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Unit 8 Information and Advantage
Unit 8 Information and Advantage
The two prime characteristics of information are relevance and reliability. The management accountant is involved in each. Relevant information assists the decision-making process the management accountant decides what is relevant. Reliable information is as accurate as needed the management accountant decides again and establishes control systems to ensure that accuracy is achieved.
Sources of information
Internal sources considered to be more reliable as it is known: Who provided the information When Why What assumptions were used
Questions exist over relevance as there is likely to be Narrow focus; Cultural distortion of issues.
External sources considered to be more relevant as a wider range of issues with less cultural distortion. However the who, why, when and what is questionable this time as these are not known with any degree of certainty.
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DATA WAREHOUSING
A data warehouse is a subject-oriented, integrated, time-variant, non-volatile collection of data in support of managements decision-making process.
A data warehouse provides a platform of integrated, historical data from which analysis can be done. It is: A database A data capture system A data classification system
It will have: Data extraction facilities Reporting facilities to act as a decision support system;
The conventional data warehousing model is a system in which a large centralised store of consolidated business data is maintained by constant updates from the operational systems at the branches/stores or operating sites.
Examples Warehouses that capture data about customers and buyer behaviour Loyalty cards usage data Oyster cards
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DATA MINING
Data mining is the analysis of data to detect unsuspected or unknown relationships, patterns and associations. This involves using advanced analytical techniques and involves researching the warehouse to turn data into information Data warehouses are for storing data, not turning it into information, whereas data mining turns data into information. The process uses statistical techniques and technologies to discover relationships and then builds models based on them. Data mining results include: Associations when one event can be correlated to another event, e.g. beer purchasers buy peanuts a certain percentage of the time; Sequences one event leading to another later event, e.g. a rug purchase followed by a purchase of curtains; Classification the recognition of patterns and a resulting new organisation of data, e.g. profiles of customers who make purchases; Clustering finding and visualising groups of facts not previously known; Forecasting simply discovering patterns in the data that can lead to predictions about the future and make forecasting easier
Summary
Warehouses capture data Mining converts data into information
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Disadvantages
The data will need to be analysed and 'cleansed' before it can be integrated into a warehouse. This will not be easy, quick or cheap to achieve; Hardware and software costs can be significant and increasingly sophisticated users will be expecting more of their systems possible development into foresight/forecasting which will attract higher development costs Staff will need training users and operators As the new system proves its worth, more and more demands will be made of it, so ongoing maintenance, adequate network bandwidth, sufficient storage space, and highly flexible upgrade capability are all essential; With all data in a single main source, it is vital to ensure that effective back-up arrangements are made and strictly adhered to. Control of access needs regularly monitoring and may be the target of attack Legal considerations constantly changing with regard to the capture and storage of data
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KNOWLEDGE MANAGEMENT
The management of the information, knowledge and experience available to an organisation its creation, capture, storage, availability and utilisation in order that organisational activities build on what is already known and extend it further. Knowledge management is an approach in which an organisation proactively gathers, organises, shares and analyses its knowledge to further its aims.
Data raw fact Information combination of data to give meaning Knowledge combines information with experience to create a basis for advantage
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Human capital which comprises of human resources The knowledge, skills and experience possessed by employees Structural capital, which is in turn divided into: innovation intellectual property; customer address lists and client records; organisational control and operating systems.
Intranet systems
This is a private network that is contained within an organisation for access by staff. The main objective of an Intranet is to make information flow more freely by sharing company data, information and knowledge amongst employees. The aim is to make knowledge accessible to as many staff as need be in a speedy cost effective manner that ensures a consistency of provision. E.g. Solicitors / accountants / university professors Advantage from consistency, speed and cost
Extranet systems
An Extranet is a private, secure extension of the enterprise via the corporate Intranet. It creates a server that outside users can access (e.g. customers) and so we can create advantage by allowing access to our knowledge by our customers / consumers It also allows the organisation to share part of its business information or operations with suppliers and other business partners using the Internet and so can create an element of customer lock in
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