefits of integration between expert systems and computer-based information systems (CBIS) as: o Improving the operations and maintenance of the database o Improving sensitive analysis o Acting as a tutor o Making applications more useful and â€Å"intelligent† o Reducing maintenance costs. o Refining the query system This is the area in which KAR Vehicles Ltd should focus on, as it automates decision making support for managers, and can help KAR Vehicles Ltd to identify and exploit any strategic or competitive advantage available in their industry. 4. Conclusion In today highly competitive and complex business environment, the capability to collect data, process it into useful and meaningful information, and then utilize this information in efficient ways to create knowledge or a competitive advantage, is essential towards prosperity and even survival in the business climate. Information systems are indispensable when it comes to this tasks, and there are a wide range and variety of information systems, all of which can be integrated, to collect data, process data into meaningful information, and then make use of this information to support the decision making process used by the managers of KAR Vehicles Ltd. In doing so, competitive and strategic advantage can be potentially identified and achieved, and greater operational efficiency will result as well. References Kraemer, Kenneth L. , Dedrick, Jason. , and Yamashiro, Sandra., 2000, â€Å"Refining and Extending the Business Model With Information Technology:Dell Computer Corporation†, The Information Society, 2000 Murray, Jerome T. , and Murray, Marilyn J. , 1988, Expert Systems in Data Processing, A Professional’s Guide, McGraw-Hill O’Brien, James A. , 1994, Introduction to Information Systems, Richard D. Irwin, Inc Rainer, Kelly. , Turban, Efraim. , and Potter, Richard. 2006, Introduction to Information Systems, John Wiley and Sons Watkins, Paul R. and Eliot, Lance B. , 1993, Expert Systems in Business and Finance, John Wiley and Sons.