The Value of Information

According to Curtis & Cobham as mentioned in my previous blog posts on the 01/02/2013 & the 08/02/2013 the characteristics of good information are as follows:

• Accurate
• Timely
• Relevant
• Just Sufficient
• Worth its cost

Having already discussed the first and second characteristic in my previous blog posts I will continue to discuss the characteristics of information and its value to organisations. I will today examine the third characteristic of good information.

Information should be relevant in order for an organisation to get the maximum value that it can from the information provided. The Oxford dictionary provides the following definition: something relevant is closely connected or appropriate to the matter in hand. Information should be relevant to the purpose for which it is required otherwise it is not worth producing it as it will not be useful to the person who is to use it. Information granularity at the upper level of an organisations management structure will be coarse whereas at lower levels the information will have a fine granularity. Attached is an image which further illustrates this point:

Information that is immediately relevant, certain and highly detailed can be used by an organisation for operational planning and control. Decisions made by business managers include whether old product lines should be dropped or whether new ones should be added, these decisions are difficult ones to make, the choice to drop or maintain the product line will be assessed based on the effect that it will have on net profit, it is therefore necessary that a careful analysis of relevant costs involved be carried out in order to ensure that the decision made is the right one.

References:

Curtis & Cobham, 2001. Business Information Systems; Analysis, Design and Practice: Fourth Edition.

Seal, Will, 2012. Management Accounting ; McGraw-Hill Higher Education: Fourth Edition. Chapter 9.

 

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