MANAGEMENT INFORMATION SYSTEMS

Course Code: MBAMS 10201 Credit Units: 03

Course Objective:
Information Systems (IS) enables new approaches to improve efficiency and
efficacy of business models. This course will equip the students with
understanding of role, advantages and components of an Information System. The
objective of the course is to help students integrate their learning from functional
areas, decision making process in an organization and role of Information Systems
to have a vintage point in this competitive world.

Course Contents:

Module I: Basic Concepts of Information System

Role of data and information, Organization structures, Business Process, Systems
Approach and introduction to Information Systems.

Module II: Types of IS

Resources and components of Information System, integration and automation of
business functions and developing business models. Role and advantages of
Transaction Processing System, Management Information System, Expert Systems
and Artificial Intelligence, Executive Support Systems and Strategic Information
Systems.

Module III: Architecture & Design of IS

Architecture, development and maintenance of Information Systems, Centralized
and Decentralized Information Systems, Factors of success and failure, value and
risk of IS.

Module IV: Decision Making Process

Programmed and Non- Programmed decisions, Decision Support Systems, Models
and approaches to DSS

Module V: Introduction to Enterprise Management technologies

Business Process Reengineering, Total Quality Management and Enterprise
Management System viz. ERP, SCM, CRM and Ecommerce.

Module VI: Introduction to SAD

System Analysis and Design. Models and Approaches of Systems Development.
Examination Scheme:

Components P-1 C-1 CT-1 EE

Weightage (%) 10 10 20 60

Text & References:

Text:
 Management Information Systems, Effy OZ, Thomson Leaning/Vikas
Publications
 Management Information Systems, James A. O‘Brein, Tata McGraw-Hill

References:
 Management Information System, W.S Jawadekar, Tata Mc Graw Hill
Publication.
 Management Information System, David Kroenke, Tata Mc Graw Hill
Publication.
 MIS: Management Perspective, D.P. Goyal, Macmillan Business Books.
 MIS and Corporate Communications, Raj K. Wadwha, Jimmy Dawar, P.
Bhaskara Rao, Kanishka Publishers.
 MIS: Managing the digital firm, Kenneth C. Landon, Jane P. Landon, Pearson
Education.
Name of Institution: Amity Business School

Subject: Management Information Systems

Course: MBA

Semester: 2nd

Module 1

Basic Concepts of Information System:

Role of data and information, Organization structures, Business Process, Systems
Approach and introduction to Information Systems.

Objectives:

1. To understand the role of data and information in today‘s business

enterprise.
2. To study the organization as a structure and its different functional layers
3. To explain business processes and their working in synergy to achieve
organizational goals.
4. Understanding system concepts.
5. To understand the components and working of a system.
6. Explain why knowledge of information systems is important for business
professionals.
7. To understand the relevance and utility of Information systems
8. Give examples to illustrate how the business applications of information
systems can support a firm‘s business processes, managerial decision-
making, and strategies for competitive advantage.
9. Provide examples of several major types of information system of business
organizations in the real world.
Introduction: (4 Lectures + 1 Tutorial)

An understanding of the effective and responsible use and management of

information systems is important for managers, business professionals, and other
knowledge workers in today‘s networked enterprises. Information systems play a
vital role in the e-business and e-commerce operations, enterprise collaboration
and management, and strategic success of businesses that must operate in a
networked global environment.

An information system uses the resources of people, hardware, software, data, and
networks to perform input, processing, output, storage, and control activities that
convert data resources into information products. Data are first collected (input)
and converted to a form that is suitable for processing. Then the data are
manipulated and converted into information (processing), stored for future use
(storage), or communicated to their ultimate user (output) according to correct
processing procedures (control).
Lecture 1:

Objective of the Lecture:

1) To give an overview of the course and its syllabus

2) To explain the meaning of data and Information. To highlight their
differences, and their roles in a business organization.

Main Lecture:

Today‘s business environment is essentially global – There is a need to improve

the efficiency and effectiveness of the business processes for competitive
advantage.
The art of management is all about decision making. Decision making can no
longer be ad hoc in nature – it must be backed by lots of facts and figures and
resultant information. Each decision taken has an effect on the organization hence
the role of data and resultant information is of extremely vital.

1.1 Data:
It is a set of facts and figures – which are random, unorganized, are not classified,
ordered or sorted. They do not convey much meaning. They are raw facts or
observations, typically about physical phenomena or business transactions. More
specifically, data are objective measurements of the attributes (characteristics) of
entities, such as people, places, things, and events.

1.2 Data Resources:

Data constitutes a valuable organizational resource. Thus, data resources must be
managed effectively to benefit all end users in an organization. The data resources
of information systems may be typically organized into Databases which are a
collection of logically related records or files. A database consolidates many
records previously stored in separate files so that a common pool of data records
serves many applications.
1.2 Process:
They may be any set of tabulations, sorting, comparisons, calculations done on the
data to make it more meaningful. They may be procedures or work flows for
conversion of data into meaningful information.
Thus data is subjected to a ―value-added‖ process (data processing or information
processing) where:
 Its form is aggregated, manipulated, and organized.
 Its content is analyzed and evaluated
 It is placed in a proper context for a human user

1.3 Information:
This is data which has been tabulated, sorted, classified etc. It conveys meaning
and gives a picture of the object/event under consideration to specific end users.
Thus Information is processed data, which has been placed in a meaningful and
useful context for an end user.

Fig 1.3 A
 Attributes of Information:

1. Timely
2. Accurate
3. Relevant
4. Complete, integrity, consistency, validity, etc.

Fig 1.4 A
Summary:

Information processing (or data processing) activities include the following:

 Input of data resources
 Processing of data into information
 Output of information products
Lecture 2

Objectives:
1. To study the business organisation as a structure and its various functional
layers.
2. To understand the transformation of data as we transcend the levels of
management.
3. To elucidate the basic functions of the levels of management.

2.1 Organization Structure (Levels of Management)

Fig 2.1 A

Each organization has a structure which facilitates its chain of command. The
management of an organization can broadly be divided into three overlapping
layers. Usually the organization is viewed as a triangle depicting the hierarchy and
diminishing number of employees with the increasing levels of management.

The top level of management is focused on chalking out long term tactics and
strategies for the organization. They are largely involved in futuristic perspectives.
They try to work out plans for the organization which can help them achieve their
vision and mission. They also have to counter the intense competition of the
markets.

Middle management carries out the programs and plans of senior management.
The most important activity of the next stratum of management is control. The top
management sets the targets and strategies of the operations with a long term
perspective.

The long term plans are then converted into short term and measurable targets. A
path to achievement of the vision is clearly laid out. This path then helps the actual
operations of the organization to monitor their progress and achievements.
Deviations within permissible limits may be allowed but any major shortfalls are
immediately addressed and lead to precautionary and remedial measures being
taken to put the process back in control.

The bottom most layers may be considered to consist mainly of lower levels of
management – usually in charge of the daily routine operations of the business
organization. These routine day to day transactions generate large quantities of
detailed data. Any transaction or operations of the lower strata of the organization
usually involves procedures which are highly structured in nature. They usually
follow a non deviating routine; these procedures then can hence be easily
converted into computer programmes of the intended software.
Summary:

Thus the three levels of management deal with data and its progressively
processed forms. The lower levels of management deal with extremely detailed
data. This is voluminous and some parts of it may be irrelevant. Every transaction
or unit activity taking place in the organization generates a trail of data. This data
is then processed, and starts giving a comprehensive picture for the middle
management to accomplish their tasks of ensuring the systems are in control. This
is the further analyzed and studied for trends and patterns to become the
knowledge capital for the top levels of management. This knowledge management
then becomes a tool for corporate warfare.
Lecture 3

Objectives of the Lecture:

1) To understand the meaning of business processes.
2) To explain the importance of business processes and their working in
synergy to achieve organizational goals
3) To comprehend the systems concept
4) To understand the working and components of a system.

Main Lecture

3.1 Business Process: The procedure or the work flow of doing any task is called
a business process. It may also be defined as the manner in which work is
organized and coordinated to produce the required product and service. The data
generated due to a transaction in an organization is converted into information in
the work flow of a business process. The analysis of this resultant information is
then used for control of the operations of an organization by comparing results to
established company goals and helping to identify problem areas and opportunities
for improvement. This data and information forms an important input for short
term or long term planning.
Fig. 3.1 A

3.2 System:

A group of interrelated components, with a clearly defined boundary, working

together towards a common goal by accepting inputs and producing outputs in an
organized transformation process is called a system.
A system maybe composed of several smaller subsystems. Each of the system has
its own sub goal, takes it input, does some processing and then converts it into
output according to the goal /objective in perspective. The subsystems need to
work with each other with synergy so that the objective of the parent system is
achieved. The subsystems may have interfaces with each other in terms of
communication or documents. This collaboration is important for the success of
the system as a whole
A system (sometimes called a dynamic system) has three basic interacting
components or functions. These include:

Input:
It involves capturing and assembling elements that enter the system to be
processed. This may be data which is requiring transformation.

Process:
It involves transformation processes that convert input into output. This may be an
activity or a combination of activities which may be classification, sorting,
tabulation, calculation etc which may be aimed at converting of data into
information for the end-user.

Output:
Output involves transferring elements that have been produced by a transformation
process to their ultimate destination. This is the result of the process and this may
be used for analysis, working out of trends, future projections and predictive
decision making.
.
Feedback:
A fourth dimension can be added to the above, that of feedback. Feedback is a
very important process for any managerial action. An understanding of the
problems faced by the end users may go a long way in the improvement of the
process. Feedback provides data about the performance of the system.
Other System Characteristics:
A system does not exist in a vacuum; rather, it exists and functions in an
environment containing other systems.
Subsystem: A system that is a component of a larger system, where the larger
system is its environment.
System Boundary: A system is separated from its environment and other systems
by its system boundary.
Interface: Several systems may share the same environment. Some of these
systems may be connected to one another by means of a shared boundary, or
interface.
Open System: A system that interacts with other systems in its environment is
called an open system (connected to its environment by exchanges of inputs and
outputs).
Adaptive System: A system that has the ability to change itself or its environment
in order to survive is called an adaptive system

Summary:

Input Process Output

Hence the systematic conversion of data into information, to aid and enhance the
process of decision making is an important managerial activity.
Lecture 4

Objective of the Lecture:

1) To understand the basic concepts of Information System.
2) To link utility of Information Systems to organizations

Main Lecture
4.1 Information Systems:
Any organized combination of people, hardware, software, communications
networks, and data resources that retrieves, stores, transforms, and disseminates
information in an organization.
In an information system, people use hardware, software, data and networks as
resources to perform input, processing, output, storage, and control activities that
transform data resources into information products.

Need for IS and Impact of IT on an Organization

There is a need for each organization to analyze its operational data as each and
every company is facing global competition. No longer is the competition
restricted to geographical domains. The competition is with multi national
companies or even with e-commerce where the consumer has diverse avenues to
not only to make his final choice but also in terms of initial enquiries and FAQ s
of the product in question. Even the after sales service/suggestions and complaints
have been re-routed to an IT enabled medium. CRM thus acquires a new
dimension with immediate feedback and complaint redress.

Thus there is an urgent need for the companies to work with their maximum
efficiency & effectiveness to be able to withstand the onslaught of the intense
competition.
There is another very subtle advantage – that of increased transparency and the
resultant accountability of processes and organizations. Each activity that is
mapped electronically leaves an auditable trail.

There is also the far reaching effect of IT and IS on organizations that of

Enterprise Collaboration Systems which can be defined as the use of software
tools to support communication, coordination, and collaboration among the
members of networked teams and workgroups.
The collaboration between the stake holders increases manifold. The free flow of
data (EDI) and prompt payments (EFT) have a cascading effect on all departments
of the business and contribute immensely to bottom lines by decreasing operation
costs and thus maximizing profits.

Fig 4.1 A
In these days of global proximities, IT can become the cause and driver of
organization renewal and innovation which can give immense gains as an agile
competitor. It has become simply ―infrastructural costs‖
Tutorial 1 / Lecture 5
Objectives:
1) To discuss problems if any
2) To discuss a case study

CASE STUDY
There‘s nothing like a punchy headline to get an article some attention. A piece in
the Harvard Business Review (May 2003), shockingly labeled ―IT Doesn‘t
Matter‖. The article has been approvingly cited in The New York Times, analyzed
in Wall Street reports, and e-mailed around the world. But without such a dramatic
and reckless title, I doubt the article would have been much noticed. It‘s a sloppy
mix of ersatz history, conventional wisdom, moderate insight, and unsupportable
assertions. And it is dangerously wrong.

Author Nicholas Carr‘s main point is that information technology is nothing more
than the infrastructure of modern business, similar to railroads, electricity, or the
internal combustion engineering advances that have become too commonplace for
any company to wangle a strategic advantage from them. Once-innovative
applications of information technology have now become merely a necessary cost.

Thus Carr thinks today‘s main risk is not under-using IT but overspending on it.
But before we get any further, let‘s have a reality check. First, let‘s ask Jeff
Immelt, the CEO of General Electric Co., one of the premier business corporations
in the world, this question: ―How important is information technology to GE?‖
Here‘s his answer: ―It‘s a business imperative. We‘re primarily a service-oriented
company, and the lifeblood for productivity is more about tech than it is about
investing in plants and equipment. We tend to get a 20 percent return on tech
investments, and we tend to invest about $2.5 billion to $3 billion a year.‖ Then
let‘s ask Dell Corporation CEO, Michael Dell: ―What‘s your take on Nick Carr‘s
thesis that technology no longer gives corporate buyers a competitive advantage?‖
Here‘s his answer: ―Just about anything in business can be either a sinkhole or a
competitive advantage if you do it really, really bad or you do it really, really well.
And information technology is an often misunderstood field. You‘ve got a lot of
people who don‘t know what they‘re doing and don‘t do it very well. For us, IT is
a huge advantage. For Wal-Mart, GE, and many other companies, technology is a
huge advantage and will continue to be. Does that mean that you just pour money
in and gold comes out? No, you can screw it up really bad.‖ Finally, let‘s ask
Andy Grove, former CEO and now Chairman of Intel Corporation, a direct
question about IT: ―Nicholas Carr‘s recent Harvard Business Review article says:
‗IT Doesn‘t Matter.‘ Is information technology so pervasive that it no longer
offers companies a competitive advantage?‖ Andy says: ―In any field, you can
find segments that are close to maturation and draw a conclusion that the field is
homogeneous. Carr is saying commercial-transaction processing in the United
States and some parts of Europe has reached the top parts of an S-curve. But
instead of talking about that segment, he put a provocative spin on it—that
information technology doesn‘t matter—and suddenly the statement is grossly
wrong. It couldn‘t be further from the truth. It‘s like saying: I have an old three-
speed bike, and Lance Armstrong has a bike. So why should he have a competitive
advantage?‖ So, basically, Carr misunderstands what information technology is.
He thinks it‘s merely a bunch of networks and computers. He notes, properly, that
the price of those has plummeted and that companies bought way too much in
recent years. He‘s also right that the hardware infrastructure of business is rapidly
becoming commoditized and, even more important, standardized. Computers and
networks per se are just infrastructure. However, one of the article‘s most glaring
flaws is its complete disregard for the centrality of software and the fact that
human knowledge or information can be mediated and managed by software.
Charles Fitzgerald, Microsoft‘s general manager for platform strategy, says that
Carr doesn‘t put enough emphasis on the ―I‖ in IT. ―The source of competitive
advantage in business is what you do with the information that technology gives
you access to. How do you apply that to some particular business problem? To say
IT doesn‘t matter is tantamount to saying that companies have enough information
about their operations, customers, and employees. I have never heard a company
make such a claim.‖ Paul Strassman who has spent 42 years as a CIO—at General
Foods, Xerox, the Pentagon, and most recently NASA—was more emphatic. ―The
hardware—the stuff everybody‘s fascinated with—isn‘t worth a damn,‖ he says.
―It‘s just disposable. Information technology today is a knowledge-capital issue.
It‘s basically a huge amount of labor and software.‖ Says he: ―Look at the
business powers—most of all Wal-Mart, but also companies like Pfizer or FedEx.
They‘re all waging information warfare.‖

Case Study Questions:

1. Do you agree with the argument made by Nick Carr to support his position that
IT no longer gives companies a competitive advantage? Why or why not?
2. Do you agree with the argument made by the business leaders in this case in
support of the competitive advantage that IT can provide to a business? Why or
why not?
3. What are several ways that IT could provide a competitive advantage to a
business? Use some of the companies mentioned in this case as examples. Visit
their websites to gather more information to help you answer.

(Source: Adapted from David Kirkpatrick, ―Stupid-Journal Alert: Why HBR‘s

View of Tech Is Dangerous,‖ Fortune, June 9, 2003, p. 190; Robert Hoff, ―Andy
Grove: We Can‘t Even Glimpse the Potential,‖ BusinessWeek, August 25, 2003,
pp. 86–88; and ―Speaking Out: View from the Top,‖ BusinessWeek, August 25,
2003, pp. 108–13.)
Objective Type Questions

Q1 An information system is a combination of hardware, software, and data

resources that transforms information in an organization.
 True
 False

Q2 There are three fundamental reasons for all business applications of

information technology. They relate to the three vital roles that information
systems can perform for a business enterprise. One of these roles is support of its
business processes and operations.
 True
 False

Q3 In any organization, end users rely on many types of information systems

like:

A) Simple manual (paper-and-pencil) information systems.

B) Formal (written procedures) and informal (word-of-mouth) systems.
C) Computer-based information systems.
D) All of the above.

Q4 Within the context of an information system, which one of the following

would be considered a typical end user?:
A) Managers.
B) Accountants.
C) Customers.
D) All of the above.
MODULE 2 - Types of IS
Resources and components of Information System, integration and automation of
business functions and developing business models. Role and advantages of
Transaction Processing System, Management Information System, Expert Systems
and Artificial Intelligence, Executive Support Systems and Strategic Information
Systems.

Introduction:
E-business is all about going much beyond just the use of the Net, It is about the
combination with other technologies and forms of electronic communication, to
enable any type of business activity
This chapter introduces the fast-changing world of business applications of
information technology, which increasingly consists of what is popularly called e-
business applications. E-business is the use of the Internet and other networks and
information technologies to support electronic commerce, enterprise
communications and collaboration, and Web-enabled business processes, both
within a networked enterprise and with its customers and business partners.
Objectives: ( 6 Lectures + 1 Tutorial)
1. Identifying the various cross-functional enterprise systems, and giving
examples of how they can provide significant business value to a company.
2. Understanding Transaction Processing Systems.
3. To identify several basic competitive strategies and explain how they can
use information technologies to confront the competitive forces faced by a
business.
4. Identify several strategic uses of technology and give examples of how
they give competitive advantages to a business.
5. Learning about Artificial Intelligence and its applications which can be
used in business.
6. To give examples of several ways in which expert systems can be used in
business decision-making situations.
Lecture 6

Objectives of the Lecture:

1) To study the Information Systems and its components.
2) To understand automation of business functions
3) To discuss examples of Functional Business Systems.

Main Lecture:

6.1 An IS has the following components.

• People – end users and IS specialists
• Hardware – physical devices and materials used in information processing
including computer systems, peripherals, and media
• Software – sets of information processing instructions including system
software, application software and procedures
• Data – facts or observations about physical phenomena or business
transactions. Any unit event or activity in an organization generates data.
• Network – communications media and network infrastructure
• Communications Media – examples include twisted-pair wire, coaxial and
fiber-optic cables, microwave, cellular, and satellite wireless technologies
• Network Infrastructure – examples include communications processors
such as modems and inter-network processors, and communications control
software such as network operating systems and Internet browser packages
Fig 6.1 A

Functional business systems are composed of a variety of types of

information systems (transaction processing, management information, decision
support, etc.) that support the business functions of:

 Accounting
 Finance
 Marketing
 Productions/operations management
 Human resource management
There is a strong emphasis in many organizations to develop such composite or
cross-functional information systems that cross the boundaries of traditional
business functions in order to reengineer and improve vital business processes.
These organizations view cross-functional information systems as a strategic way
to share information resources and improve the efficiency and effectiveness of a
business, thus helping it attain its strategic objectives.

Business firms are turning to Internet technologies to integrate the flow of

information among their internal business functions and their customers and
suppliers. Companies are using the World Wide Web and their intranets and
extranets as the technology platform for their cross-functional and inter-
organizational information systems.

Examples:

Marketing Systems:
Marketing information systems integrate the information flow required by many
marketing activities. Marketing information systems provide information for:
 Internet/intranet websites and services make an interactive marketing
process possible where customers can become partners in creating,
marketing, purchasing, and improving products and services.
 Sales Force Automation Systems use mobile computing and Internet
technologies to automate many information processing activities for sales
support and management. Increasingly, computers and networks are
providing the basis for sales force automation. In many companies, the
sales force is being outfitted with notebook computers that connect them to
web browsers, and sales contact management software that connect them to
marketing websites on the Internet, extranets, and their company intranets.
 Characteristics of sales force automation include:
o Increases the personal productivity of salespeople.
o Dramatically speeds up the capture and analysis of sales data from the
field to marketing managers at company headquarters.
o Allows marketing and sales management to improve the delivery of
information and the support they provide to their salespeople.
o Many companies view sales force automation as a way to gain a
strategic advantage in sales productivity and marketing responsiveness.
 Interactive marketing: Customers are not passive participants, but are
actively engaged in a network-enabled proactive and interactive process. It
encourages customers to become involved in product development,
delivery, and service issues. This is enabled by various Internet
technologies, including chat and discussion groups, Web forms and
questionnaires, and e-mail correspondence.
 Targeted Marketing: Companies can customize their web advertising
messages and promotion methods to appeal to people in specific
communities. These can be communities of interest, such as virtual
communities of online sporting enthusiasts or arts and crafts hobbyists, or
geographic communities formed by the websites of a city or other local
organizations.
o Content – advertising such as electronic billboards or banners can be
placed on various website pages, in addition to a company‘s home
page. These messages reach the targeted audience.
o Context – advertising appears only in Web pages that are relevant to
the content of a product or service. So advertising is targeted only at
people who are already looking for information about a subject
matter that is related to a company‘s products.
 o Demographic/Psychographic – marketing efforts can be aimed only
at specific types or classes of people: unmarried, twenty-something,
middle income, male college graduates.
o Online Behavior – advertising and promotion efforts can be tailored
to each visit to a site by an individual. This strategy is based on
―web cookie‖ files recorded on the visitor‘s disk drive from previous
visits. Cookie files enable a company to track a person‘s online
behavior at a website so marketing efforts can be instantly developed
and targeted to that individual at each visit to their website.

Summary:

Marketing Information Systems are good examples to explain the use of

information used in strengthening business functions. The cross functional
linkages of information improve the efficacy of all processes concerned.
Lecture 7

Objectives of the Lecture:

1) To study the examples of Manufacturing and HRM Information Systems to
further understand role of automation in business functions.
2) To give an overview of Computer-Based Accounting Information Systems:

Main Lecture:

7.1 Manufacturing Systems(Computer-Integrated Manufacturing (CIM)):

Computer-based manufacturing information systems use several major
techniques to support computer-integrated manufacturing (CIM).
Uses of computers in manufacturing include
o Computer-aided engineering (CAE)
o Computer-aided design (CAD)
o Computer-aided process planning (CAPP)
o Material requirements planning (MRP)
o Manufacturing resource planning (MRP-II)
o Computer-aided manufacturing (CAM)

Computer-aided manufacturing - (CAM) systems are those that automate the

production process. Some of the benefits of CAM are:
o Increased efficiency through:
 work simplification and automation,
 better production schedule planning
 better balancing of production workloads in production capacity
 o Improved utilization of facilities, higher productivity, better quality control
through:
 continuous monitoring
 feedback and control of factory operations, equipment and robots.

o Reduced investments in production inventories and facilities through:

 work simplification
 just-in-time inventory policies
 better planning and control of production
 better planning and control of finished goods requirements

o Improved customer service through:

 reducing out-of-stock situations
 producing high-quality products that better meet customer
requirements

Human Resource Systems:

Traditionally, businesses used computer-based information systems to:

 Produce paychecks and payroll reports
 Maintain personnel records
 Analyze the use of personnel in business operations

Many firms have gone beyond these traditional personnel management functions
and have developed human resource information systems (HRIS) that also
support:
• Recruitment, selection and hiring
• Job placement
• Performance appraisals
• Employee benefit analysis
• Training and development
• Health, safety, and security

HRM and the Internet:

The Internet has become a major force for change in human resource management.
For example, companies are:
 Recruiting for employees through recruitment sections of their corporate
websites.
 Using commercial recruiting services and databases on the World Wide
Web
 Posting messages in selected Internet newsgroups
 Communicating with job applicants by Internet e-mail.

HRM and the Corporate Intranet

Intranet technologies allow companies to process most common HRM
applications over their corporate intranets. For example:
 Intranets allow the HRM department to provide around-the-clock services
to their customers – the employees
 Intranets allow for the dissemination of valuable information faster than
through previous company channels
 Intranets can collect information online from employees for input to their
HRM files
 Intranets enable employees to perform HRM tasks with little intervention
by the HRM department
 Intranets can serve as a superior training tool
 Intranets enable employees to produce automated paychecks, the online
alternative to timecards
Accounting Systems (Online Accounting Systems)

Accounting information systems are being affected by Internet and client/server

technologies. Using the Internet, intranets, extranets, and other network changes
accounting information systems monitor and track business activity. The online,
interactive nature of such networks calls for new forms of transaction documents,
procedures, and controls. Many companies are using or developing network links
to their trading partners through the use of the Internet or other networks for
applications such as order processing inventory control, accounts receivable, and
accounts payable.

Summary:
After studying the role of data and information in various information systems
such as Manufacturing Systems, Accounting Systems and Human Resource
Management Systems one can comprehend how the level of efficiency increases
in various business processes once the computer based information systems are in
place.
Lecture 8:

Objectives:
1) To define a ―Transaction‖
2) To understand the concept of Transaction Processing System.
3) To study the role and advantages of TPS

Main Lecture:
Transaction – Any unit event happening in the organization is called a
transaction. A transaction generates data. This data may then form part of the
information generating process which is the basis of all managerial decision
making.

8.1 Transaction Processing Systems (TPS):

Everyday routine business processes or transactions produce voluminous data.

Data is entered every second into the company databases. There may be two
modes of data entry and resultant transaction processing:
• Batch Processing – transaction data are accumulated over a period of time
and processed periodically. Batch processing is the preferred mode when
the business task in process is not critical in nature. This is used when
benefits of real time processing are not in congruence to the communication
costs involved. Processing of fee or attendance records etc may be
examples of such processing.
• Real-Time Processing – data are processed immediately after a transaction
occurs. This is essential for processes which are critical in nature and
whose records must be current and up to date. No time lag should take
place between the time the data is generated and the time it is updated on
central databases. These are also called OLTPS
Transaction Processing Cycle

Fig 8.2 A

The process of transaction processing follows the below mentioned steps:

 The first step is the entry of the details of any business process and
hence the resultant database maintenance which is updating of the
corporate databases of an organization to reflect changes resulting from
day-to-day business transactions.
  The next step is the document and report generation – including
transaction documents, transaction listings and error reports. Reporting
is a very important task of the management process. A report depicts the
status of any task to the complexity and detail specified.

Summary:

TPS are the basic and initial processing systems of a business organization. The
data generated at this preliminary level is used at all ascending levels of
management for control and analysis purposes.
Lecture 9

Objectives of the Lecture:

1) To discuss various types of reports
2) To link type and complexity of the reports with levels of
management

Some of the types of report generated at lower levels of management may be:

Detailed Reports – These reports contain minute details of transactions and

processes involved. These may be an important source of record keeping of the
operations of the organization and add to the archives of the organization. They
may be further processed, modified or summarized for higher levels of the
organization. These may also contribute data to the data warehouse or data mart
maintained for the organization. Older data and reports may form a part of the
legacy systems of the organization.

Summary Reports – These are those reports which are prepared to give a
comprehensive and holistic picture of the organization. They may be used to
review the systems and ensure that the systems are in control and in consonance
with the targets and standards specified.

Periodic Reports or Scheduled Reports: They are produced on a regular basis,

widely distributed, and often contain large amounts of information. These are
reports which are generated at specified fixed intervals of time regardless of
activity. These may be weekly, monthly, yearly etc.
Non Periodic Reports – They are generated as a function of activity and not time.
They may follow some other methodology of generation such as:

 Push Reports – generated by a member of the organization to highlight

some activity or task of importance.

 Demand Reports – generated on demand to give a picture of the activity or

task specified. These may be made as detailed or as comprehensive as
specified by the relevant authority. Demand Reports fill irregular needs for
information (SQL, QBF)

 Inquiry Processing – making inquiries and receiving responses concerning

the results of transaction processing activities

Summary:

Information Technology has enhanced inter-organization collaboration with its

business partners and intra organization communication within the networked
enterprise. Data driven tasks improve vital business processes as also contributing
to archival systems.
Lecture 10
Objectives of the Lecture:
1. To understand OLAP (Online Analytical Processing) and Data
Visualization Systems (DVS) as tools for ESS
2. To study Executive Support Systems

Online Analytical Processing:

Online analytical processing enables managers and analysts to interactively

examine and manipulate large amounts of detailed and consolidated data from
many perspectives (analytical databases, data marts, data warehouses, data mining
techniques, and multidimensional database structures, specialized servers and
web-enabled software products).

Online analytical processing involves several basic analytical operations:

 Consolidation - Involves the aggregation of data. This can involve simple
roll-ups or complex groupings involving interrelated data.

 Drill-Down - OLAP can go in the reverse direction and automatically

display detailed data that comprises consolidated data.

 Slicing and Dicing - Refers to the ability to look at the database from
different viewpoints. Slicing and dicing is often performed along a time
axis in order to analyze trends and find patterns.
OLAP applications:
 Access very large amounts of data to discover patterns, trends, and
exception conditions
 Analyze the applications between many types of business elements
 Understand aggregated data
 Compare aggregated data over hierarchical time periods
 Present data in different perspectives
 Involve complex calculations between data elements
 Are able to respond quickly to user requests so that managers or analysts
can pursue an analytical or decision thought process without being hindered
by the system

DVS (Data Visualization Systems):

DVS represent complex data using interactive three-dimensional graphical forms
such as charts, graphs, and maps
DVS tools help users to interactively sort, subdivide, combine, and organize data
while it is in its graphical form.

10.1 Executive Information Systems (ESS)

Executive Information Systems are those which aid and support the top levels of
managers in their working. These information systems provide top executives,
managers, analysts, and other knowledge workers with immediate and easy access
to information about a firm‘s key factors that are critical to accomplishing an
organization‘s objectives. They may include personalized decision support,
modeling, information retrieval, data warehousing, what-if scenarios, and
reporting. Trend analysis and futuristic data form a very large part of the data and
information provided to Executives. The presentation forms are tailored to the
preferences of the executives using the system
OLAP techniques and DVS form a very large component of the tools available to
the top management to integrate data from all over the organization into ―at-a-
glance‖ graphical indicators and controls. They also supports the work of senior
executives by providing access to company data and general information on the
industry and economy.

Capabilities of EIS include:

 Information is presented in forms tailored to the preferences of the
executives using the system. Heavy use of graphical user interface and
graphics displays.
 Information presentation methods used by an EIS include exception
reporting and trend analysis. The ability to drill down allows executives to
quickly retrieve displays of related information at higher levels of detail.
 Internet and intranet technologies have added capabilities to EIS systems.
 EIS‘s have spread into the ranks of middle management and business
professionals as they have recognized their feasibility and benefits, and as
less-expensive systems for client/server and corporate intranets become
available.

10.2 Strategic Information Systems

These systems are a part of the EIS and are specifically designed to help the
managers to work out the strategies and long term plans for the organization.
These may help to get information about the markets and competitors.
Types of reports used in higher levels of management
Exception Reports: They notify management when a system goes out of control
so that directions for appropriate corrective action are given.
Predictive Reports: They are extremely useful in taking futuristic decisions, and
make use of statistical modeling techniques (regression, time series, simulation).

Summary:
Strategic Information Systems and Executive Information systems are information
systems originally designed to support the strategic information needs of top
management. However, their use is spreading to lower levels of management and
business professionals. EIS are easy to use and enable executives to retrieve
information tailored to their needs and preferences. Thus, EIS can provide
information about a company‘s critical success factors to executives to support
their planning and control responsibilities.
Lecture 11

Objectives:
1. To identify how artificial intelligence can be used in business.
2. To give examples of several ways expert systems can be used in business
decision-making situations.

Main lecture:
11.1 Business and AI

Business and other organizations are significantly increasing their attempts to

assist the human intelligence and productivity of their knowledge workers with
artificial intelligence tools and techniques.

AI includes:
 Natural languages
 Industrial robots
 Expert systems
 Intelligent agents

Artificial intelligence (AI) is a science and technology based on disciplines such

as computer science, biology, psychology, linguistics, mathematics, and
engineering. The goal of AI is to develop computers that can think, as well as see,
hear, walk, talk, and feel. A major thrust of AI is the development of computer
functions normally associated with human intelligence, such as reasoning,
learning, and problem solving. AI applications may include all or some of the
following technologies.

 Knowledge-Based Systems - An information system, which adds a

knowledge base and with some reasoning capability to the computer-based
information systems.

 Adaptive Learning Systems - An information system that can modify its

behaviour based on information acquired as it operates.

 Natural Interface: - The development of natural interfaces is considered a

major area of AI applications and is essential to the natural use of
computers by humans. For example, the developments of natural languages
and speech recognition are major thrusts of this area. Being able to talk to
computers and robots in conversational human languages and have them
 ―understand‖ us is the goal of AI researchers. This application area
involves research and development in linguistics, psychology, computer
science, and other disciplines. Efforts in this area include:

o Natural Language - A programming language that is very close to

human language. Also, called very high-level language.

o Multisensory Interfaces - The ability of computer systems to

recognize a variety of human body movements, which allows them
to operate.

o Speech Recognition - The ability of a computer system to recognize

speech patterns, and to operate using these patterns.

o Virtual Reality - The use of multisensory human/computer

interfaces that enables human users to experience computer-
simulated objects, entities, spaces, and ―worlds‖ as if they actually
existed.

11.2 Expert Systems

One of the most practical and widely implemented application of artificial

intelligence in business is the development of expert systems and other
knowledge-based information systems.

Expert System - A computer-based information system that uses its knowledge

about a specific complex application area to act as an expert consultant to users.
The system consists of knowledge base and software modules that perform
inferences on the knowledge, and communicate answers to a user‘s questions. ES
provide answers to questions in a very specific problem area by making humanlike
inferences about knowledge contained in a specialized knowledge base. They
must also be able to explain their reasoning process and conclusions to a user.

Components of Expert Systems:

The components of an expert system include a knowledge base and software

modules that perform inferences on the knowledge and communicate answers to a
user‘s question.
The interrelated components of an expert system include:

 Knowledge base: - the knowledge base of an ES contains:

1. Facts about a specific subject area
2. Heuristics (rule of thumb) that express the reasoning procedures of an
expert on the subject

 Software resources: - An ES software package contains:

1. Inference engine that processes the knowledge related to a specific
problem
2. User interface program that communicates with end users.
3. Explanation program to explain the reasoning process to the user
4. Software tools for developing expert systems include knowledge
acquisition programs and expert system shells

Hardware resources: - These include:

1. Stand alone microcomputer systems
2. Microcomputer workstations and terminals connected to minicomputers or
mainframes in a telecommunications network
3. Special-purpose computers

 People resources: - People resources include:

1. Knowledge engineers
2. End-users

Expert System Applications:

Using an expert system involves an interactive computer-based session, in which:

 The solution to a problem is explored with the expert system acting as a
consultant.
 Expert system asks questions of the user, searches its knowledge base for facts
and rules or other knowledge.
 Explains its reasoning process when asked.
 Gives expert advice to the user in the subject area being explored.
 Examples include: credit management, customer service, and productivity
management.
Some Examples:

Expert systems typically accomplish one or more generic uses. Some of them are:

 Decision management
 Diagnostic/troubleshooting
 Maintenance scheduling
 Design/configuration
 Selection/classification
 Process monitoring/control

Summary:

 Artificial Intelligence. The major application domains of artificial

intelligence (AI) include a variety of applications in cognitive science,
robotics, and natural interfaces. The goal of AI is the development of
computer functions normally associated with human physical and mental
capabilities, such as robots that see, hear, talk, feel, and move, and software
capable of reasoning, learning, and problem solving. Thus, AI is being
applied to many applications in business operations and managerial
decision making, as well as in many other fields.

 Expert Systems. Expert systems are knowledge-based information systems

that use software and a knowledge base about a specific, complex
application area to act as expert consultants to users in many business and
technical applications. Software includes an inference engine program that
makes inferences based on the facts and rules stored in the knowledge base.
A knowledge base consists of facts about a specific subject area and
heuristics (rules of thumb) that express the reasoning procedures of an
expert. The benefits of expert systems (such as preservation and replication
of expertise) must balance with their limited applicability in many problem
situations.
Test your understanding:

1. What are some of the most important applications of Expert Systems in

business? Defend your choices.
2. What is the business value of AI technologies in business today? Use
several examples.
Lecture 12 /Tutorial 2

Objectives:
1. To discuss problems and doubts if necessary
2. To discuss a case study

Case Study:

Manipal Hospital is situated in Bangalore city known as Garden city of India, with
population of around 6 million. The hospital is set on Airport Road, is in the
centre of eastern part of the city, opened its doors in 1990 for in and around
Bangalore citizens to usher in a new era in sophisticated and specialized medical
care in the southern part of the country. The hospital is housed in a magnificent
twin towered, centrally air-conditioned, fourteen storied building with a bed
strength of 450 at each of the towers totaling 900.

This hospital is an addition to the Manipal family of health care institutions which
included four medical, two dental nursing and pharmacy colleges and 10 hospitals
with a total of around 5000 beds. All of this represents four decades of their total
experience and expertise in medical education and health services and it is this
track record that ensures the quality of Manipal Hospital, Bangalore, known to
each and every citizen of Bangalore. This hospital has provided sophisticated
medical and surgical facilities. It has gained reputation in Bangalore as a centre
for medical excellence and it is all due to the pre-eminence of the specialists on its
medical staff, its highly skilled nurses and support staff and sophisticated and
medical equipments.

A premier, multi specialty unique hospital with multi-units situated at Bangalore,

Mangalore, Manipal, Nepal, Sikkim and Goa is committed to providing
personalized care of the highest order the widest scope of advanced medical
facilities. The hospital offers its medical services on-a-break-even financial basis
this bringing high quality healthcare on commercial terms. The individual health
insurance plans, company group insurance plans and some subsidized inpatient
beds in line with Government directives are some of the highlights that bring
sophisticated treatment to the middle class family. Besides these, they have
standard screen programs at a very nominal rate for the middle class families and
executive screen programmes for the privileged class at a higher rate covering
complete blood count, uri-analysis, stool examination, blood grouping, blood
sugar, urea, cholesterol, electrolyte, lipid profile, X-ray chest, ECG, creatinine,
triglycerides and finally consultation with physicians, gynecologists etc. They
work towards a preventive approach, pinpointing all possible risk areas and
offering solutions to each and every problem area with the cream of medical
fraternity and state-of-the-art equipment, each of the Manipal hospital is a cost
centre.

The central office is at Manipal, where the Medical Director and other Directors
working there provides corporate guidance to all of their other hospitals. They
decide important matters connected with all their units. At Bangalore, CEO heads
the three hospitals (two situated in the Airport Road, one at each of the towers and
the third hospital known as ‗North Side Hospital‘ situated at Malleswaram,
northern part of Bangalore with 62 beds}. One hospital at one of the towers deals
with heart operations and is headed by Divisional Head and designated as
Director, Operations. Similarly in the second tower for three different operations,
like Nephrology/Urology, Neurology, Diagnostics, there are three Divisional
Heads who control the operations in their respective area. The fifth Divisional
Head of Bangalore is at the North side hospital. Each of the Divisional Heads has
different departments under them and each accounts as a separate cost centre. The
various departments are personnel, engineering, maintenance, purchase accounts,
Matron, Finance Officer, pharmacy, laundry, security, kitchen, Housekeeper etc.
their clients all at the same level. Each of these officers has again assistants,
senior assistance and junior assistants etc. to look after various sub-functions.
Since inception of Manipal Hospital in 1991, the hospital has computerized
various recurring activities like inpatient, outpatient admissions, transfers,
discharges, registration and certain corporate activities, payrolls, billing etc. from
the computers and software packages engineers to suit their operations. Though
the computerization activities are in full swing at various departments, the
interconnectivity is lacking and the system is also old, to cope up with increased
work. At present, they do not have connection between computers of different
department and also with different hospitals. As such the hospital was very
serious in modernizing the old computer system at each of the departments and to
expand its activities to other departments and to have connectivity to various
hospitals including their hospitals at Nepal and Sikkim which are far off.

The hospital considering its future expansions as well anticipated increased work
load negotiated with some of the reported consultants in the software field, about
six months back and is likely to entrust to one of the leading software companies
at Bangalore (short listed) for full computerization of the hospital. They are likely
to spend a huge amount for computerization activities and the pilot project is to
commence in April. Manipal Hospital at present is having MIS activities, at one
nodel centre at each of the hospitals do not have a separate department, but all
MIS activities comes under Finance Controller.
The pilot project commencing in April includes computerization of the following:

 Front Office (Administration, registration, discharge, transfer etc.)

Inpatient
 Billing
Out patient

Billing

 Accounts Purchase

Stores

Payroll

 CDR

 Medical records ward management, OT scheduling, doctors appointments

scheduling, engineering and maintenance, laundry, kitchen, housekeeping
all wads etc.

 Laboratory (Inter/facing)

 Computerized Library …… etc.

 Radiology

Many of the activities, through existing are to be updated with new systems and
wherever systems do not cover departments, these are to be included.

According to Mr. Sairam, who in Incharge of all these activities at present

confirms that the entire work will be done in ten phases as under within a span of
2 years maximum.
Pilot project at Manipal Hospital (Tower 1 – 450 beds)
 Extend the pilot project to (Tower 2 – 450 beds)
 Extend the same to North side hospital
 Connect all the three thru‘ WAN
 Simultaneously with activity 1, work starts at Manipal – 1600 beds
 Simultaneously with activity 2, work starts at Mangalore – 1000 beds
 Connect Bangalore, Mangalore, Manipal across all the hospital through
extended WAN
  Extend the similar activities to Nepal
 Extend the similar activities to Goa and Sikkim
 Connect all hospitals

During this period, care will be taken to include all high tech systems like expert
system (may be useful for hospital research work), executive information systems
and ES for top managements to take decisions on vital matters.

QUESTIONS:

1. Do you feel that SIS and EIS are required in hospital information
system? Give explanations for both ‗yes‘ and ‗no‘ answers.
2. Analyze whether the expert system could be used effectively in Hospital
R & D activities.
Objective Type Questions

Q1 Several major types of databases may be found in computer-using

organizations. Operational databases are described as databases that store
detailed data needed to support the business processes and operations of the
business enterprise. A transaction processing database is one type of
operational database.
 True
 False

Q2 Transactions are business _____________ that occur as part of doing

business such as sales, purchases, deposits, withdrawals, refunds, and payments.

Q3 Transaction processing systems process data in two basic ways. One way is
real-time processing, where transaction data are processed __________ after a
transaction occurs.

Q4 Online transaction processing systems play a role in electronic commerce

but the major roles are played by the Internet, extranets, and other networks
that tie them electronically to their customers or suppliers for online
transaction processing not the data collected from data systems.
 True
 False

Q5 An information system is a combination of hardware, software, and data

resources that transforms information in an organization.
 True
 False
Q6 There are three fundamental reasons for all business applications of
information technology. They relate to the three vital roles that information
systems can perform for a business enterprise. One of these roles is support of its
business processes and operations.
 True
 False

Q7 In any organization, end users rely on many types of information systems

like:
A) Simple manual (paper-and-pencil) information systems.
B) Formal (written procedures) and informal (word-of-mouth) systems.
C) Computer-based information systems.
D) All of the above.

Q8 Within the context of an information system, which one of the following

would be considered a typical end user?:
A) Managers.
B) Accountants.
C) Customers.
D) All of the above.
Module III

Module III: Architecture & Design of IS

Architecture, development and maintenance of Information Systems, Centralized
and Decentralized Information Systems, Factors of success and failure, value and
risk of IS.

Objectives:

1. To understand the concept of IT architecture

2. To discuss its components
3. To revise centralized and decentralized databases.
4. To discuss the reasons of success and failures of IS

Introduction (2 lectures + 1 Tutorial)

IT has become a major bridge between the many disparate departments that
exist in organizations. However, without integration, a corporation may
have many different "islands of automation", all of which have their own
autonomous information systems. Therefore, as information systems
software differs from section to section, integration and coordination is a
must to facilitate firms utilizing the full potential of the benefits that
information systems have to offer.
Lecture 13

Objectives:

1. To understand the concept of IT architecture

2. To discuss its components
3. To revise centralized and decentralized databases.

Main Lecture:

13.1 What is IT Architecture?

It is a conceptual design that includes:

• Technology Platform – networks, computer systems, system

software and integrated enterprise application software
• Data Resources – databases
• Applications Architecture – business applications
• IT Organization – organizational structure of the IS function and
distribution of IS specialists

13.2 Centralized Systems and Decentralized Systems:

The nature of the IT structure in relation to other business units within an

organization has yielded a choice between control or coordination (Gordon &
Gordon, 2000). In other words, this can be recast as centralization versus
decentralization.

Centralized Systems:

Centralization refers to the allocation of all IT resources to one particular business

unit that provides IT services to the whole firm (Gordon & Gordon, 2000). The
main characteristics of a centralized approach include control, efficiency and
economy. Centralized approaches are effective in gaining or regaining control
over an organization‘s information system (Robson, 1997). A centralized IS may
have always been centralized or it may be a cost saving regrouping of an
organization‘s IS to one particular location.
Decentralized Systems:

Decentralization gives individual business units autonomy over their own IT

resources without any major considerations over other units unless it is essential to
the overall organization policy (Gordon & Gordon, 2000). The main traits of a
decentralized approach include flexibility, empowerment of individual business
units and service orientation. Decentralized approaches tend to be just as efficient
as centralized ones in regard to meeting individual‘s needs.

The Advantages of Centralized Information Systems:

The main advantages of centralized systems are that they provide centralized
control using established technology and vendors (Kroenke & Hatch). They thus
involve less technical risks. Information Systems professionals providing highly
reliable operation maintain such systems. There should be no confusion over
responsibilities and the software and hardware used should interface easily
(Robson). Duplication of effort, resources and expertise is also reduced, saving
cost and time.

The Disadvantages of Centralized Information Systems:

Centralized systems entail a high initial cost disadvantage (Kroenke & Hatch).
Furthermore, the information systems professionals who install and operate such
systems are also expensive. The bureaucracy and inflexibility of such systems also
can cause costs to escalate (Robson). Due to one central system carrying out all
the requested tasks, this system is obviously going to be much slower than a
decentralized arrangement where each business unit has its own autonomous
system for local tasks (Robson). Similarly, local, independent processing is not
allowed and the entire information system is dependent on the one IS
infrastructure (Kroenke & Hatch). If the system fails, the entire system is
inoperable. In addition, many centralized information systems are isolated from
real business priorities and concerns (Robson). Personal attentions to individual
groups are not possible.

The Advantages of Decentralized Information Systems:

In decentralized information systems, startup costs are relatively low (Kroenke &
Hatch). Tailoring and scaling the system to individual needs is also possible. Thus,
local processing is enabled. In other words, there is increased autonomy
(Hodgkinson). Organizational flexibility and responsiveness is a major advantage
brought by autonomy. Due to this autonomy, there is greater scope for motivating
and involving users (Robson). Due to the fact that local individuals control their
own information system, the logic is that they will have to act in a much more
responsible way because they control their own destiny. Perhaps the most
important advantage is that reliability is increased greatly because multiple
computer systems are involved (Kroenke & Hatch). If one computer system fails,
the system or at least part of it will still be able to function.

Decentralization also offers benefits of increased accountability, motivation and

management responsiveness (Hodgkinson). Decision-makers are brought closer to
customers, too. Customers provide the information to make important decisions.
This applies to all aspects of the organization and not just the IT section.

The Disadvantages of Decentralized Information Systems:

By their very nature, decentralized systems lack a centralized control (Kroenke &
Hatch). This can be very disadvantageous as conflicting ideas arise and clashes in
policy leading to delays and inefficiency arises as a result. Similarly, the one
vendor may supply not all the many different components of the overall systems.
This can lead to similar problems as those resulting from the conflicting ideas.
There also is a high degree of duplication of resources, effort and expertise, which
wastes time and causes cost increases.

IT as an enabler of Centralization and Decentralization:

In many organizations, the potential benefits of the contribution of IT in

organizations have been sorely under-appreciated (Moreton & Chester). IT can
enable information sharing, support business processes and transactions and link
customer information. Thus, the organization will have closer links with suppliers,
customers and other business partners. IT can have a strong influence on the
bargaining relationships between buyers and sellers. Internal information sharing
in organizations, for example between departments, is also enhanced by IT.
Information can be stored and retrieved far easier than in non-IT enabled
organizations while management can communicate with employees or each other
more easily. As well as this, teamwork and group collaboration is also made
easier. More indirectly, IT provides the employees of an organization with new
skills, helps with the design plans of an organization and provides tools that
enhance education among employees

A fundamental question to ask is whether or not IT will lead to centralization or

decentralization (Dewett & Jones). In terms of centralization, Management
Information Systems enable management to obtain information more quickly and
accurately, reducing uncertainty. Managers may make better decisions than they
would have made without the aid of IT. With regard to decentralization, electronic
bulletin boards and discussion groups enable lower and middle level managers to
stay better informed about organizational issues.
It can be deducted that IT is both a provider of centralization and decentralization
(Dewett & Jones). Therefore, any organization does not have to choose rigidly
between either a centralized or a decentralized approach. IT permits simultaneous
centralization-with-decentralization. The parts of an organization that are best
suited to be centralized are centralized while other parts may be best

Summary:

Information Systems are a valuable part of the modern organization. With

organizations becoming increasingly global, their IT systems have to be as well.
This gives rise to the centralization versus decentralization argument. In a
centralized environment, everything is done in the one location, whereas in a
decentralized environment work is done across many locations.

IT has the ability to promote both efficiency and innovation. Efficiency deals with
saving cost and time to provide better results. On the other hand, innovation is
defined as the conceptualization of a new idea that provides new benefits.

A centralized system in general is efficient due to reduced duplication, more

centralized control and better standardization. Risk of entire system failure and
high startup costs have the potential to hinder or even halt this efficiency, though.
Innovation can be stifled in centralized system due to its bureaucratic nature.

The reverse of the above paragraph is true for decentralized systems. In addition,
decentralized environments mean that local users are more responsible for IS
budgets and their demands may be more restrained than if someone else was
paying for it. Also, transport costs are significantly reduced.
 Lecture 14:

Objectives:

1 To understand the reasons of success and failure of IT

2 To discuss a relevant case study

14.1 Success and Failure with IT:

It is important that students realize that information technology and information

systems can be mismanaged and misapplied so that they create both technological
and business failure.

Top Five Reasons for Success Top Five Reasons for Failure

User involvement Lack of user input

Executive management support Lack of executive support

Clear statement of requirements Incomplete requirements and

specifications or changing requirements
and specifications

Proper planning Lack of direction

Realistic expectations Technological incompetence

Case Study:

Chicago Board of Trade: From Failure to Success in Managing Information

Technology

Picture 3,000 traders in ―the pit‖ waving their hands and screaming orders for
stocks, bonds, and commodities. Millions of dollars in investments are changing
hands every minute. Suddenly, screens freeze; orders won‘t execute. Mayhem
reigns, as millions of dollars are lost with every tick of the clock. ―That‘s the worst
thing that can happen,‖ says Carol Burke, executive vice president and chief of
staff at the Chicago Board of Trade (CBOT) (www.cbot.com). But two years ago,
trading-floor systems were crashing almost weekly because of a deteriorating IT
infrastructure, costing the exchange and its members millions of dollars. In July
2001, after two years of operating in the red, the board of directors brought in a
new management team for CBOT, including Executive Vice President and CIO
Bill Farrow. A total IT revamp got the exchange back to in-house profitability. By
2002, its profit had risen to $25 million, trading-system crashes were virtually
unheard of, and CBOT was once again bullish on technology. Farrow walked into
an IT situation that was grim. ―The chairman said, ‗Bill, you have very small
shoes to fill,‘‖ he recalls. ―That tells you a lot.‖ ―IT was in disarray,‖ agrees
Burke, a 20-year CBOT veteran. ―There were a lot of good people in IT, but there
was a real lack of leadership,‖ says Chip Bennett, senior vice president of
technology solutions and Farrow‘s first hire at CBOT. ―The infrastructure was
ancient, unreliable, and undocumented.‖ For example, desktop PCs ran a version
of Windows no longer supported by Microsoft. Nearly every key process was
routed through a group of old, midrange Tandem computers in an environment so
complex that developing a new process took more than 90 steps. Project and
budget controls were lacking, and quality control was substandard. IT was full of
silos and fiefdoms, so there were no economies of scale. Morale was low. There
was a place called ―the wall,‖ where nearly 100 yellow sticky notes
commemorated people who had gotten fed up and left. Yet many were
complacent. ―Tech jobs were called ‗the golden hammock,‘‖ Farrow says. ―Once
you got in, you could have a very easy, very, very long career in technology here.‖
That attitude made no friends on the business side. ―We would go to IT and say,
‗Help us,‘‖ recalls Kevin Lennon, vice president of real estate operations. ―The
feeling we got was that we were taking them away from something more
important.‖ Other than Y2K, IT hadn‘t completed a single project in four years. As
a result, people had no experience in project management disciplines, and return
on investment was a foreign concept. ―No ROIs were done—ever,‖ Farrow says.
―Technology did not have to provide a return for investing the money in it.‖ There
was such a lack of credibility between the business and IT sides that the business
people had totally given up, Farrow says. Farrow began by taking inventory of
what he had. He documented systems and technical architecture, nailed down
vendor relationships and service-level agreements, and evaluated security systems.
Simultaneously, he faced the bigger challenge of building new relationships with
skeptical business managers. He assigned IT managers to counterparts on the
business side to brainstorm regularly about how technology could support business
goals. Denise Schaller, director of technology and data products for floor support
applications, who has 21 years experience at CBOT, says her weekly meeting with
the two vice presidents of exchange operations has changed everything. ―If I have
any business questions, issues, priorities—they help sort it out,‖ she says.
Replacing the ancient Tandems with Sun Unix servers and Oracle databases, a
process that Schaller thought would take two years, got done in half the time
because her new partners in business helped with the analysis, legwork, and scope.
Farrow boosted quality assurance with additional software testing and backed it up
by putting IT troubleshooters on the trading floor every day when the market
opened. ―I‘m on the spot, so I can see any problems and react immediately,‖ says
Schaller. Farrow established a project management office to centralize the project
portfolio and the IT skills pool. He also brought ROI to project agendas. Farrow
used news of the turnaround to attract technology professionals with new skills,
particularly in the areas of security and business analysis. But there were painful
decisions as well; including letting 15 IT managers go. The permanent IT
workforce shrank from 250 to fewer than 200, supplemented by temporary
contract help as required by the project load.

Soon, IT completed 66 projects. Then, CBOT handled 33 million contracts—33

percent more than in the previous February, without a single system stutter. ―We
have a much more stable and robust environment with fail-over abilities,‖ says
Burke. ―If there were a problem in a primary system, it would fail over to a backup
and be seamless to the marketplace.‖ Throughout the turnaround, IT has
maintained a flat budget. ―If you are wasting 35 percent of your money, that‘s a lot
of money to put back into information technology to make it robust,‖ Farrow says.

Case Study Questions

1. What were several major reasons the IT organization had failed at the Chicago
Board of Trade? Explain the impact of each on CBOT.
2. What were several key management changes and initiatives that Bill Farrow
implemented to make IT successful at CBOT? Explain the impact of each on
CBOT.
3. Does the experience of CBOT prove that ―IT is a business function that needs to
be managed like any other business function?‖ Why or why not?

(Source: Adapted from Kathleen Melymuka, ―Market Rally,‖ Computerworld,

pp.40–41. )
Lecture 15/Tutorial 3

Objectives:

a. To discuss problems and doubts if necessary

b. To discuss a case study

Until the late 1990s, Mitsubishi Motor Sales of America Inc.

(www.mitsucars.com) was only about cars, and its approach to retail customer
service reflected that. There were more than 18 toll-free customer service numbers
that callers had to navigate to find information on topics ranging from financing to
sales to repairs. ―We were fragmented in our approach, and we clearly lacked a
customer focus,‖ says Greg O‘Neill, executive vice president and general
manager. Mitsubishi decided to change that. As part of a companywide shift to an
increased focus on customers, executives challenged the call center to provide
―one voice and one set of ears for the customer,‖ says CIO Tony Romero. That
was the beginning of a continuing drive toward improved customer service
through a customer relationship management (CRM) initiative that would
eventually engage multiple departments and 18 vendors. Today, Mitsubishi has
one call center and an outsourced service provider that handles the most basic
calls. The cost per call has decreased by about two-thirds, and that savings alone
paid for the system in 18 months, according to Rich Donnelson, director of
customer relations. The system saves agents time and uncertainty and enabled the
call center to handle 38 percent more volume, with an even staffing level.
Meanwhile, the company‘s customer satisfaction rate rose by 8 percent, according
to a survey by J. D. Power and Associates. Mitsubishi‘s call center project team
included members from its sales, marketing, finance, and IT departments, all of
which contributed resources as needed. Early on, the team members established
some rules of the road. First, they would selectively choose best-of-breed CRM
software components, not the integrated CRM suites that seemed intent on force-
fitting Mitsubishi‘s needs into fixed product offerings. But that required a constant
struggle to keep 18 vendors heading in the same direction. The team members also
decided to implement changes slowly, adding a technology only when all
employees were using the last one implemented. This approach allowed call center
agents to get comfortable with the new technology over time. To accommodate the
deliberate, modular approach, all products had to pass the ―three S‖ test: Is it
simple? Does it satisfy? Is it scalable? ―If we couldn‘t answer yes to all three, we
didn‘t do it,‖ says Greg Stahl, Mitsubishi‘s director of advertising. The journey
began in earnest in June 1999, when Mitsubishi chose to outsource its most basic
level of customer calls to Baltimore-based Sitel Corp. Within two months,
Mitsubishi‘s 18 toll-free customer numbers and the multiple call centers behind
them were consolidated, and call center software from Siebel Systems was
implemented. Also, as part of the companywide customer focus, a new
customercentric database was consolidated in-house the next year. The database
became the engine powering the call center, but unfortunately, dirty data were a
major stumbling block. The project stalled for months as the data were cleansed
and updated. In early 2001, a digital phone switch from Avaya Inc. was installed
that allowed flexible skills–based call routing. Callers to the single toll-free
number were routed based on menu choices. About half the callers got the
information they needed from an interactive voice response unit, which can
answer fairly sophisticated queries without live contact. Simple calls went to Sitel,
and the rest were routed to call center agents with the appropriate skills. In March
2001, graphical user interface upgrades put 11 screens‘ worth of customer
information on one screen of call center agents. And Smart Scripts workflow
software from Siebel provided agents with decisiontree scripts and automated
customer correspondence. In May 2001, Mitsubishi managers began listening to
outsourced service calls, and they could see agents‘ screens with Avaya IP Agent
software. The next month, the company started using workforce management
software from Blue Pumpkin Software to hourly forecast call center coverage.
Then NiceLog software from Nice Systems was installed to record agents‘ voice
and screen activity for quality assurance and training. Aside from happier
customers, the benefits to call center employees include career growth and higher
pay. Previously, agents in separate call centers handled specific areas: accounts,
vehicles, titles, or retailer queries. Now the silos are gone and agents can learn
new skills in multiple areas, greatly increasing call center flexibility. The
workforce management software schedules training time during lags, and agents
who learn multiple skills earn more money. Call center turnover, which has
traditionally been more than 20 percent, was about 7 percent last year. O‘Neill
says the executive team members regularly listen in on service calls to get a feel
for customer concerns, and they act on what they hear. ―That bubble up of
information has driven more early marketing decisions and made us more
effective earlier on than I could have ever thought,‖ O‘Neill says. ―That‘s been a
huge dividend.‖

Case Study Questions

1. What are the key application components of Mitsubishi‘ system? What is the
business purpose of each of them?

2. What are the benefits to a business and its customers of a system like
Mitsubishi‘s?
3. Do you approve of Mitsubishi‘s approach to acquiring and installing its IT
system? Why or why not?
(Source: Adapted from Kathleen Melymuka, ―Driven to Better Service,‖
Computerworld, July 8, 2002, pp. 40–41.)
Module IV: Decision Making Process
Programmed and Non- Programmed decisions, Decision Support Systems, Models
and approaches to DSS

Learning Objectives:
1. Identify the changes taking place in the form and use of decision making in
business.
2. To understand the types of decisions and their differences
3. Describe how online analytical processing can meet key information needs
of managers.
4. Explain the decision support system concept and how it differs from
traditional management information systems.

Introduction (4 Lectures + 1 Tutorial)

Decision Support Trends

Using information systems to support business decision making has been one of
the primary thrusts of the business use of information technology. The fast pace
of new information technologies like PC hardware and software suites,
client/server networks, and networked software made decision support available to
lower levels of management, as well as to non-managerial individuals and self-
directed team of business professionals.

This trend has accelerated with the dramatic growth of the Internet and intranets
and extranets that net-work companies and their stakeholder. The e-commerce
initiatives that are being implemented by many companies are also expanding the
information and decision support uses and expectations of a company and its
business partners. Today‘s businesses are responding to with a variety of
personalized and proactive Web-based analytical techniques to support the
decision-making requirements of all of their constituents.

The dramatic expansion of DSS growth has opened the door to the user of
analytical tools by the suppliers, customers, and other business stakeholders of a
company for customer relationship management, supply chain management, e-
business applications and informed decision making.
Lecture 16

Objectives of the Lecture:

1. To define decision making.
2. To understand the process of decision making.

Introduction:

16.1 Decision Making Process

Decision Making is one of the most crucial activities of management. A manager
spends large parts of his activity time periods in decision making. His decision
making may effect the organization in many ways. His good or bad decisions may
take the organization to its heights or its doom. Usually the decision making is a
cyclic process. Once the manager is faced by a problematic situation he / she
weighs it in his/ her intellectual domain and works out the possible alternatives or
solutions. Then after weighing and analyzing each of the possible alternatives, the
manager chooses the best one according to the present circumstances. No decision
is final or ideal. Each decision has its fall outs and desirable or undesirable results.
Feedback is also received involuntarily or as a part of the cycle. Hence the whole
cycle starts once more.

Some Definitions:

Problem is a condition or event that is harmful or potentially harmful to a firm

and requiring a solution.
Problem solving consists of responses to activities not going as per plan or
deviating from pre-specified course of actions.
Decision making is the act of selecting from alternative problem solutions.
Decision is a selected course of action.
Many theorists have given ―Steps to Decision Making‖:
Herbert A. Simon’s four basic phases:
 Intelligence activity–Searching the environment for conditions
calling for a solution.
 Design activity–inventing, developing, and analyzing possible
course of actions.
 Choice activity–Selecting a particular course of action from those
available.
 Review activity–Assessing past choices

Fig 16.1 A
Summary:

Decision making is one of the primal activities of management. A good or a bad

decision can have far reaching effects on the organization. The process has very
clear steps defined, known as ―Simon‘s Model‖.
Lecture 17
Objectives of the Lecture:
1. To understand the types of decisions
2. To review and revise utility of Data mining
3. To understand DVS and OLAP as building blocks to Decision Support
Systems

17.1 Types of Decisions

• Structured or Programmed Decisions – situations where the procedures

to follow when a decision is needed can be specified in advance. These
decisions are easy to programme as they follow a step by step undeviating
procedure. They are usually taken at lower levels of management.
Examples: Restock inventory, determining special offers to customers.
• Unstructured or Non Programmed Decisions – decision situations where
it is not possible to specify in advance most of the decision procedures to
follow. Hence these decisions are hardest to programme as they follow a
new approach suitable to the circumstances in question each time.
Computers act as an aid and tool for decision making. Examples: Approve
capital budget; decide corporate objectives.
• Semi Structured - decision procedures that can be pre-specified, but not
enough to lead to a definite recommended decision. Examples: Allocate
resources to managers; develop a marketing plan
Fig 17.1 A

Data Mining

Data mining software analyzes the vast stores of historical business data that have
been prepared for analysis in corporate data warehouses, and tries to discover
patterns, trends, and correlations hidden in the data that can help a company
improve its business performance.

Data mining software may also perform regression, decision tree, neural network,
cluster detection, or market basket analysis for a business. It may also perform
• Consolidation – aggregation of data
• Drill-down – represent details of data from consolidated data
• Slice and Dice – ability to look at the database from different viewpoints
Data Mining for Decision Support:
The main purpose of data mining is knowledge discovery, which will lead to
decision support.

Characteristics of data mining include:

• Data mining software analyzes the vast stores of historical business data
that have been prepared for analysis in corporate data warehouses.
• Data mining attempts to discover patterns, trends, and correlations hidden
in the data that can give a company a strategic business advantage.
• Data mining software may perform regression, decision-tree, neural
network, cluster detection, or market basket analysis for a business.
• Data mining can highlight buying patterns, reveal customer tendencies, cut
redundant costs, or uncover unseen profitable relationships and
opportunities.

OLAP (Online Analytical Processing)

Enables mangers and analysts to interactively examine and manipulate large
amounts of detailed and consolidated data from many perspectives
DVS (Data Visualization Systems)

DVS represent complex data using interactive three-dimensional graphical forms

such as charts, graphs, and maps
DVS tools help users to interactively sort, subdivide, combine, and organize data
while it is in its graphical form.

Differences between MIS and DSS

Summary:

Online analytical processing interactively analyzes complex relationships among

large amounts of data stored in multidimensional databases. Data mining analyzes
the vast amounts of historical data that have been prepared for analysis in data
warehouses. Both technologies discover patterns, trends, and exceptional
conditions in a company‘s data that support their business analysis and decision
making.
Lecture 18
Objectives:
1 To understand the concept of DSS.
2 To enumerate its components
3 To identify its relevance and uses in decision making.

18.1 Decision Support Systems

Decision support systems are computer-based information systems that provide

interactive information support to managers and business professionals during the
decision-making process.

In this era of intense competition and evolving management styles data-driven

decision support application frameworks are needed to help the organization to
respond rapidly to changing market conditions and customer needs.

Decision support systems use:

 Analytical models
 Specialized databases
 Decision maker‘s own insights and judgments
 Interactive, computer-based modeling process to support the making of
semistructured and unstructured business decisions

DSS Components:
Decision support systems rely on model bases as well as databases as vital system
resources. A DSS model base is a software component that consists of models
used in computational and analytical routines that mathematically express
relationships among variables.

Examples include:
 Spreadsheet models
 Linear programming models
 Multiple regression forecasting models
 Capital budgeting present value models
 • DSS database: A collection of current or historical (archival) data from a
number of applications or groups of people or processes.
• DSS software system: Contains the software tools for data analysis, models,
data mining, and other analytical tools
• DSS user interface: Graphical, flexible interaction between users of the
system and the DSS software tools

Fig 18.1 A
Summary:
Thus DSS is an interactive, computer-based modeling process which uses
analytical models on specialized databases to arrive at a road map for semi
structured decisions which are then tempered with the decision maker‘s own
insights and judgments.
Lecture 19
Objective of Lecture:
1 To understand models used in DSS

Main Lecture:
Models with reference to DSS:

Model is an abstract representation that illustrates the components or relationships

of a phenomenon. There may be various types of models:
• Statistical models
• Optimization models
• Forecasting models
• Sensitivity analysis (―what-if‖ models)
Models may also be classified as:

► Static model which doesn‘t include time as a variable but deals only with a
particular point in time.
► Dynamic model includes time as a variable; it represents the behavior of
the entity over time.
Or
► Probabilistic model includes probabilities. Otherwise, it is a deterministic
model.
► The act of using a model is called simulation while the term scenario is
used to describe the conditions that influence a simulation.

Models can be designed so that the scenario data elements are variables, thus
enabling different values to be assigned. The input values the manager enters to
gauge their impact on the entity are known as decision variables.
Model base - Software component that consists of models used in computational
and analytical routines those mathematically express relationships among
variables:

Using a decision support system involves an interactive analytical modelling

process. Typically, a manager uses a DSS software package at his workstation to
make inquiries, responses and to issue commands. This differs from the demand
responses of information reporting systems, since managers are not demanding
pre-specified information. Rather, they are exploring possible alternatives. They
do not have to specify their information needs in advance. Instead they use the
DSS to find the information they need to help them make a decision.

Using a DSS involves four basic types of analytical modelling activities:

 What-If Analysis: - In what-if analysis, an end user makes changes to

variables, or relationships among variables, and observes the resulting changes
in the values of other variables.

 Sensitivity Analysis: - Is a special case of what-if analysis. Typically, the

value of only one variable is changed repeatedly, and the resulting changes on
other variables are observed. So sensitivity analysis is really a case of what-if
analysis involving repeated changes to only one variable at a time. Typically,
sensitivity analysis is used when decision-makers are uncertain about the
assumptions made in estimating the value of certain key variables.

 Goal-Seeking Analysis: - Reverses the direction of the analysis done in what-

if and sensitivity analysis. Instead of observing how changes in a variable
affect other variables, goal-seeking analysis sets a target value for a variable
and then repeatedly changes other variables until the target value is achieved.

 Optimization Analysis: - Is a more complex extension of goal-seeking

analysis. Instead of setting a specific target value for a variable, the goal is to
find the optimum value for one or more target variables, given certain
constraints. Then one or more other variables are changed repeatedly, subject
to the specified constraints, until the best values for the target variables are
discovered.
Summary:
Lecture 20 / Tutorial 4

Objectives:
1. To discuss problems and doubts
2. To discuss a case study

Case Study
Boehringer Ingelheim (www.boehringer-ingelheim.com) is a huge company, with
$7.6 billion in revenue and 32,000 employees in 60 nations. But the Ingelheim,
Germany–based pharmaceutical maker says Webenabled reporting and financial
applications are making the company as nimble as some of its smaller competitors
when it comes to running financials. Like many large corporations, Boehringer is
turning to Web-based financial and analytical tools to rapidly consolidate and
present key financial data on a daily, weekly, or monthly basis. The company uses
a Web-enabled version of SAP AG‘s financial software, which allows it to drill
down and draw conclusions based on the latest available financial and operational
data. ―I want to be told where I stand and where we are heading‖ says
Boehringer‘s chief financial officer, Holger Huels. ―I like to be able to see
negative trends and counter them as fast as possible.‖ More important, Boehringer
is now able to close its books for most of its divisions just two hours after the
close of business at the end of each month, says Huels. That‘s a big change for
Boehringer‘s accounting department, which previously had to wait for printed
reports and then pick through them manually. The staff used a variety of software
tools for financial analysis, says Tony Ciancio, Boehringer‘s director of
accounting. The closing process spanned three days each month, including the
time required to reconcile data from the disparate systems. The pharmaceutical
company switched to the SAP Financials SAP R/3 system a little more than a year
ago, after a 14-month rollout. Delivering the necessary information required some
integration work with several procurement systems that tied into SAP. Boehringer
also had to write custom interfaces to link its SAP system to its Manugistics
roduction planning application. The new system uses the Cognos Inc.
(www.cognos.com) Impromptu reporting tool to report financial results from an
Oracle-managed data warehouse, which takes feeds from the SAP system each
night, says Ciancio. Impromptu then creates standard income statements, cost
center reporting, and account-level analysis. Impromptu also lets the accounting
staff drill down to individual transactions. Ciancio says that with three and a half
years‘ worth of SAP data, his department can spot product sales trends and track
expenses such as personnel costs, which are frequently reviewed and compared
with net sales and other metrics. The biggest difficulty in implementing the new
system was training staff to deal with the unique way the SAP application deals
with pharmaceutical-specific accounting procedures as it reports revenue, says
Ciancio. Despite the amount of time required for training, the system has made the
accounting department much more productive, in part because the staff can now
run up-to-date reports whenever needed, according to Ciancio. Boehringer also
uses the Cognos PowerPlay business intelligence tool, which permits
multidimensional views of profit-and-loss data. ―We can quickly analyze revenue
and expense information by switching the columnar and row data, and also bring
in different dimensions or measures such as budget or prior year, then drill down
and get subsets of the data,‖ Ciancio says. Executives can access this data through
Cognos Upfront, which securely delivers the reports via a browser over the
Boehringer intranet. The system also allows for ad hoc analyses. The most
common of these are transaction reviews that let users get fast summaries by
customer account or product. Ciancio says the new system is running as efficiently
as possible, but it has limitations. For instance, there is still a one-day lag in
reporting because some parts of the global organization are still using different
systems. Boehringer usually closes the books for four of its divisions in 12 hours,
typically on the first business day of the month, Ciancio explains. However, three
units don‘t use the SAP Financials system and its general ledger. So those units
have to close independently, and then the financial data is consolidated through
Excel spreadsheets into the Cognos Finance tool for reporting, which requires
manual intervention and takes another day. ―For many reports, this is acceptable.
For others, we are evaluating options for getting realtime updates and reporting up
to the minute to the Web,‖ Ciancio says. But Boehringer plans to roll out the Web-
based SAP Financials system to most of its subsidiaries worldwide over the next
few years says Ciancio. Despite some problems, the company is convinced that the
savings from the new system have already exceeded expectations, he says.

Case Study Questions:

1. What are the business benefits and limitations of Boehringer‘s Web-based

financial analysis and reporting systems?
2. Which of Boehringer‘s financial analysis and reporting systems are MIS tools?
DSS tools? Why?
3. How could the Cognos tools used by Boehringer be used for marketing and
other business analysis and reporting applications? Visit the Cognos website to
help you answer.
(Source: Adapted from Marc Songini, ―Boehringer Cures Slow Reporting,‖
Computerworld, July 21, 2003. Copyright © 2003 Computerworld, Inc.,
Framingham, MA 01701. All rights reserved)
Objective Type of Questions:

Q1 Unstructured decisions are typically made at the ___________ management

level.

Q2 Which decision making type would best apply to the following statement -
"information is available whenever a manager summons it"?

Q3 Which type of analysis should be used to answer the following: Let's

increase advertising by $100 repeatedly so we can see its relationship to
sales?

Q4 The author of your text outlines a conceptual view of the levels of

managerial decision-making. Unstructured decisions involve situations
where the procedures to follow when a decision needed cannot be specified
in advance.
A) True
B) False

Q5 In online analytical processing, consolidation refers to the interrogation of

data, including simple roll-ups or complex groupings involving interrelated
data.
A) True
B) False

Q6 Geographic Information Systems (GIS) are a special category of decision

support system that integrates computer graphics with other DSS features.
A) True
B) False
Q7 Advantage of current data mining software is that it can be used to perform
regression, decision tree, and neural network analysis, which would help
professional managers discover patterns, trends, and correlations in the data.

A) True
B) False
Module V

Module V: Introduction to Enterprise Management Technologies

Business Process Reengineering, Total Quality Management and Enterprise
Management System viz. ERP, SCM, CRM and E-Commerce.

Objectives:

1. To study Business Process Re-engineering and Total quality management

in perspective of technology.
2. To identify and give examples to illustrate the following: Customer
Relationship Management (CRM), Enterprise Resource
Management(ERP), and Supply Chain Management Systems(SCM)

Introduction (4 Lectures + 1 Tutorial)

Today, customers are in charge. It is easier than ever for customers to compare and
with a click of the mouse, to switch companies. As a result, customer-organization
relationships have become a company‘s most valued asset. These relationships are
worth more than the company‘s products, stores, factories, web addresses, and
even employees. Every company‘s strategy should address how to find and retain
the most profitable customers possible. The primary business value of customer
relationships today is indisputable. Becoming a customer-focused business is one
of the top business strategies that should be supported by information technology.
Thus, many companies are implementing business initiatives such as CRM, SCM,
ERP, TQM and information systems to improve their chances for success in
today‘s competitive business environment.

Enterprise e-Business Systems outlines the goals and components of customer

relationship management, enterprise resource planning, and supply chain
management, and discusses the benefits and challenges of these major enterprise
e-business applications.
Lecture 21

Objectives:
1 To discuss the concept and design of BPR in perspective of
technology.
2 To explain the role of Business Process Reengineering (BPR) within
the organization
3 Understand the origins and key characteristics of BPR

Main Lecture:

21.1

Business Process Reengineering is also known as Business Process Redesign,

Business-Transformation, or Business Process Change Management.

What is Re-ingineering? - Reengineering is the fundamental rethinking and

redesign of business processes to achieve dramatic improvements in critical,
contemporary measures of performance, such as cost, quality, service and speed.
(Hammer & Champy, 1993)

BPR may or may not consist of:

• Automation
• Downsizing
• Outsourcing

But will definitely imply during the process, re-engineering and radical
transformations including drastic change of attitudes & behaviours. This process
will rebuild with people & technology focus and involve high investment

 What is a Process?

A specific ordering of work activities across time and space, with a beginning, an
end, and clearly identified inputs and outputs: a structure for action.

 What is a Business Process?

A group of logically related tasks that use the firm's resources to provide
customer-oriented results in support of the organization's objectives
 Why Reengineer?

This is because of the change of needs and attitudes of customers. Increasing

competition both local and global and evolutionary changes in the technologies

 Why Organizations Don’t Reengineer?

This is usually because of the complacency that has set in. Some times political
and internal resistance faced also plays an important role. This opposition is
usually because of fear of unknown and failure.

Key Characteristics of BPR:

a) Radical Improvements of:

b) Cost
c) Quality
d) Service
e) Speed

b) Changes in philosophies of business.

c) Global Perspective on Business Processes
d) Shift in focus to end-customers - Process improvements must relate to the
needs of the organization and be relevant to the end-customers to which
they are designed to serve
e) BPR Initiatives must add-value over and above the existing process
f) The change envisaged must be viable and practical and realistic
g) Yet in the same time it should be people-centred. There should be
empowerment & participation of all internal stake holders and the
organizational culture must benefit from the same.
 Implementing a BPR Strategy

Select The Process & Appoint Process Team

Understand The Current Process

Develop & Communicate Vision of Improved Process

Identify Action Plan

Execute Plan

Fig 21.1 A

Summary:
Lecture 22

Objectives:

4. To understand the concept of CRM

5. To study its relevance in the modern organisation

Main Lecture:

Introduction:

Customer-focused business is one of the top business strategies that can be

supported by information technology. Many companies are implementing
customer relationship management (CRM) business initiatives and information
systems as part of a customer-focused or customer centric strategy to improve
their chances for success in today‘s competitive business environment.

22.1 What is CRM?

 CRM is described as a cross-functional e-business application that integrates

and automates many customer-serving processes in sales, direct marketing,
accounting and order management, and customer service and support.
 CRM systems create an IT framework that integrates all the functional
processes with the rest of a company‘s business operations.
 CRM systems consist of a family of software modules that perform the
business activities involved in such front office processes.
 CRM software provides the tools that enable a business and its employees to
provide fast, convenient, dependable, and consistent service to its customers.

Why E-CRM ?

 It costs six times more to sell to a new customer than to sell to an existing one.
 A typical dissatisfied customer will tell eight to ten people about his or her
experience.
 A company can boost its profits 85 percent by increasing its annual customer
retention by only 5 percent.
 The odds of selling a product to a new customer are 15 percent, whereas the
odds of selling a product to an existing customer are 50 percent.
Contract and Account Management
CRM software helps sales, marketing, and service professionals capture and track
relevant data about every past and planned contact with prospects and customers,
as well as other business and life cycle events of customers.

Sales
CRM software tracks customer contacts and other business and life cycle events of
customers for cross-selling and up-selling.

Marketing and Fulfilment

CRM software can automate tasks such as qualifying leads, managing responses,
scheduling sales contacts, and providing information to prospects and customers.

Customer Service and Support

CRM helps customer service managers quickly create, assign, and manage service
requests. Help desk software assists customer service reps in helping customers
whom are having problems with a product or service, by providing relevant
service data and suggestions for resolving problems.

Examples of business benefits of customer relationship management include:

 CRM allows a business to identify and target their best customers; those who
are the most profitable to the business, so they can be retained as lifelong
customers for greater and more profitable services.
 CRM enables real-time customization and personalization of products and
services based on customer wants, needs, buying habits, and life cycles.
 CRM can keep track of when a customer contacts the company, regardless of
the contact point.
 CRM enables a company to provide a consistent customer experience and
superior service and support across all the contact points a customer chooses.

The Three Phases of CRM:

CRM can be viewed as an integrated system of Web-enabled software tools and

databases accomplishing a variety of customer-focused business processes that
support the three phases of the relationship between a business and its customers.
 Acquire – a business relies on CRM software tools and databases to help it
acquire new customers by doing a superior job of contract management, sales
prospecting, selling, direct marketing, and fulfilment.
o The goal of these CRM functions is to help customers perceive the
value of a superior product offered by an outstanding company.
 Enhance – Web-enabled CRM account management and customer service and
support tools help keep customers happy by supporting superior service from a
responsive networked team of sales and service specialists and business
partners. CRM sales force automation and direct marketing and fulfilment
tools help company‘s cross-sell and up-sell to their customers, thus increasing
their profitability to the business.
o The value perceived by customers is the convenience of one-stop
shopping at attractive prices.

 Retain – CRM analytical software and databases help a company proactively

identify and reward its most loyal and profitable customers to retain and
expand their business via targeted marketing and relationship marketing
programs.
o The value perceived by customers is of a rewarding personalized
business relationship with ―their company‖.

CRM Failures:
 Major reason for the failure of CRM systems is the lack of understanding and
preparation.

Trends in CRM:

Four types or categories of CRM that are being implemented by many companies
today include:
 Operational CRM – most businesses start out with operational CRM systems
such as sales force automation and customer service centres.

 Analytical CRM – analytical CRM applications are implemented using several

analytical marketing tools, such as data mining, to extract vital data about
customers and prospects for targeted marketing campaigns.

 Collaborative CRM – CRM systems to involve business partners as well as

customers in collaborative customer service.

 Portal-based CRM – Internet, intranet, and extranet Web-based CRM portals as

a common gateway for various levels of access to all customer information, as
well as operational, analytical, and collaborative CRM tools for customers,
employees, and business partners.
Summary:

Increasingly, businesses are moving to collaborative CRM systems, to involve

business partners as well as customers in collaborative customer services. This
includes systems for customer self-service and feedback, as well as partner
relationship management (PRM) systems.
Lecture 23

Objectives:

1 To study Enterprise Resource Planning as the business backbone

Introduction

Enterprise Resource Planning (ERP) systems serve as a cross-functional enterprise

backbone that integrates and automates many internal business processes and
information systems within the manufacturing, logistics, distribution, accounting,
finance, and human resource functions of a company.

23.1 Enterprise resource planning (ERP)

 ERP software is a family of software modules that supports the business
activities involved in vital back-office processes.
 ERP gives a company an integrated real-time view of its core business
processes.
 ERP systems track business resources, and the status of commitments made by
the business no matter what department has entered the data into the system.
 ERP software suites typically consist of integrated modules of manufacturing,
distribution, sales, accounting, and human resource applications.

Benefits and Challenges of ERP

 Quality and efficiency – ERP creates a framework for integrating and

improving a company‘s internal business processes that results in significant
improvements in the quality and efficiency of customer service, production,
and distribution.

 Decreased costs – many companies report significant reductions in transaction

processing costs and hardware, software, and IT support staff compared to the
non-integrated legacy systems that were replaced by their new ERP systems.

 Decision support – ERP provides vital cross-functional information on

business performance quickly to managers to significantly improve their ability
to make better decisions in a timely manner across the entire business
enterprise.
 Enterprise agility – ERP can be used in breaking down many former
departmental and functional walls, which results in more flexible
organizational structures, managerial responsibility, and work roles. The result
is a more agile and adaptive organization and workforce that can more easily
capitalize on new business opportunities.

The Cost of ERP

 Costs and risks involved in implementing ERP are considerable.
 Hardware and software costs are a small part of the total costs. The costs of
developing new business processes (reengineering) and preparing employees
for the new system (training and change management) make up the bulk of
implementing a new ERP system.
 Converting data from previous legacy systems to the new cross-functional ERP
system is another major category of ERP implementation costs.

Causes of ERP Failures

 Business managers and IT professionals underestimate the complexity of the
planning, development, and training that are needed to prepare for a new ERP
system that would radically change their business processes and information
systems.
 Failure to involve affected employees in the planning and development phases
and change management programs
 Trying to do too much, too fast in the conversion process.
 Insufficient training in the new work tasks required by the ERP system.
 Failure to do enough data conversion and testing.
 Over-reliance by company or IT management on claims of ERP software
vendors or the assistance of prestigious consulting firms hired to lead the
implementation.

Trends in ERP

Four major developments and trends that are evolving in ERP applications
include:
 ERP software packages are gradually being modified into more flexible
products.
 Due to the growth of the Internet, corporate intranets and extranets, software
companies are prompted to use Internet technologies to build Web interfaces
and network capabilities into ERP systems.
 Development of inter-enterprise ERP systems that provide Web-enabled links
 between key business systems of a company and its customers, suppliers,
distributors, and others.
 ERP software companies have developed modular, Web-enabled software
suites that integrate ERO, customer relationship management, supply chain
management, procurement, decision support, enterprise portals, and other
business applications and functions.
Lecture 24

Objectives:
a) To study Supply Chain Management as a vital business network

Main Lecture:

Introduction

Fundamentally, supply chain management helps a company get the right products
to the right place at the right time, in the proper quantity and at an acceptable cost.
The goal of SCM is to efficiently manage this process by forecasting demand;
controlling inventory; enhancing the network of business relationships a company
has with customers, suppliers, distributors, and others; and receiving feedback on
the status of every link in the supply chain. To achieve this goal, many companies
today are turning to Internet technologies to Web-enable their supply chain
processes, decision-making, and information flows.

What is SCM?

Supply chain management is a cross-functional inter-enterprise system that uses

information technology to help support and manage the links between some of a
company‘s key business processes and those of its suppliers, customers, and
business partners. The goal of SCM is to create a fast, efficient, and low-cost
network of business relationships, or supply chain, to get a company‘s products
from concept to market.

According to the Advanced Management Council, supply chain management has

three business objectives:
 Get the right product to the right place at the least cost.
 Keep inventory as low as possible and still offer superior customer service.
 Reduce cycle times. Supply chain management seeks to simplify and
accelerate operations that deal with how customer orders are processed through
the system and ultimately filled, as well as how raw materials are acquired and
delivered for manufacturing processes.

A large part of the functioning of SCM is with the incorporation of EDI

(Electronic Data Interchange)
Electronic Data Interchange

Electronic data interchange (EDI) involves the electronic exchange of business

transaction documents over the Internet and other networks between supply chain
trading partners (organizations and their customers and suppliers). Data
representing a variety of business transaction documents are electronically
exchanged between computers using standard document message formats.
Characteristics of EDI software include:
 EDI software is used to convert a company‘s own document formats into
standardized EDI formats as specified by various industry and international
protocols.
 Formatted transaction data are transmitted over network links directly between
computers, without paper documents or human intervention.
 Besides direct network links between the computers of trading partners, third-
party services are widely used.
 EDI eliminates the printing, mailing, checking, and handling by employees of
numerous multiple-copy forms of business documents.

Benefits of the business use of EDI include:

 Reduction in paper, postage, and labour costs
 Faster flow of transactions as formatted transaction data are transmitted over
network links directly between computers, without paper documents or human
intervention.
 Reductions in errors
 Increases in productivity
 Support of just-in-time (JIT) inventory policies
 Reductions in inventory levels
 Value-added network companies offer a variety of EDI services. They can
offer secure, lower cost EDI services over the Internet.
 Smaller businesses can now afford the costs of EDI services.

Benefits and Challenges of SCM

Major business benefits that are possible with effective supply chain management
systems include:
 Faster, more accurate order processing, reductions in inventory levels, quicker
time to market, lower transaction and materials costs, and strategic
relationships with suppliers.
 Companies can achieve agility and responsiveness in meeting the demands of
their customers and the needs of their business partners.
Major business challenges include:
 Lack of proper demand planning knowledge, tools, and guidelines.
 Inaccurate or overoptimistic demand forecasts will cause major production,
inventory, and other business problems, no matter how efficient the rest of the
supply chain management process is constructed.
 Inaccurate production, inventory, and other business data provided by a
company‘s other information systems are frequent causes of SCM problems.
 Lack of adequate collaboration among marketing, production, and inventory
management departments within a company, and with suppliers, distributors,
and others.
 SCM software tools are considered to be immature, incomplete, and hard to
implement by many companies who are installing SCM systems.

Stages in SCM

Three possible stages in a company‘s implementation of SCM systems:

 First stage – a company concentrates on making improvements to its internal
supply chain process and its external processes and relationships with suppliers
and customers.
 Second stage – a company accomplishes substantial supply chain management
applications by using selected SCM software programs internally, as well as
externally via intranet and extranet links among suppliers, distributors,
customers, and other trading partners.
 Third stage – company begins to develop and implement cutting-edge
collaborative supply chain management applications using advance SCM
software, full-service extranets links, and private and public e-commerce
exchanges.
Lecture 25 / Tutorial 5

Objectives:

3. To summarize the module

4. To discuss problems and doubts if necessary
5. To discuss a case study

Summary

● Customer Relationship Management: The Business Focus. Customer

relationship management is a cross-functional enterprise system that integrates and
automates many of the customer-serving processes in sales, marketing, and
customer services that interact with a company‘s customers. CRM systems use
information technology to support the many companies who are reorienting
themselves into customer-focused businesses as a top business strategy. The
major application components of CRM include contact and account management,
sales, marketing and fulfillment, customer service and support, and retention and
loyalty programs, all aimed at helping a company acquire, enhance, and retain
profitable relationships with its customers as a primary business goal. However,
many companies have found CRM systems difficult to implement properly due to
lack of adequate understanding and preparation by management and affected
employees. Finally, many companies are moving toward collaborative CRM
systems that support the collaboration of employees, business partners, and the
customers themselves in enhancing profitable customer relationships.

● Enterprise Resource Planning: The Business Backbone. Enterprise resource

planning is a cross-functional enterprise system that integrates and automates
many of the internal business processes of a company, particularly those within
the manufacturing, logistics, distribution, accounting, finance, and human resource
functions of the business. Thus, ERP serves as the vital backbone information
system of the enterprise, helping a company achieve the efficiency, agility, and
responsiveness required to succeed in a dynamic business environment. ERP
software typically consists of integrated modules that give a company a real-time
cross-functional view of its core business processes, such as production, order
processing, and sales, and its resources, such as cash, raw materials, production
capacity, and people. However, properly implementing ERP systems is a difficult
and costly process that has caused serious business loses for some companies, who
underestimated the planning, development, and training that were necessary to
reengineer their business processes to accommodate their new ERP systems.
However, continuing developments in ERP software, including Web-enabled
modules and e-business software suites, have made ERP more flexible and user-
friendly, as well as extending it outward to a company‘s business partners.
● Supply Chain Management: The Business Network. Supply chain
management is a cross-functional inter-enterprise system that integrated and
automates the network of business processes and relationships between a company
and its suppliers, customers, distributors, and other business partners. The goal of
SCM is to help a company achieve agility and responsiveness in meeting the
demands of their customers and needs of their suppliers, by enabling it to design,
build, and sell its products using a fast, efficient, and low cost network of business
partners, processes, and relationships, or supply chain. SCM is frequently
subdivided into supply chain planning applications, such as demand and supply
forecasting, and supply chain execution, such as inventory management, logistics
management, and warehouse management. Developing effective supply chain
systems and achieving the business goals of SCM has proven to be a complex and
difficult challenge for many firms. But SCM continues to be a major concern and
top e-business initiative as companies increase their use of Internet technologies to
enhance integration and collaboration with their business partners, and improve
the operational efficiency and business effectiveness of their supply chains.

Case Study:

Agilent Technologies and Russ Berrie: Challenges of Implementing ERP

Systems

The good news is that Agilent Technologies Inc. (www.agilent.com) says its
enterprise resource planning applications are stable. The bad news is they got that
way only after a rocky ERP migration project that cost the company $105 million
in revenue and $70 million in profits. In mid-August 2002, the multinational
communications and life sciences company, formerly a part of Hewlett-Packard
Co., said problems with the ERP components in Oracle‘s e-Business Suite 11e
software froze production for the equivalent of a week, leading to the massive
losses. The Oracle system handles about half of the company‘s worldwide
production of test, measurement, and monitoring products and almost all of its
financial operations, as well as functions such as order handling and shipping.
Agilent was in the process of migrating as many as 2,200 legacy applications that
it inherited from HP to Oracle. As part of the switchover, approximately 6,000
orders in the internally developed legacy systems had to be converted to an
Oracle-friendly format, an Agilent spokeswoman said from company headquarters
in Palo Alto, California. She said the configuration process had problems requiring
correction. In a statement last week, Agilent President and CEO Ned Barnholt said
the disruptions to the business after implementing the ERP system were ―more
extensive than we expected.‖ An Agilent spokeswoman said the issue wasn‘t the
quality of the Oracle application, but rather the ―very complex nature of the
enterprise resource planning implementation.‖ For its part, Oracle Corp. said it‘s
working closely with Agilent. ―At Oracle, we are fully committed to all of our
customers for the long haul and support them in any way necessary,‖ the company
said in a statement. ―We have a strong relationship with Agilent, and both
companies believe the implementation is stable.‖ Agilent also had a takeaway
lesson: ―Enterprise resource planning implementations are a lot more than
software packages,‖ the company said in a statement. ―They are a fundamental
transformation of a company‘s business processes. People, processes, policies, the
company‘s culture are all factors that should be taken into consideration when
implementing a major enterprise system.‖ According to one analyst, ERP disasters
are often caused by the user company itself. Joshua Greenbaum, an analyst at
Enterprise Applications Consulting, said 99 percent of such rollout fiascoes are
caused by ―management‘s inability to spec out their own requirements and the
implementer‘s inability to implement those specs.‖ Russ Berrie and Co. After a
three-year saga that included a $10.3 million financial hit from the failed
installation of packaged applications, teddy bear maker Russ Berrie and Co.
(www.russberrie.com) was taking another crack at replacing its legacy business
systems. The Oakland, New Jersey–based distributor of toys and gifts finalized
plans to roll out J. D. Edwards & Co.‘s OneWorld Xe suite of enterprise resource
planning (ERP), customer relationship management, and financial applications.
The multimillion-dollar project was scheduled to be done in phases over the next
18 months. Russ Berrie CIO Michael Saunders said that the company, which had
sales of $225 million during the first nine months of 2001, hoped the OneWorld
System would help it reach $1 billion in annual revenue in the coming years.
Within the next 12 months, he said, Russ Berrie planned to begin installing the
applications one department at a time, starting with a stand-alone implementation
in purchasing. ―We‘re not going big bang,‖ Saunders said. ―We‘re mitigating
implementation risks by taking a phased-in approach.‖ The company had reason to
be cautious. Three years before, a Y2K-related migration from its homegrown
distribution, financial, and customer service systems to packaged ERP applications
experienced major system failures. Saunders said the problems were severe
enough for Russ Berrie to take many of the new applications off-line and return to
their old systems. Saunders wouldn‘t identify the software vendors that were
involved in the failed implementation, but sources said that SAP AG‘s
applications were part of the 1999 project. A spokesman at SAP confirmed that
Russ Berrie was one of its customers, but he declined to offer further details
because of pending litigation between the two companies. Joshua Greenbaum of
Enterprise Applications Consulting said it appeared that Russ Berrie ―bit off more
than they could chew‖ on the 1999 project. Companywide rollouts are especially
risky for midsize businesses like Russ Berrie, Greenbaum said.
Case Study Questions
1. What are the main reasons companies experience failures in implementing ERP
systems?
2. What are several key things companies should do to avoid ERP systems
failures? Explain the reasons for your proposals.
3. Why do you think ERP systems in particular are often cited as examples of
failures in IT systems development, implementation, or management?

(Source: Adapted from Marc Songini, ―ERP Effort Sinks Agilent Revenue,‖
Computerworld, August 26, 2002, pp. 1, 12; and Marc Songini, ―Teddy Bear
Maker Prepares for Second Attempt at ERP Rollout,‖ Computerworld, February 4,
2002, p. 16. )
Objective Type of Questions:

True or False

1
Today, it is not easy for customers to compare, shop and, with a click of the
mouse, to switch companies. As a result, customer relationships have become a
company's most valued asset.
A) True
B) False

2
Managing the full range of the customer relationship involves two related
objectives. One of those objectives is to provide the organization and all of its
customer-facing employees with a single, complete view of every customer at
every touch point and across all channels. The other is to provide the customer
with multiple views of the company and its extended channels.
A) True
B) False

3
Customer relationship management (CRM) improves a company's customer
focus by assisting in the fulfillment of and customer responses and requests by
quickly scheduling sales contacts and providing appropriate information on
products and services to sales representatives, while capturing relevant
information for the CRM database.
A) True
B) False

4
The business benefits of customer relationship management are not guaranteed
and have proven elusive at many companies.
A) True
B) False
5
Enterprise resource planning systems serve as a cross-functional enterprise
backbone that integrates and automates many internal business processes and
information systems within the manufacturing, logistics, distribution,
accounting, finance, and human resource functions of a company.
A) True
B) False

6
Despite its many benefits, ERP can not give a company an integrated real-time
view of its core business processes, such as production, order processing, and
inventory management.
A) True
B) False

7
Many companies have found major business value in their use of ERP in
decision support. ERP provides vital cross-functional information on business
performance quickly to managers to significantly improve their ability to make
better decisions in a timely manner across the entire business enterprise.
A) True
B) False

8
Converting data from previous legacy systems to the new cross-functional ERP
system is not a major category of ERP implementation costs.
A) True
B) False
 9
Failure to involve affected employees in the planning and development phases
is a typical cause of failed ERP projects.
A) True
B) False

10
Fundamentally, value chain management helps a company get the right
products to the right place at the right time, in the proper quantity and at an
acceptable cost.
A) True
B) False

Submit Answ ers

Fill in the Blanks

1
The primary business value of customer relationships today is unquestionable.
Thus, companies emphasize becoming customer-focused as one of the top
business that can be supported by information technology.

2
Companies are turning to customer relationship management (CRM) to improve
their focus. CRM assists in the fulfillment of customer
responses and requests by quickly scheduling sales contacts and providing
appropriate information on products and services to sales representatives, while
capturing relevant information for the CRM database.

3
The potential business benefits of customer relationship management (CRM) are
many. For example, CRM allows a business to identify and target their best
customers—those who are the most profitable to the business—so they can be
retained as lifelong customers for greater and
more services.

4
CRM systems implementations involve business partners as
well as customers in collaborative customer services. This includes systems for
customer self-service and feedback, as well as partner relationship management
systems.

5
resource planning software suites typically consist of
integrated modules of manufacturing, distribution, sales, accounting, and human
resource applications. Examples of manufacturing processes supported are
material requirements planning, production planning, and capacity planning.
6
Supply chain management applications let companies see—
in real-time, or as close as possible— if their existing supply chain management
(SCM) systems are working.

Submit Answ ers

Customer relationships are

worth more than the
company's products, stores,
factories, web addresses, and
even employees. Every
company's strategy should
address which of the
following?
A) How to retain the most profitable customers
possible.
B) How to find the most profitable customers.
C) Both A and B.
D) Neither A nor B.

2
_____________ software assists customer service reps in helping
customers who are having problems with a product or service, by
providing relevant service data and suggestions for resolving problems.
A) Call center
B) Help desk
C) Sales force automation
D) Customer management
3
Three phases of customer relationship management are acquire, enhance,
and retain. In the _______ phase, a business relies on CRM software tools
and databases to help the company proactively identify and reward its
most loyal and profitable customers to retain and expand their business via
targeted marketing and relationship marketing programs.
A) Acquire
B) Enhance
C) Retain
D) All of the above

4
ERP systems can generate significant business benefits for a company.
Many companies have found major business value in their use of ERP in
several basic ways in quality and efficiency, decreased costs, decision
support, and enterprise agility. Which of the following are found through
decreased costs?
A) ERP creates a framework for integrating
and improving a company's internal
business processes that result in significant
improvements in the quality and efficiency
of customer service, production, and
distribution.
B) Many companies report significant
reductions in transaction processing costs
and hardware, software, and IT support
staff compared to the nonintegrated legacy
systems that were replaced by their new
ERP systems.
C) ERP provides vital cross-functional
information on business performance
quickly to managers to significantly
improve their ability to make better
decisions in a timely manner across the
entire business enterprise.
D) Implementing ERP systems breaks down
many former departmental and functional
walls or "silos" of business processes,
information systems, and information
resources. This results in more flexible
organizational structures, managerial
responsibilities, and work roles, and
therefore a more agile and adaptive
organization and workforce that can more
easily capitalize on new business
opportunities.

Submit Answ ers

Module VI: Introduction to SAD
System Analysis and Design. Models and Approaches of Systems Development.

Objectives:

1. To understand the use of systems development process as problem-solving

framework to help propose information systems solutions to simple
business problems.
2. To describe and give examples to illustrate how you might use each of the
steps of the systems development cycle to develop and implement a
business information system.
3. To explain how prototyping improves the process of systems development
for end users and IS specialists.
4. To identify the activities involved in the implementation of new
information systems.
5. To describe several evaluation factors that should be considered in
evaluating the acquisition of hardware, software, and IS services.
6. To understand the various change management solutions for end user
resistance to the implementation of new information systems.

Introduction:

In organizations of today the systems approach to problem solving is applied for

the development of information systems solutions to business problems, e-
business systems and thus applications can be developed that meet the business
needs of a company and its employees and stakeholders.

System Analysis and Design is a problem solving technique that uses a systems
orientation to define problems and opportunities and develop solutions.

There are various approaches and models of implementation of the system so

designed. Change management forms an important step of the implementation
process so that all stake holders are satisfied with the new system.
Lecture 26

Objectives:

1 To understand the concept of System Analysis and Design.

2 To list out its main constituent activity.

Main Lecture:

THE SYSTEMS DEVELOPMENT CYCLE:

The Systems Development Cycle. Business end users and IS specialists may use a
systems approach to help them develop information system solutions to meet
business opportunities. This frequently involves a systems development cycle
where IS specialists and end users conceive, design, and implement business
systems. It is an iterative and step by step procedure of analyzing a problem and
formulating a solution involving the following interrelated activities:

1 Recognize and define a problem or opportunity using systems thinking

2 Develop and evaluate alternative system solutions
3 Select the system solution that best meets your requirements
4 Design the selected system solution
5 Implement and evaluate the success of the designed system

Starting the Systems Development Process

The first step in the systems development process is the systems investigation
stage. This step may involve consideration of proposals generated by an e-
business planning process. The investigation stage also includes the preliminary
study of proposed information system solutions to meet a company‘s e-business
priorities and opportunities.

The three steps of the systems investigation stage involve:

 Determining how to address e-business opportunities and priorities.

 Conducting a feasibility study to determine whether a new or improved e-
business system is a feasible solution.
 Developing a project management plan and obtaining management approval.
Feasibility Studies:
Because the process of developing can be costly, the systems investigation stage
frequently requires a preliminary study called a feasibility study. A feasibility
study is a preliminary study, where the information needs of prospective users and
the resource requirements, costs, benefits, and feasibility of a proposed project are
determined.

Steps of a feasibility study:

 Gather information/data for a feasibility study.
 Formalize a written report including the preliminary specifications and a
developmental plan for the proposed system e-business application.
 Submit the report to management for approval.
 Begin system analysis (if management approves the recommendations of the
feasibility study).

The goal of feasibility studies is to:

 Evaluate alternative e-business systems solutions.
 Propose the most feasible and desirable e-business application for
development.

The feasibility of a system can be evaluated in terms of four major categories:

 Organizational Feasibility:
Focuses on how well a proposed system supports the e-business priorities of
the organization.

 Economic Feasibility:
Focuses on whether expected cost savings, increased revenue, increased
profits, and reductions in required investment, and other types of benefits will
exceed the costs of developing and operating a proposed system.

 Technical Feasibility:
Focuses on the reliabilities/capabilities of the hardware and software to meet
the needs of the proposed system, and whether they can be acquired or
developed in the required time.

 Operational Feasibility:
Focuses on the willingness and ability of the management, employees,
customers, suppliers, and others to operate, use, and support the proposed
system.
Cost/Benefit Analysis

Every legitimate solution will have some advantages or benefits, and some
disadvantages or costs. These advantages and disadvantages are identified when
each alternative solution is evaluated. This process is typically called cost/benefit
analysis.

 Tangible Costs: Tangible costs are costs and benefits that can be quantified
(e.g., cost of hardware and software, employee salaries, and other quantifiable
costs needed to develop and implement a solution).

 Intangible Costs: Intangible costs are costs and benefits that cannot be
quantified (e.g., loss of customer goodwill or employee morale caused by
errors and disruptions arising from the installation of a new system).

 Tangible Benefits: Tangible benefits are favourable results (e.g., decrease in

payroll costs caused by a reduction in personnel or a decrease in inventory
carrying costs caused by a reduction in inventory)

 Intangible Benefits: Intangible benefits are hard to estimate (e.g., better

customer service or faster and more accurate information for management).
Lecture 27

Objectives:
1 To study the components of system analysis
2 To study the tools employed for it
3 To study the concept of System Design

Main Lecture:

Systems Analysis

Systems analysis is an in-depth study of end user information needs, which

produces functional requirements that are used as the basis for the design of a new
information system. Systems analysis traditionally involves a detailed study of:
 The information needs of the company and the end users.
 The activities, resources, and products of any present information systems
being used.
 The information systems capabilities required to meet the information needs of
end users, and those of other e-business stakeholders that may use the system.

Organisational Analysis
Organisational analysis involves evaluating the organizational and
environmental systems and subsystems involved in any situation. Systems
analysis traditionally involves a detailed study of the organizations‘:
 Environment
 Management structure
 People
 Business activities
 Environmental systems it deals with
 Current information systems

Analysis of the Present System

Before designing a new system, a detailed analysis of the current system (manual
or automated) must be completed. An analysis of the present system involves
analyzing activities, resources, and the products. There is a need to analyze how
the present system uses its Hardware, software, people resources to convert data
resources into information products, such as reports and displays.

Document Analysis: This is a very crucial activity where all the documents are
studied to understand how the activities of input, processing, output, storage, and
control are being accomplished.
Functional Requirements Analysis
This step of systems analysis is one of the most difficult. Steps involve:
 IS analysts and end users work as a team to determine specific business
information needs.
 Determining the information processing capabilities required for each system
activity (input, processing, output, storage, and control) to meet the
information needs. Goal is to identify WHAT should be done NOT how to do
it.
 Develop functional requirements (information requirements that are not tied
to the hardware, software, network, data, and people resources that end users
presently use or might use in the new system).

Systems Analysis describes what a system should do to meet the information

needs of users.
System Design specifies how the system will accomplish this objective.

Systems Design:

Systems design consists of design activities, which produce systems specifications

satisfying the functional requirements developed in the systems analysis stage.
These specifications are used as the basis for:
 Software development
 Hardware acquisition
 System testing
 Other activities of the implementation stage

Systems design can be viewed as the design of three major products, or

deliverables that should result from the design stage. These activities include:
 User interface design
 Data design
 Process design

User Interface Design

User interface design focuses on supporting the interactions between end users and
their computer-based applications. Designer‘s concentrate on:
 The design of attractive and efficient forms of user input and output, such as
easy-to-use Internet or intranet web pages.
 Design is frequently a prototyping process, where working models or
prototypes of user interface methods are designed and modified several times
with feedback from end users.
 Design process produces detailed design specifications for information
products such as display screens, interactive user/computer dialogues, audio
responses, forms, documents, and reports.

Design tips to be kept in mind:

 Keep it simple.
 Keep it clean.
 Organize logically.

System Specifications
System specifications formalize the design of an application‘s user interface
methods and products, database structures, and processing and control procedures.
Therefore, systems designers will frequently develop hardware, software, network,
data, and personnel specifications for a proposed system. Systems analysts work
with the users so they can use their knowledge of their own work activities and
their knowledge of computer-based systems to specify the design of a new or
improved information system.

The final systems design typically specifies:

 Hardware resources (machines and media)
 Software resources (programs and procedures)
 Network resources (communications media and networks)
 People resources (end users and information systems staff).
 How resources will be used to convert data resources (stored in files and
databases they design) into information products (displays, responses, reports,
and documents).
Lecture 28
Objectives:
1 To study further stages of SDLC
2 To study the implementation process

Main Lecture:

End User Development

In end user development, IS professionals play a consulting role while the users
do application development. Sometimes a staff of user consultants may be
available to help with application development efforts. This may include:
 Training in the use of application packages
 Selection of hardware and software
 Assistance in gaining access to organization databases
 Assistance in analysis, design, and implementation

Focus on IS Activities:
End user development should focus on the fundamental activities of an
information system:
 Input
 Processing
 Output
 Storage
 Control

In analyzing a potential application, one should focus on:

 Output
- What information is needed and in what form should it be presented?

 Input
- What data are available, from what sources? And in what form?

 Processing
- What operations or transformation processes will be required to convert the
available inputs into the desired output?
- What software can best perform the operations required?

 Storage
- Does the application use previously stored data?
- Does it create data that must be stored for future use by this or other
applications?
 Control
- What controls are needed to protect against accidental loss or damage?
- Is there a need to control access to data used by the application?

Doing End User Development:

In end user development, business professionals can develop new or improved
ways to perform their jobs without the direct involvement of IS specialists. The
application development capabilities built into a variety of end user software
packages make it easier for many users to develop their own computer-based
solutions.

Implementing New Systems:

The implementation process for newly designed information systems involves a

variety of acquisition, testing, documentation, installation, and conversion
activities. It also involves the training of end users in the operation and use of the
new information system. Thus, implementation is a vital step in ensuring the
success of new systems. Implementation involves a variety of activities, which
include:
 Acquisition of hardware, software and services.
 Software development or modification.
 Testing of programs, procedures, and hardware.
 System documentation.
 Conversion
 End User training.

Evaluating Hardware, Software and Services

To evaluate and select hardware and software, computer-using organizations

typically:
 Require suppliers to present bids and proposals based on system specifications
developed during the design stage of systems development.
 Establish minimum acceptable physical and performance characteristics for all
hardware and software requirements.
 Government agencies and most large businesses use a document called an RFP
(request for proposal) or RFQ (request for quotation), which lists all the
required specifications.
 When several competing proposals for hardware or software acquisition need
to be evaluated, a scoring system may be used, giving a numerical score for
each of several evaluation factors. Each competing proposal is assigned
 points for each factor, depending on how well it meets the specifications of the
computer user.
 Hardware and software should be demonstrated and evaluated.
 Using special benchmark test programs and test data to evaluate proposed
hardware and software. Special software simulators may also be available that
simulate the processing of typical jobs on several computers and evaluate their
performances.
 Other users are frequently the best source of information needed to evaluate the
claims of manufacturers and suppliers. Good example: Internet newsgroups.

Hardware Evaluation Factors:

When evaluating computer hardware, one should investigate specific physical and
performance characteristics for each hardware component to be acquired. This is
true whether one is evaluating mainframes, microcomputers, or peripheral devices.
Hardware evaluation factors include:
 Performance
 Cost
 Reliability
 Compatibility
 Technology
 Ergonomics
 Connectivity
 Scalability
 Software
 Support

Software Evaluation Factors:

One should evaluate software according to many factors that are similar to those
used for hardware evaluation. Thus, the factors of performance, cost, reliability,
availability, compatibility, modularity, technology, ergonomics, and support
should be used to evaluate proposed software acquisition. In addition, however,
software evaluation factors should also include evaluating:
 Quality
 Efficiency
 Flexibility
 Security
 Connectivity
 Language
 Documentation
 Hardware
 Other factors (performance, cost, reliability etc.)
Evaluating IS Services:
Suppliers of hardware and software products and many other firms offer a variety
of IS services to end users and organizations. Some IS services which are
provided free or for a change include:
 e-commerce website development
 Installation or conversion of new hardware and software
 Employee training
 Hardware maintenance.

IS services can be outsourced to an outside company for a negotiated price. For

example:
 Systems integrators take over complete responsibility for an organization‘s
computer facilities when an organization outsources its computer operations.
 Systems integrators may assume responsibility for developing and
implementing large systems development projects that involve many vendors
and subcontractors.
 Value-added resellers (VARs) specialize in providing industry-specific
hardware, software, and services from selected manufacturers.
 Other services include systems design, contract programming, and consulting
services.

Evaluating IS services includes factors such as:

 Performance
 Systems development
 Maintenance
 Conversion
 Training
 Backup
 Accessibility
 Business position
 Hardware
 Software
Lecture 29

Objectives
1 To further study the implementation process

Other Implementation Activities

Testing, documentation, and training are keys to successful implementation of a

new e-business system.

Testing:
System testing may involve:
 Testing website performance
 Testing and debugging software
 Testing new hardware
 Review of prototypes of displays, reports, and other output
 Testing at every stage of the systems development process

Documentation:
Developing good user documentation is an important part of the implementation
process.
 Documentation serves as a method of communicating among the people
responsible for developing, implementing, and maintaining a computer-based
system.
 Documentation is extremely important in diagnosing errors and making
changes.
 Documentation involves developing:
1. Manuals for operating procedures 3. Sample forms
2. Sample data entry display screens 4. Sample reports

Training:
Training is a vital implementation activity. IS personnel must be sure that end
users are trained to operate a new e-business system or its implementation will
fail. Training may include:
 Activities such as data entry
 All aspects of the proper use of a new system
 Managers and end users must be educated in how the new technology impacts
the company‘s business operations and management.
 Training programs for specific hardware devices, software packages, and their
use for specific work activities.
Conversion Methods:
The initial operation of a new e-business system can be a difficult task. Such an
operation is usually a conversion process in which the personnel, procedures,
equipment, input/output media, and databases of an old information system must
be converted to the requirements of a new system. Four major forms of system
conversion include:
 Parallel Conversion: - Both the old and the new system are operated until the
project development team and end user management agrees to switch
completely over to the new system. It is during this time that the operations
and results of both systems are compared and evaluated. Errors can be
identified and corrected, and the operating problems can be solved before the
old system is abandoned.

 Phased Conversion: - Only parts of a new application or only a few

departments, branch offices, or plant locations at a time are converted. A
phased conversion allows a gradual implementation process to take place
within an organization.

 Pilot Conversion: - Where one department or other work site serves as a test
site. A new system can be tried out at this site until developers feel it can be
implemented throughout the organization.

 Plunge/Direct Cutover: - Using the system immediately and totally

abandoning the old system.

IS Maintenance:
Once a system is fully implemented and is being used in business operations, the
maintenance function begins. System maintenance is the monitoring, evaluating,
and modifying of operational e-business systems to make desirable or necessary
improvements. The maintenance function includes:
 A post-implementation review process to ensure that newly implemented
systems meet the e-business objectives established for them.
 Correcting errors in the development or use of the system. This includes a
periodic review or audit of a system to ensure that it is operating properly and
meeting its objectives.
 Making modifications to an e-business system due to changes in the business
organization or the business environment.
Summary:

The stages, activities, and products of the information systems development cycle
are summarized in Figure

Fig 29
 Systems investigation Product: Feasibility Study
 Systems analysis Product: Functional Requirements
 Systems design Product: Systems Specifications
 Systems implementation Product: Operational System
 Systems maintenance Product: Improved System
Lecture 30 / Tutorial 4

Objectives:
3. To discuss problems and doubts
4. To discuss a case study

Case Study
When Web-based self-service is good, it‘s really good. Customer satisfaction soars
and call center costs plummet as customers answer their own questions, enter their
own credit card numbers, and change their own passwords without expensive live
help. But when Web-based self-service is bad, it‘s really bad. Frustrated customers
click to a competitor‘s site or dial up your call center—meaning you‘ve paid for
both a self-service
website and for a call center, and the customer is still unhappy. A poorly designed
Web interface that greets self-service users with a confusing sequence of options
or asks them questions they can‘t answer is a sure way to force them to call a help
center. Blue Cross–Blue Shield. For Blue Cross–Blue Shield of Minnesota
(www.bluecrossmn.com), developing Web selfservice capabilities for employee
health insurance plans meant the difference between winning and losing several
major clients, including retailer Target, Northwest Airlines, and General Mills.
―Without it, they would not do business with us,‖ explains John Ounjian, CIO and
senior vice president of information systems and corporate adjudication services at
the $5 billion insurance provider. So when Ounjian explained to executives that
the customer relationship management (CRM) project that would enable Web-
based selfservice by client employees would cost $15 million for the
first two phases, they didn‘t blink. Blue Cross–Blue Shield also learned the
importance of
communicating with business units during the design phase of its Web self-service
system. Ounjian and his technical team designed screen displays that featured
drop-down
boxes that they thought were logical, but a focus group of end users that examined
a prototype system found the feature cumbersome and the wording hard to
understand. ―We had to adjust our logic,‖ he says, of the subsequent redesign.
AT&T Wireless. When AT&T Wireless Services (www. attws.com) began rolling
out its new high-bandwidth wireless networks, its self-service website required
customers to say whether their phones used the older Time Division Multiple
Access (TDMA) network or the newer, third-generation network. Most people
didn‘t know which network they used, only which calling plan they had signed up
for, says Scott Cantrell, e-business IT program manager at AT&T Wireless. So
AT&T had to redesign the site so the customer just enters his user ID and
password, ―and the application follows built-in rules to automatically send you to
the right website,‖ Cantrell says. According to Gartner Inc., more than a third of
all customers or users who initiate queries over the Web eventually get frustrated
and end up calling a help center to get their questions answered. Whether a self-
service application is aimed at external customers or internal users such as
employees, two keys to success remain the same: setting aside money and time for
maintaining the site, and designing flexibility into application interfaces and
business rules so the site can be changed as needed. CitiStreet. CitiStreet
(www.citistreetonline.com) is a global benefits services provider managing over
$170 billion in savings and pension funds and is owned by Citigroup and State
Street Corp. CitiStreet is using the JRules software development tool to make rules
changes in its benefits plan administration systems, many of them featuring Web-
based employee self-service. JRules manages thousands of business rules related
to client policies, government regulations, and customer preferences. Previously,
business analysts developed the required business rules for each business process,
and IT developers did the coding. But now analysts use JRules to create and
change rules, without help from developers, says Andy Marsh, CitiStreet‘s CIO.
―We‘ve effectively eliminated the detail design function and 80 percent of the
development function,‖ says Marsh. IT is involved in managing the systems and
platforms, but it‘s less involved in rules management, he says. The software helps
speed the development process for new business systems or features, says Marsh.
For example, it used to take CitiStreet six months to set up benefit plans for
clients; it now takes three months. CitiStreet can also react more quickly to market
changes and new government regulations. It has used the rules development
software to quickly revise business rules to accommodate the changes in pension
programs required by new legislation. And Marsh says that when a client company
recently added a savings plan to its benefits program, CitiStreet was able to easily
develop and implement changes with JRules.

Case Study Questions:

1. Why do more than a third of all Web self-service customers get frustrated and
end up calling a help center? Use the experiences of Blue Cross–Blue Shield and
AT&T Wireless to help you answer.

2. What are some solutions to the problems users may have with Web self-service?
Use the experiences of the companies in this case to propose several solutions.

3. Visit the websites of Blue Cross–Blue Shield and AT&T Wireless. Investigate
the details of obtaining an individual health plan or a new cell phone plan. What is
your appraisal of the self-service features of these websites? Explain your
evaluations.
Objective Type of Questions:

Q1 Feasibility study is a preliminary study that investigates the information

needs of ______________and the objectives, constraints, basic resource
requirements, cost/benefits of proposed projects.

Q2 Organizational feasibility studies how well a proposed information system

supports the objectives of an organization's _______________plan for
information systems.

Q3 User _________________ design is the system component closest to the

business end users and the one they most likely help design.

Q4 The database specification describes how to organize the company's

___________and access to that data.

Q5 Specifications is the product of the systems design stage. It is used to

determine _________________for hardware, software, hardware,
facilities, personnel, databases, and the user interface of a proposed
information system.

Q6 The implementation process for newly designed information systems

involves a variety of acquisition, testing, documentation, installation, and
conversion activities. It also involves the _____________ of end users in
the operation and use of the new information system.

Q7 __________________Testing involves testing hardware devices, testing

and debugging programs, and testing information-processing procedures.
Programs are tested using test data that attempt to simulate all conditions
that may arise during processing.

Q8 Documentation is the -------------------- of documents or information that

describes a computer program, information system, or required data
processing operations in the systems development process.
Q9 Plunge conversion is one of the major forms of ____________conversion,
where installation can be accomplished by a direct cutover to a newly
developed system.

Q10 The maintenance activity includes a post ___________ review process to

ensure that newly implemented systems meet the systems development
objectives established for them.

Q11 Business processes can be viewed as a system.

A) True
B) False

Q12 The traditional information systems development cycle has five steps that
are based on the stages of the systems approach. The feasibility
investigation step is used to determine how to address business
opportunities and priorities.
A) True
B) False

Q13 There are four major categories of feasibility studies that are part of the
systems development process. Of the four major categories, economic
feasibility focuses on how well a proposed information system supports the
objectives of the organization and its strategic plan for information systems.
A) True
B) False

Q14 The systems design stage of systems development focuses on three major
products or deliverables: user interface methods and products, information
structures, and hardware architecture.
A) True
B) False

Q15 It is important to remember that end user development should focus on the
fundamental activities of any information system: input, processing, output,
storage, and control. In analyzing a potential application, you should focus
first on the input to be supplied to the application and the storage
requirements of that input.
A) True
B) False
Q16 When evaluating and selecting hardware suppliers, many organizations
formalize specific requirements by listing them in a document called an
RFP (request for proposal). However, these same organizations do not use
an RFP for selecting software vendors because most organizations purchase
software directly from manufacturers.
A) True
B) False

Q17 When training employees on a computerized application, the training may

involve activities such as data entry, or it may involve all aspects of the
proper use of a new system.
A) True
B) False