INTERORGANIZATION INFORMATION SYSTEM

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INFORMATION SYSTEM

An information system (IS) is typically considered to be a set of interrelated elements or

components that collect (input), manipulate (processes), and disseminate (output) data and
information and provide a feedback mechanism to meet an objective. Specifically computer-
based information systems are complementary networks of hardware/software that people and
organizations use to collect, filter, and process, create, & distribute data.

At the start, in businesses and other organizations, internal reporting was made manually and
only periodically, as a by-product of the accounting system and with some additional
statistic(s), and gave limited and delayed the information on management performance.
Previously, data had to be separated individually by the people as per the requirement and
necessity of the organization. Later, data and information was distinguished and instead of the
collection of mass of data, important and to the point on that data that is needed by the
organization and was stored

Cross Functional information system, marketing information System, and Business information
system are some of the types of information systems found working in different organizations.

BUSINESS INFORMATION SYSTEM

There are variety of information systems being incorporated by various organizations support
their business functions of finance, marketing, accounting, operation management and human
resource management. The on-going use and evolution on long timescales of these large
scale socio-technical systems so far have tremendously increased the business efficiency.

In the past information systems were developed simply to improve the efficiency of specific
business functions. More recently information systems have been viewed as tools for obtaining
competitive advantage. Avison and Fitzgerald (1995) have discussed the following ways in
which information systems can help to achieve competitive advantage:-

"Redefine the boundaries of particular industries,

Develop new products or services,
 Change the relationships between suppliers and customers,Establish barriers to
deter new entrants to marketplaces."

Porter (1980) identifies five competitive forces that any organization needs to consider:-

1. Threat of new entrants.

2. Bargaining power of customers.
3. Threat of substitute products or services.
4. Bargaining power of suppliers.
5. Rivalry among existing firms.

Sales information system

Sales and product management can be set at ease by automating it with a computer based
information system. The sales analysis by product, product line, customer, type of product,
sales territory. It helps the marketing managers to evaluate the performance of the company
on the basis of sales.

Product Management Information system

Product managers need information to improve the performance of specific products, product
line and brand. Computer based information systems can help provide the information
regarding the price, revenue, cost and growth for existing products and the forth coming
products. it may help to evaluate the performance of the current products and prospects of the
success of proposed products.

Advertising and Marketing Information system

Marketing managers try to maximize sale at the lowest possible costs. Marketing information
system uses market resource information and promotion model to:

1) Allocate financial resource

2) Select media and promotional methods
3) Control and evaluate results of different promotional campaigns.

Financial Information system

The system helps the finance manager to cater cash and investment, capital budgeting,
financial forecasting and financial planning in a much rapid and competent manner
IMPORTANCE OF INFORMATION SYSTEM IN BUSINESS

All medium to large organizations depend on Information technology for their continued
survival. Organizations like British Gas, British Telecom, the Power and Water companies
having to manually calculate, millions of customer bills every month or quarter. Clearly the
clerical effort involved would make it difficult if not impossible for the organization to make a
profit. Similar arguments apply to many other organizations such as the high street banks,
central and local government. A recent article in the Daily Telegraph IT supplement suggested
that many large organizations could last no longer than 24 hours without IT support! There
should be little wonder that attitudes to the development of information systems have changed
over the years from an ad hoc almost cavalier approach to a professionally managed,
disciplined, planned, and engineering approach.

Work forces are expensive to go with instead of the system incorporation in a business.
Without system usage. a company needs a larger number of employee and its difficult to
arrange the efficient and expert staff under one umbrella .

The chances of error are greatly minimized using the information system.

FACTORS INFLUENCING THE INFORMATION SYSTEM IN BUSINESS

The emerging organizational paradigm involves complementary changes in multiple

dimensions. The revolution in information systems merits special attention as both cause and
effect of the organizational transformation

 Strategic Information Systems Planning

 Corporate Data Management,
 Business Process Re-Engineering,
 The Technical Environment,
 Supporting Tools,
 Project Management,
 Human Resources,

Strategic Information Systems Planning

Organizations typically develop rolling business plans, they are constructed by taking into
account the current business, the external influences on the business (e.g. the economy,
government policy and technological advances), and the aims and objectives of the most
senior levels of management. The strategic business plan describes how the organization will
strive to move from the current business to the target business.
Corporate Data Management

Many organizations have come to realize that on a replacement cost basis their computerized
databases are amongst their most valuable assets. The development of application is
constrained by the need to be consistent with the overarching, high level, company wide view
of its data.

Business Process Re-Engineering / Process Innovation

The idea of process innovation (Davenport and Short, 1990, Davenport, 1993) is closely linked
with the techniques of Business Process Re-engineering. The argument is that computerizing
existing systems is only likely to yield marginal gains. In many cases the only means of
achieving radical improvements is to radically re-engineer the business process itself and use
IT to enable to re-engineered process. An effective methodology for ISE should adopt a
rigorous, structured approach to data design and a dynamic approach to process design.

The Technical Environment

The more advanced the technical side of a company is the more it will aid to its progress.
Business efficiency and output.

Supporting Tools

Standard tools are likely to be used, e.g. Case tools, data dictionaries, analyst workbenches
and 4th Generation Environments (4GE). These are often linked with methodologies, e.g. the
PC/Select Case product has add-on toolkits for SSADM and Yourdon. Again organizations
using these tools are choosing to constrain their systems development process.

Project Management

Everyone has heard of spectacular overruns in terms of time and budgets for computer
projects. In an attempt to overcome these problems many organizations have adopted formal,
structured (or semi-structured) project management techniques.

According to Jensen and Meckling, informational variables are key to the structure of
organizations because the quality of decisions is determined by the quality of information
available to the decision maker. The co-location of information and decision rights enables the
decision maker to make optimal decisions. The implementation of this co-location depends on
the nature of the pertinent information

This systematical treatment leads to a purpose that an organization’s action/structure

dimensions are not reproduced in isolation but rather undergo an intimate mixing and
intermingling of error free system support handled by the enviably efficient workforce.
Information systems have helped organization to build their pillars firmly on the market ground
in much shorter time span.
Explanation of the Assigned topic

INCORPORATION OF TECHNOLOGY IN BUSINESS

Market globalization and steep competition are increasing the need for more efficient and
effective strategies in meeting evolving market demands. Adopting a more integrated approach
can produce lean and agility in company’s output.

At the turn of the century, Frederick Taylor sought to put the nascent wisdom for successful
business organization on a scientific basis. His work guided a generation of managers towards
success in meshing their organizations with the technologies, markets, labor and general
environment of the era. By the 1920s, Henry Ford had applied the Taylorist approach with a
vengeance and soon dominated the automobile market, driving dozens of competitors under.
Ironically, these same principles are almost diametrically opposed to the prevailing wisdom of
the 1990s.

INTERORGANIZATIONAL INFORMATION SYSTEM;

Interorganizational information system is one of the main tools that help connect the business
diamonds through a much reliable knot.

Inter-organizational Information Systems (IOIS) are computer-based systems shared by, or

connecting several organizations.

IMPORTANCE OF INTERORGANIZATION INFORMATIONAL SYSTEM:

Inter-organizational networks and workgroup computing facilities reduce the information costs
of teamwork and hence make it a more efficient solution to the organizational design problem.
Client-server computing technology lowers cross-functional (as well as geographic) barriers. IT
(when applied properly) streamlines the types of information -- quantitative control information
-- and turns it into general knowledge that can be readily transmitted to, and processed by,
people other than those who originally gathered the data. A reduction in the number of
management layers and the thinning out of middle management ranks is the predictable result.

TYPES OF INTERORGANIZATIONAL INFORMATION SYSTEM

Electronic Data Interchange

Electronic Market Systems

ELECTRONIC DATA INTERCHANGE

It refers to the structured transmission of data between organizations by electronic means. It is

used to transfer electronic documents from one computer system to another, i.e. from one
trading partner to another trading partner. It is more than E-mail.

EDI also exhibits its pre-Internet roots, and the standards tend to focus on ASCII (American
Standard Code for Information Interchange)-formatted single messages rather than the whole
sequence of conditions and exchanges that make up an inter-organization business process.

EDI implies a sequence of messages between two parties, either of whom may serve as
originator or recipient. The formatted data representing the documents may be transmitted
from originator to recipient via telecommunications or physically transported on electronic
storage media

EDI Defined By the National Institute of Standards and Technology

The National Institute of Standards and Technology in a 1996 publication [1] defines Electronic
Data Interchange as "the computer-to-computer interchange of strictly formatted messages
that represent documents other than monetary instruments. EDI implies a sequence of
messages between two parties, either of whom may serve as originator or recipient. The
formatted data representing the documents may be transmitted from originator to recipient via
telecommunications or physically transported on electronic storage media."

"EDI" constitutes the entire electronic data interchange paradigm, including the transmission,
message flow, document format, and software used to interpret the documents. EDI is
considered to describe the rigorously standardized format of electronic documents. The EDI
standards were designed to be independent of communication and software technologies. EDI
can be transmitted using any methodology agreed to by the sender and recipient. This
includes a variety of technologies, including modem, FTP, E-mail, HTTP, AS1, AS2, etc.

STANDARD PROCEDURE FOR EDI

There are four major sets of EDI standards:

1) The UN-recommended UN/EDIFACT is the only international standard and is

predominant outside of North America.
2) The US standard ANSI ASC X12 (X12) is predominant in North America.
3) The TRADACOMS standard developed by the ANA (Article Numbering Association) is
predominant in the UK retail industry.
4) The ODETTE standard used within the European automotive industry
Transmission

Trading partners are free to use any method for the transmission of documents. In the past
one of the more popular methods was the usage of a bisync modem to communicate through a
value added network (VAN). Some organizations have used direct modem to modem
connections and bulletin board systems (BBS), and recently there has been a move towards
using some of the many Internet protocols for transmission, but most EDI is still transmitted
using a VAN. In the healthcare industry, a VAN is referred to as a "clearinghouse".

EDI COMPLIANT

EDI compliance involves either buying or outsourcing the following components:

1. Software for communications

2. VAN service for EDI transmission

3. Mail boxing of EDI transactions

4. Mapping and translation software

5. Installing upgrades to software as needed

6. Mapping labor

7. Testing with EDI trading partners

8. Upgrades for new versions required by trading partners

BENEFACIAL ASPECTS OF EDI

1) EDI and other similar technologies save company money by providing an alternative to,
or replacing information flows that require a great deal of human interaction and
materials such as paper documents, meetings, faxes, etc. Even when paper documents
are maintained in parallel with EDI exchange, e.g. printed shipping manifests, electronic
exchange and the use of data from that exchange reduces the handling costs of sorting,
distributing, organizing, and searching paper documents. EDI and similar technologies
allow a company to take advantage of the benefits of storing and manipulating data
electronically without the cost of manual entry.
2) EDI is reduces errors, such as shipping and billing errors, because EDI eliminates the
need to rekey documents on the destination side
3) EDI is speedier than paper system due to which the trading partner receives and
incorporates the information into their system thus greatly reducing cycle times.
4) Fewer errors occur because computer systems process the documents rather than
processing by hand
5) Business transactions flow faster
6) Much less labor time is required

HURDLES IN ADAPTING EDI

1) It is difficult to change the Existing business processes built around slow paper handling
may not be suited for EDI and would require changes to accommodate automated
processing of business documents. EDI is that companies must ensure that they have
the resources in place to make an EDI program work; however, the need for buying and
hiring these resources or outsourcing them may be offset by the increased efficiency
that EDI provides
2) The preliminary expenses and time that arise from the implementation, customization
and training can be costly and therefore may discourage some businesses so one got to
choose the right method of integration to lower the cost.
3) Security issue is also the big hang up in the way to successful implementation of EDI

ELECTRONIC MARKET SYSTEM

Markets play a central role in the economy, facilitating the exchange of information, goods,
services, and payments. Recent years have seen an enormous increase in the role of
information technology in markets, in particular the emergence of electronic marketplaces.
Different matching mechanisms are appropriate in different situations and there is not a single
solution that caters for all the various negotiation situations. Therefore, economists, game
theorists, and computer scientists have started to take a direct role by designing various kinds
of negotiation mechanisms for computer products, travel, insurance, and utilities such as
power and gas.

Electronic trading, sometimes called etrading, is a method of trading securities (such as

stocks, and bonds), foreign currency, and exchange traded derivatives electronically. It uses
information technology to bring together buyers and sellers through electronic media to create
a virtual market place. NASDAQ, NYSE Arca and Globex are examples of electronic market
places. Exchanges that facilitate electronic trading in the United States are regulated by either
the Securities and Exchange Commission or the Commodity Futures Trading Commission,
and are generally called electronic communications networks or ECNs.

ADVANTAGES OF EMS

1) Faster than Fast: Trade execution in a half a blink of an eye.

2) Latency; Survival of the fastest. The latency, speed and movement, of sensitive data
has seen its obvious effects on the general quality of execution. There are many drivers
that include satisfy the need for speed, consistency, and systemic capacity or throughput.
Any slow down in this speed can be a losing proposition for the executor.
3) Reduced cost of transactions

4) Greater competition

5) Increased transparency It has meant that the markets are less opaque. It's easier to
find out the price of securities when that information is flowing around the world
electronically

INTRANET

An intranet is a private computer network that uses Internet Protocol technologies to securely
share any part of an organization's information or operational systems within that organization
An intranet can be understood as a private version of the Internet, or as a private extension of
the Internet confined to an organization. The first intranet websites and home pages began to
appear in organizations in 1990 - 1991. Although not officially noted, the term intranet first
became common-place among early adopters, such as universities and technology
corporations, in 1992

BASIS OF INTRANET

An intranet is built from the same concepts and technologies used for the Internet, such as
client-server computing and the Internet Protocol Suite (TCP/IP). Any of the well known
Internet protocols may be found in an intranet, such as HTTP (web services), SMTP (e-mail),
and FTP (file transfer). Internet is often deployed to provide modern interfaces to legacy
information systems hosting corporate data.

INTRANET LITENING THE WORK ATMOSPHERE

Workforce productivity:

Intranets can also help users to locate and view information faster and use applications
relevant to their roles and responsibilities. With the help of a web browser interface, users can
access data held in any database the organization wants to make available, anytime and -
subject to security provisions - from anywhere within the company workstations, increasing
employees' ability to perform their jobs faster, more accurately, and with confidence that they
have the right information. It also helps to improve the services provided to the users.

Saving Time

With intranets, organizations can make more information available to employees on a "pull"
basis (i.e., employees can link to relevant information at a time which suits them) rather than
being deluged indiscriminately by emails.
Communication

Intranets can serve as powerful tools for communication within an organization, vertically and
horizontally. From a communications standpoint, intranets are useful to communicate strategic
initiatives that have a global reach throughout the organization. The type of information that
can easily be conveyed is the purpose of the initiative and what the initiative is aiming to
achieve, who is driving the initiative, results achieved to date, and who to speak to for more
information. By providing this information on the intranet, staff has the opportunity to keep up-
to-date with the strategic focus of the organization.

Web publishing allows cumbersome corporate knowledge to be maintained and easily

accessed throughout the company

Enhance Collaboration

With information easily accessible by all authorized users, teamwork is enabled.

EXTRANET

An extranet is a private network that uses Internet protocols, network connectivity, and
possibly the public telecommunication system to securely share part of an organization's
information or operations with suppliers, vendors, partners, customers or other businesses. An
extranet can be viewed as part of a company's intranet that is extended to users outside the
company, usually via the Internet

For decades, institutions have been interconnecting to each other to create private networks
for sharing information. One of the differences that characterize an extranet, however, is that
its interconnections are over a shared network rather than through dedicated physical lines.

REQUIREMENTS FOR SECURED EXTRANET COMMUNICATIONS

An extranet requires network security. These can include firewalls, server management, the
issuance and use of digital certificates or similar means of user authentication, encryption of
messages, and the use of virtual private networks (VPNs) that tunnel through the public
network.

Many technical specifications describe methods of implementing extranets, but often never
explicitly define an extranet. RFC 3547 [1] presents requirements for remote access to
extranets. RFC 2709 [2] discusses extranet implementation using IPsec and advanced
network address translation (NAT).

Successful incorporation of information system in our business requires that we understand

the flow of information among humans and their agents every bit as well as we understand the
flow of electrons in chips and wires. Perhaps, then, the revolution brought by the information
processing capabilities will not only call for flourishing business, but also provides the fuel to
drive our communications faster on every track.
http://en.wikipedia.org/wiki/Electronic_Data_Interchange

http://www.webopedia.com/TERM/E/EDI.html

http://www.lib.ru.ac.th/knowledge/pcweb/mis/MISLESSION_8PDF.pdf

http://en.wikipedia.org/wiki/Management_information_system

FIPS PUB 161-2

FEDERAL INFORMATION
PROCESSING STANDARDS PUBLICATION

1996 April 29
U.S. DEPARTMENT OF COMMERCE/National Institute of Standards and Technology
http://www.itl.nist.gov/fipspubs/fip161-2.htm

http://www.covalentworks.com/what-is-edi.asp