1.

NEW INFORMATION REVOLUTION

What is new information?

Information started with business enterprise and business information.

Change the MEANING of information for both enterprises and individuals.
Revolution in CONCEPTS.
It is not happening in Information Technology (FT), or in Management
Information Systems (MIS),and is notbeing led by Chief Information Officers
(CIOs). It is led by people on whom the Information Industry tends to look
down: accountants.
New information revolution has taken places and driven them due to failure
of the "Information Industry"the IT people, the MIS people, the ClOs-to
provide INFORMATION
It has focused on the "T" in "IT." The new information revolutions focus on
the "I."
redefining the tasks to be done with the help of information and, with it, to
redefining the institutions that do these tasks.
Difference between data and information

From the T To the I IN IT and how it revolutionized?

AT FIRST, HOW Technology has revolutionized - market for the new Miracle
computer how it came?- IBM CASE- how it has impacted?
Revolutionary software Applications in OPERATIONS : architecture, surgical
virtual operation, software that enables a major equipment maker such as
Caterpillar to organize its operations, including manufacturing worldwide,
banking industry,
But the computer and the information technology arising from it
have so far had practically no impact on the decision. So, For top
management tasks, information technology so far has beena producer of data
rather than a producer of information
Early-19th-century theorem that lower costs differentiate businesses
and make them compete successfully.
data available in business enterprise are based on above theorem.
Originally what is accounting and what does it provide?- traditional
accounting?
After world war II, top management task are OPERATIONAL TASKS
but neither preservation of assets nor cost control.
.But business success is based on something totally different, the
creation of value and wealth risk taking decision that is strategic
decisions based on the New Certainties true task of top
management not compatible with assumption of traditional
accounting but The new information technology, based on the
computer, hadno choice but to dependon the accounting system's
data - It collected these data, systematized them, manip ulated

them, analyzed them and presented them no impact on mgmt of

business itself
information technology has so far provided has triggered the new,
the next, Information Revolution. What was needed was not more
data, more technology, more speed. What was needed was to define
information; what was needed was new concepts.
"What information concepts do we need for our tasks?"- started
demanding from traditional information providers, the accounting
people new accounting evolved as result (discussed in
INFORMATION ENTERPRISES NEED)
ONE new area- information on the OUTSIDE of the enterprise- new
method with different assumptions- developed independently and by
different people- two things in common- provide information rather
than data- for top management tasks and top management
decisions.
How new information revolution began? business- education,
health care
How the concept has changed in education? Ex: long- distance
learning Its consequences -higher education (i.e., postsecondary
teaching and learning) may shift to the continuing professional
education of adults during their entire working lives - move learning
offcampus and into alot of new places: the home, the car or the
commuter train
In case of health care, shift is likely to lead from health care being
defined as the fight against disease to being defined as the
maintenance of physical and mental functioning.
In education and health care, the emphasis thus will also shift from
the T in IT to the"I," as it is shifting in business

LESSON FROM HISTORY

HISTORY OF INFORMATION REVOLUTION

Information history 5000 to 6000 years ago first invention in MESOPOTAMIAthen several thousand later in CHINA fifteen hundered years later by MAYA
IN CENTRAL AMERICA.
Second Information Revolution was brought on by the invention of the written
book, first in China, perhaps as early as 1300 B.C., and then, independently,
eight hundred years later, in Greece, when Peisistratus, the tyrant of Athens,
had Homer's epicsonly recited until thencopied into books.
The third Information Revolution was set off by Gutenberg's invention of the
Printing press and of movable type between 1450 and1455 and by the
contemporaneous invention of engraving.
no documents on the first two of these revolutions,
In fact, China's entire civilization and system of government still rest on it
Third Information Revolution, printing and engraving,

LESSON

Humility
At the time Gutenberg introduced the press, there was a substantial
information industry in Europe- monk as labor- by 1500 period
monks unemployed- produce printed book through teamwork- how
printer evolved?- printing team vs monk results of output.
Mid 1400 books were such a luxury that only wealthy could affordbut when Martin Luther's German Bible came out in 1522 its price
was so low that even the poorest peas antfamily could buy one.
The cost and price reductions of the third Information Revolution
were at least as great as those of the present, the fourth
Information Revolution. And so were the speed and the extent of its
spread- similar in case of technology evolution ex: cotton industry
How printer gets evolved? Printing revolution and its impact- how
turned to reformation?
printing revolution was easily as great and surely as fast as the
impact of the present Information Revolution, if not faster.

History lesson for the technologist

The last Information Revolution, the printed book, may also have a
lesson for today's information technologists, the IT and MIS people
and the CIOs: they may be about to become "Supporting Cast" rather
than the "Superstars" they have been the last forty years.
The printing revolution immediately created a new class of
information technologists VS most recent Information Revolution has
created any number of information businesses, MIS and IT
specialists, software designers and chief information officers. AT THE
TIME OF PRINTER REVOLUTION, The IT people of the printing
revolution were the early printers. WHO WERE Nonexistentand
indeed not even imaginablein 1455, they had become stars twentyfive years later AND printing press ( at that time it was used by
kings, princes, the Pope and rich merchant cities and were showered
with money and honors) were revered all over EUROPE JUST AS the
leading computer and software firms recognized world wide today.
One of first invented printer was Venetian printer Aldus Manutius
(1449-1515). What he does?
Then, last great printing technologist Christophe Plantin (15201589). What he does ? he was known for what? And what happen
during that time?
By 1580 how T CHANGE TO I- the printers, with their focus on
technology, had become ordinary craftsmen, respectable tradesmen
to be sure. Their place was soon taken by whatwe now call
publishers, ,people and firms whose focus was no longer on the "T"in
IT but on the "I."
THIS SHIFT got under way the moment the new technology began to
have an impact on the MEANING of information, and with it, on the

meaning and function of the 15th century's key institutions such as

the church and the universities.
NEW PRINT REVOLUTION

HIGH tech companies IBM fastest growing business in the post

WORLD WAR II BUT two worlds leading print companies have grown
fastest. One of them is German-based Bertelsmann Group- it is now
the world's number one publisher and distributor ofprinted
materials(other than daily papers)in most countries of the
world(except in China and Russia), through its ownership of
publishing firms (e.g;, of Random House in the United States), of
book clubs and of magazines (e.g., of France's leading business
magazine Capital) . another one is Australian-born Rupert Murdoch.
Even faster than the growth of these BOOK publishers has been the
growth ofanother PRINT medium: the "specialty mass magazine."
many of the huge-circulation "general magazines" that dominated
1920sand 1930sAmerica, Life, for instance, or The Saturday Evening
Post, have disappeared. Specialty mass magazines, each with a
circulation between fifty thousand and a million, and most highly
profitable.
The three leading American magazines ofthis type,Business Week (a
weekly), Fortune (a biweekly), and Forbes (a monthly), each havea
circulation approaching 1 million.
Before World War II the London-based Economistthe world's only
mag azine that systematically reports every week on economics, poli
tics and business all the world over was practically unknown outside
the UK, and even there its circulation was quite small, well below
one hundred thousand copies.. IN US how much? What conclision?
for every single profession, every single trade, every single industry.
Success of print media: purpose is INFORMATION.
e Sachbucha. book written by an expert for nonexperts.
nt noreducation. Its purpose is INFORMATION." This is just as true
ofthe specialty mass magazineswhether written for the layman
who wants to know about medicine or for the plumber who wants to
know what goes on in the plumbing business.
THEY INFORM. And above all, they inform about the OUTSIDE.
THEY INFORM. And above all, they inform about the OUTSIDE
now the printed media are taking over the electronic channels. EX:
AMAZON .COM In a few very short years it may have become the
Internet's largest retail merchant.
More and more ofthe spe cialty mass magazines now publish an "online" editiondeliv eredoverthe Internet to be printed outby the
subscriber.
Instead ofIT replacing print,print is takingover the electronic
technology, as a distribution channel for PRINTED INFORMATION

The new distribution channel will surely change the printed book.
WHAT WAS THE PROBLEM?
The market for information exists, CONVERGE REAL I NEW
INFORMATION REV OLUTIONled not by IT people, but by
accountants and publishers
And then both enterprises and individuals will have to learn what
information they need and how to get it. THEY WILL HAVE TO LEARN
TO ORGANIZE INFORMATION AS THEIR KEY RESORCE
RESOURCE.

THE INFORMATION ENTERPRISES NEED

What are the information system enterprises need?

From cost accounting to result control ( COST OF OPERATION)

Redesigning of traditional information sys. Many businesses have already
shifted from traditional cost accounting to activity-based costing.
Developed for mfg but rapidly spreading to service businesses and
even to nonbusi nesses,for example, universities.
What are traditional cost and activity based costing? What are its
benefits to the company?
Traditional cost accounting, first developed by General Motors
seventy years ago, how it was before?
Traditional cost accounting measures what it cost to do something
where as Activity-based costing also records the cost of not doing,
such as the cost of machine downtime, the cost ofwaiting for a
needed part or tool, the cost of inventory waiting to be shipped and
the cost of reworking or scrapping a defective part. The costs of not
doing, which traditional cost accounting cannot and does not record,
often equal and sometimes even exceed the cost of doing, Activitybased costing therefore gives not only much better cost control;
increasingly, it gives result control.
(yeshma hamile kunai company ko example dina sakchau)
Activity-based costing can substantially lower manufacturing costs
greatest impact, however, is likely to be in services. (HERE WE CAN
PRESENT THE DATA)
Activity based costing asks: Does it have to be done? If so,where is it
best done?" Activity based costing integrates what were once
several proceduresvalue analysis, process analysis, quality
management and costinginto one analysis..pg 112 2 nd para
Activity-based costing shows why traditional cost accounting has not
worked for service companies.. why ?

Service companies cannot start with the cost of individual

operations, as manufac turing companies have done witH Traditional
cost accounting
Assuption of traditional cost accounting which is irrelevant for
service business.
All costs are fixed over a given time period and that resources
cannot be substituted for each other are precisely the assumptions
with which activity-based costing starts. By applying them to
services, we are beginning for the first time to get cost information
and control.
How the service business like hospital, bank, etc are not able to
apply the traditional costing method? How? Pg 113 1st para WE CAN
USE THE EXAMPLE OF BANK HOW THEY USE ACTIVITY BASED
COSTING.
RETAIL DISCOUNTERS IN WESTERN EUROPE HOW IT USES ?
CASE RELATED TO GM, FORD, AND CHRYSLER IN UNITED STATE
THAT USE TRADITIONAL VS TOYOTA, NISSAN AND HONDA IN JAPAN USE
ACTIVITY BASED COSTING. HOW THE JAPANESE AUTO INDUSTRY SUCCED IN
MARKET.

From Legal Fiction to Economic Reality

.To compete successfully in an increasingly competitive
globalmarket,acompany has to knowthecosts ofitsentireeconomic
chain andhas to workwith other members ofthe chain to manage
costs and maximize yield.
CASE OF COCA-COLA CO
What matters in the marketplace is the economic reality, the costs
ofthe entire process, regardless of who owns what.
TOYOTA IS ONE THE BEST EX OF COMPANY THAT KNOWS TO MANAGE
THE COST OFENTIRE CHAIN
Economists have known the importance ofcosting the entire
economic chain since Alfred Marshall wrote about it in the late 1890s
PG. 115
A powerful force driving companies toward economic chain costing
will be the shift from cost-led pricing to price-led costing. CASE OF
SEARS AND MARKS & SPENCHER
The same ideas (PRICE-LED COSTING) apply to outsourcing, alliances
and joint venturesindeed, to any structure that is built on
partnership rather than control
CHALLENGES OF SWITCHING TO ECONOMIC CHAIN COSTINGeco
nomic-chain costing requires information sharing across companies;
yet even within the same company, people tend to resist information
sharing.
Information for Wealth Creation
Enterprises are paid to create wealth, not to control costs. BASED
ON GOING CONCERNS, ENTERPRISE CAN MANAGED FOR WEALTH
CREATION. FOUR DIAGNOSTIC TOOLS: foundation information,

productivity information, competence information, and resource

allocation information. Together they constitute the executive's tool
kit for managing the current business