importance of information systems

Importance of Information Systems

•Necessary for Decision Making•For Taking Rational, Timely & Accurate Decisions•For Taking decisions in Complex Decision situations•Globalization & Liberalization have added various dimensions that necessitate use of Information Systems•IS is regarded as the fifth important resource besides- Money, Material, Men & Machine.

•In short Today’s business organizations can’t survive and grow without properly planned, designed, implemented and maintained Information System.

What is Management Information System

Management Information Information System is composed of three parts1. Management2. Information 3. System

Management may be defined as ‘The art of getting things done through and with the people in formally organized groups.

A Manager gets the things done by performing different functions in a SYSTEMATIC way and these are

• Planning• Organizing• Staffing• Directing• Controlling

There are broadly three levels of Management Hierarchy •Top Management( Strategic Planning)•Middle Management( Management control)•Operating Management ( Operational control)

TopManagement

MiddleManagement

OperatingManagement

Strategic Planning•Policies•Plans•Budgets•Objectives

Management control•Revenue•Costs•Profits•Schedules•Measurements

Operational control•Goods•Services•Performance

Management Hierarchy

Information

• One of the Most valuable resource required by the management in order to run the organization.

•Information is the data that is processed and presented in the form that assists in decision making.

Data Processing Information

• Concept of data & Information is a relative one. Information for one may be data for Another. e.g. Withdrawal slip in a bank is a information for data entry operator but data for the bank manager.

Information

Senior Management Operating Management

1. Unstructured

2. Non-Programmed

3. Futuristic

4. External & Internal

1. Structured

2. Programmed

3. Historical

4. Internal

5. Exact

Different layers of Management require different types of information

System• A System may be defined as a set of elements which are joined together to achieve a common objective.

• The set of elements for a system are:1. Input2. process3. Output4. Feedback/ Control5. Environment

Input Process Output

Feedback/Control

TYPES of INFORMATION SYSTEMSTwo Types:1. Manual Systems2. Computer- based Systems

2. Computer –based Information systems

A Computer based Information System consists of hardware, software, databases, telecommunications, people, and procedures that are configured to collect, manipulate, store, and process data into information.For example

•Company’s Payroll System,•Order Entry System•Inventory Control System

1. Manual Information SystemsInformation System is created, operated and managed in manual mode.

• Example: Inventory Register, Accounts Register/book.• Lacks functionalities of Information Technology.

MIS Defined

A Management Information system (MIS) is an organized collection of •People•Procedures•Software•Databases,and• Devices

that are used to provide routine information to managers and decision makers.

The System gathers data from internal and external sources Of the organization; processes it according to the procedure;And supplies Information to assist Manager in taking effective decisions in a speedy manner.

•The focus of MIS is primarily on Operational efficiency of resources. Marketing, production, Finance, and other functional areas are supported by Management Information systems and linked through a common database.

•Thus MIS is not a single system, rather it is an integrated system where subsystems fit into an overall design.

•Management Information Systems typically provide standard reports generated from the Transaction Processing Systems.

MIS

Nature & Scope of MIS

The discipline of MIS is interdisciplinary. It involves different domains like

•Accounting•Management•Computers•Organizations•Mathematics & Operations Research•Behavioral Sciences etc.

Management Information Systems

AccountingMathematics &

Operations ResearchComputer Science

Behavioral Sciences Management

Constituents of MISMIS constitutes of

• Hardware The computer equipment to perform input,

processing and output activities. E.g. CPU, monitor, keyboard, Printer, drives, tapes, communication devices, etc.

• SoftwareComputer programs that direct the operation of

the hardware. Software could be1. System software2. Application software

• DatabasesThe databases contain all data that is generated and used by application software.

• Telecommunications and Networks

• PeopleAnalysts, Programmers, System managers,

Computer Operators

Constituents of MIS (Contd.)

•Procedures

Procedures include the strategies, policies, methods, and rules for using the MIS.

Types of MISInformation Systems are developed around the functional areas of business like marketing, finance etc. and are also termed as Functional Information Systems.

These may be as •Financial Information System•Marketing Information System•Personnel Information System•Production Information System and so on.

Financial Information System

Financial Information System provides financial information to all financial managers within an organization and a broader set of people who need to make better decisions.

Financial MIS performs the following functions:•Makes financial data available on a timely basis to shorten analysis turnaround time.•Provides easy access to data for both financial and non-financial users, often through the use of corporate intranet .•Integrates financial an doperational information from multiple sources, including the Internet, into a single MIS.•Enables analysis of financial data along multiple dimensions- time, geography, product, plant , customer etc.•Analyzes historical and current financial activity.•Monitors and controls the use of funds over time.•For adhering to legal requirements

Financial MIS aids managers in:•Capital Budgeting Decisions•Financing decisions•Dividend decisions•Current asset management

Financial Information System ( Contd.)Financial MIS composes of the Inputs

1. Transaction Data: This data includes credit applications, billing, payment vouchers, stock transfers, cheques, journal and ledger entries etc.

2. Financial Intelligence : This data is collected from banks, government, stock markets, etc. which is processed to determine its impact on the company’s economy.

3. Organizational Plan: Another important input to Financial MIS, that portrays the objectives of the company. This needs to be reflected in the output of Financial MIS, which may be in the form of financial plans.

Some of the Financial MIS areTallyBMSIFPS

Marketing MIS

It is the MIS that supports managerial activities in marketing as product development, distribution, pricing decisions, and promotional effectiveness.

The Marketing MIS help managers in marketing activities of:• Customer Identification: who, when, where, in

what quantity, etc.• Purchase motivation factors: social, economical,

psychological factors of customers.• Physical distribution: optimum integration of

transportation, warehousing, merchandising.• Communication function: This function includes

decisions on advertising, personal selling, sales promotion, publicity, packaging etc.

• Transaction functions : Activities that transfer the title of ownership as order handling, invoicing, billing, credit management, policy & guarantee etc.

• Post transaction Function: Feedback, after sales service support etc.

Human Resource Management Information System

Human Resource MIS are concerned with activities related to employees and potential employees of the organization.

The HR functions that are facilitated by HRMIS are as:

•Manpower Planning•Staffing•Training & Development•Performance evaluation•Wage & Salary administration•Separation activities

Manufacturing Management Information System

Manufacturing or Production Information System provides information on production/ operation activities of an organization and thus facilitates the decision-making process of production managers of the organization.

Manufacturing MIS facilitate decision making in areas as:

•Product Design: CAD, CAE•Plant Location & Layout: •Production Planning & Control:Routing, Scheduling,

Loading•Quality Control:

Office Automation SystemOffice automation refers to the application of computer and communication technology to office functions.Office Automation systems improve productivity of managers at various levels of management by providing secretarial assistance and better communication facilities.

These systems include facilities for activities as • Typing• Mailing• Scheduling of meetings and conferences• calender keeping• retrieving documents• conferencing• Production of information( messages, memos,

reports), and so on

Office Automation Systems provide support facilities in form of:

•Word Processing•Electronic mail,•Message Switching,•Data Storage,•Data & Voice Communications.

MIS Characterstics

A Management Information System has the following Characterstics:

•Systems Approach MIS follows Systems approach i.e. MIS adopts

wholistic approach to the study of systems and its performance in the light of the objective of the MIS. It takes comprehensive view or complete look at the subsystems of the organization.

•Management OrientedMIS should be designed in Top-down approach.

MIS should be derived from the overall business plan.

•Need basedMIS should cater to specific information needs of

managers at different levels I.e. for strategic planning level, management control level, and operations control level.

•Exception BasedMIS should be on Exception based reporting

Principle and deviation should be reported to decision maker at the required level.

MIS Characterstics( Contd.)•Future Oriented

MIS should not merely provide past information but should provide information based on the future projections based on which manager may initiate suitable action.

•IntegratedMIS should blend information from different

departments or constitute of different possible subsystems of the organization.

•Long Term PlanningMIS designers should have future objectives and

needs of the company in mind.

•Common Data Flow & Central Database

Types of MISInformation Systems are developed around the functional areas of business like marketing, finance etc. and are also termed as Functional Information Systems.

These may be as •Financial Information System•Marketing Information System•Personnel Information System•Production Information System and so on.

Functional Business IS


Financial Information System provides financial information to all financial managers within an organization and a broader set of people who need to make better decisions.

Financial MIS performs the following functions:•Makes financial data available on a timely basis to shorten analysis turnaround time.•Provides easy access to data for both financial and non-financial users, often through the use of corporate intranet .•Integrates financial and operational information from multiple sources, including the Internet, into a single MIS.•Enables analysis of financial data along multiple dimensions- time, geography, product, plant , customer etc.•Analyzes historical and current financial activity.•Monitors and controls the use of funds over time.•For adhering to legal requirements

Financial MIS aids managers in:•Capital Budgeting Decisions•Financing decisions•Dividend decisions•Current asset management


Financial Information System ( Contd.)Financial MIS composes of the Inputs

1. Transaction Data: This data includes credit applications, billing, payment vouchers, stock transfers, cheques, journal and ledger entries etc.

2. Financial Intelligence : This data is collected from banks, government, stock markets, etc. which is processed to determine its impact on the company’s economy.

3. Organizational Plan: Another important input to Financial MIS, that portrays the objectives of the company. This needs to be reflected in the output of Financial MIS, which may be in the form of financial plans.


BusinessTransactions

Transaction ProcessingSystem

DatabaseOf ExternalData

DatabaseFromTPS

Datawarehouse

FINANCIAL MIS

•Sorted Data

•Forecasts

•Management Ratios

•Audit &Control

•Other Financial Decisions& Plans

•Financial DSS/EIS

Some of the Financial MIS are• Tally• BMS• IFPS


Marketing MIS

It is the MIS that supports managerial activities in marketing as product development, distribution, pricing decisions, and promotional effectiveness.

The Marketing MIS help managers in marketing activities of:• Customer Identification: who, when, where, in what quantity,etc.• Purchase motivation factors: social, economical,

psychological factors of customers.• Physical distribution: optimum integration of

transportation, warehousing, merchandising.• Communication function: This function includes

decisions on advertising, personal selling, sales promotion, publicity, packaging etc.

• Transaction functions : Activities that transfer the title of ownership as order handling, invoicing, billing, credit management, policy & guarantee etc.

• Post transaction Function: Feedback, after sales service support etc.

Marketing MIS

Marketing MIS

BusinessTransactions

•Internet

•CRM

TransactionProcessing System

DatabaseOf ExternalData

DatabaseFromTPS

Datawarehouse

MARKETING MIS

Marketing DSS

Marketing EIS

Marketing ES


Human Resource MIS are concerned with activities related to employees and potentiaal employees of the organization.

The HR functions that are facilitated by HRMIS are as:

•Manpower Planning•Staffing•Training & Development•Performance evaluation•Wage & Salary administration•Separation activities


Manufacturing or Production Information System provides information on production/ operation activities of an organization and thus facilitates the decision-making process of production managers of the organization.

Manufacturing MIS facilitate decision making in areas as:

•Product Design: CAD, CAE•Plant Location & Layout: •Production Planning & Control:Routing, Scheduling,

Loading•Quality Control:

Office Automation SystemOffice automation refers to the application of computer and communication technology to office functions.Office Automation systems improve productivity of managers at various levels of management by providing secretarial assistance and better communication facilities.

These systems include facilities for activities as • Typing• Mailing• Scheduling of meetings and conferences• calender keeping• retrieving documents• conferencing• Production of information( messages, memos,

reports), and so on

Office Automation Systems provide support facilities in form of:

•Word Processing•Electronic mail,•Message Switching,•Data Storage,•Data & Voice Communications.

Office Automation System

MIS Characterstics

A Management Information System has the following Characterstics:

•Systems Approach MIS follows Systems approach i.e. MIS adopts wholistic

approach to the study of systems and its performance in the light of the objective of the MIS. It takes comprehensive view or complete look at the subsystems of the organization.

•Management OrientedMIS should be designed in Top-down approach. MIS should

be derived from the overall business plan.

•Need basedMIS should cater to specific information needs of managers at

different levels I.e. for strategic planning level, management control level, and operations control level.

MIS Characterstics( Contd.)

•Exception BasedMIS should be on Exception based reporting Principle and

deviation should be reported to decision maker at the required level.

•Future OrientedMIS should not merely provide past information but

should provide information based on the future projections based on which manager may initiate suitable action.

•IntegratedMIS should blend information from different departments or

constitute of different possible subsystems of the organization.

•Long Term PlanningMIS designers should have future objectives and

needs of the company in mind.

•Common Data Flow & Central Database

Types of Information Systems

INFORMATION SYSTEMS

Operations Support Systems

Management Support Systems

Office Automation Systems

•TransactionProcessing Systems

•Enterprise Resource Planning Systems

•ManagementInformation Systems

•Decision Support Systems

•Executive InformationSystems

•Expert Systems

•Text Processing Systems

•Electronic DocumentManagement Systems

•Electronic Message Communication Systems

Operations Support Systems

The Operations Support Systems are the Information Systems that process the business transactions ,control industrial processes,and update company’s databases.

Such Systems don’t produce specific information that can be used by the managers.

The output of these Systems act as input for higher level systems. To generate useful information, further processing of output from these systems is required.

Enterprise Resource Planning Systems

A Single Information System that performs processing of all or most of the business transactions and has characterstics as

I) AutomationII) Integration.

The design of such system is specially made to incorporate all the processes of the company.( e.g. Marketing, Accounts, HR, Production etc are mapped in the ERP)

More complex in design, Implementation and Maintenance. It has a single database.

Decision Support Systems

Application of DSS:

For Inventory ManagementTo identify Customer buying patternsOptimizing discounts/price markdowns.Targeting direct- mail marketing customersStore locationEvaluation of Potential drilling sites.Flight Scheduling etc.

Web-Based Decision Support System

The DSS based on Web & Internet can support decision making,by providing online access to various databases and information pools along with the software for data analysis.

GE Plastics

Customer Decision Support Systems: In such DSS customers using web interface to self-serve using the DSS tools of the sponsoring company.

Fidelity InvestmentsHomes.com, etc.

Group Decision Support System

GDSS is an interactive computer based system to facilitate the solution of unstructured problems by a set of decision makers working together as a group.

While Groupware & video-conference tools provide a platform for communication in group decision, GDSS provides additionally the tools and technologies explicitly for group decision making.

Components of GDSS Hardware Software People

Group Decision Support System

GDSS software tools include:

Electronic questionnaireElectronic brainstorming toolsIdea OrganizerPrioritizing toolsGroup dictionariesStakeholder Identification &Analysis toolsPolicy Formation tools

Executive Information System

Executive Information Systems are IS that help senior management take decision in unstructured problem situations.

EIS find application in decision areas of: Monitor company performance Track activities of competitors Spot & foresee problems Identify opportunities Forecasting

EIS depend heavily on external sources of data like stock market, economic databases, news services etc. as well as on internal information.

EIS have highly flexible and user friendly input & output interfaces. They have drill-down options.

Knowledge Management System

Knowledge is the ability of person to understand the situation and act effectively.

•Competition & Market forces demand that organizations today can be competitive if they manage the knowledge and continuously upgrade as per changing requirements.

•Knowledge Management is the process of capturing, maintaining and updating continuously the company’s expertise both internal as well as external where-ever it resides- in computers, in peoples heads, on paper or thru external sources- and distributing efficiently wherever it can help produce the biggest payoff.


Knowledge Management Systems involve the tasks of

•definition, •acquisition, •construction, •storage, •delivery and •application of the knowledge so as to maintain and improve the competitiveness of the organization..

KMS ArchitectureKMS architecture deals with three main functions as :

•Knowledge Identification•Knowledge Generation•Knowledge Delivery

KMS

KnowledgeIdentification

KnowledgeGeneration

KnowledgeDelivery

•Definition &Categorization

•Surveying & Locating

•Build KnowledgeStructure

•Processing forAcquisition

•Manupulating &Modelling

Creation of KDB

•Access Control

•Application Methods

•Storage &Security

KMS ToolsThe tools for KMS are as:

Database management tools-For data management and seeking knowledge thru SQL queries

Data Warehousing, Data mart, Data Mining tools

Process Modeling and Management tools-For recording standard processes for knowledge use

Search Engine tools

Document Management tools-like Lotus Notes

Web based tools- Internet& Intranet

System Development For MIS

System Development includes the all activities of the development stages of any MIS solution. It includes activities as :

• Understanding the Management Problem• Deciding a Plan for a Solution• Coding the Planned Solution• Testing the Coded Program

System Development Stages

To develop any system, the project is managed by breaking the total development process into different sub activities or stages. These areas:

1. System Investigation2. System Analysis3. System Design4. System Construction5. System Implementation6. System maintenance

System Investigation

The organization may be facing any problem and the managers of the organization may not be very clear about the problem. The organization would in such case invite a business/system/ information analyst to help in defining and resolving the business problem in clear form.

System Investigation deals with this stage. The Investigation stage constitutes of two sub-stages

•Problem Definition•Feasibility

Problem Definition

One of the MOST IMPORTANT stages in the System Development Cycle but yet most neglected often. Tasks performed at this stage are

Prepare a written statement of the objectivesIdentify scope of ProblemDiscover the causes of Problems, etc.

For example some of the possible definition of Problems may be as •The existing system has a poor response time•Unable to handle load•Does not provide sufficient information •Problem of security, etc

Feasibility Study

Feasibility addresses the viability of the intended MIS would be useful for the organization. It is intended to assess the various alternatives and identify the most feasible and desirable system for development

.Feasibility is assessed in terms of the below categories:

1. Organizational Feasibility: The extent up to which the proposed MIS supports the strategic plans of the organization.

2. Economic Feasibility:

The costs and returns are evaluated to justify the

investment in the system project. The factors

evaluated are

• Cost of H/W, S/W, N/W, Cost of Full

System Investigation, Maintenance, etc

• Benefits in form of targeted objectives of MIS.

Feasibility Study

Feasibility Study

3. Technical Feasibility: It deals as with issues as whether hardware and software, capable of meeting the needs of the proposed system can be acquired or developed, in required time. It concerns regarding

•Does the necessary technology exist?

•Does the proposed equipment have the technical capacity to hold the data, provide response to enquiries, regardless of locations

•Can the system be expanded

•Technical surety of accuracy, reliability, ease of access, data security, etc.

Operational Feasibility

Operational Feasibility contains factors like management support and willingness, employees, customers, suppliers willingness to operate, and adopt the proposed system, etc.It includes

•Support from Management•Willingness of employees, Customers to adopt new system and business methods•Support from suppliers, vendors, external partners, etc.

•Involvement of users in system development•Meeting regulatory/legal requirement, etc.

Methods of System Preliminary Investigation

1. Reviewing Documents1. Conducting Interviews

System Analysis

System Analysis is the detailed study of various operations of the business system/activity, along with its boundaries.

The objective is to determine exactly what must be done to solve the problem.

System analysis involves detailed study of:

•Information needs of the organization and its end users.•Existing Information Systems( their activities, functions, resources, products)•The Expected Information System( expected capabilities)

System Design

System Analysis describes WHAT a MIS should do to meet information needs of organization and System Design specifies HOW the System will accomplish these objectives.

System design consists of activities as:

•Use Interface : Interactions between user and computer systems.

•Data Design: Focuses on structure of database

•Process Design: Programs and procedures of the MIS

System Construction

Once the system specifications are understood, required programs are coded, debugged, and documented.

System Testing

Testing done on new Systems, using test data. Feedback leads to improved System.

System Implementation

Even a well design System will fail if not implemented properly. It involves various activities as:

•Acquisition of H/W & S/W•Site preparation•User training•Installation of the System•Standardizing the new System in the organization.

System Maintenance

System maintenance involves the monitoring, evaluating and modifying the system to make desirable or necessary improvements and remove residual errors/shortcomings.

System Development Approaches

A System Development approach defines and guides how the system development activities are to be organized in the overall system development process. There are four most important system development approaches.

1. Waterfall Model or SDLC2. Prototyping Approach3. Rapid Application Development4. Spiral Model

Waterfall Model

This is also referred to as SDLC( Software Development Life Cycle) or Traditional approach .

This approach takes step-by -step approach to system development activities. Once one stage is completed , only then next stage is taken up. :

Waterfall Model(Contd.)Systems Investigation

Understand Problem

Systems Analysis

Understand Solution

Systems Design

Select & Plan Best Solution

Systems Implementation

Place solution into effect

Systems Maintenance & Review

Evaluate Results of Solution

Limitations:

1. Each stage is considered as distinct which may

not be in reality.

2. This model involves freezing of requirements for hardware.

However in large projects the hardware technology may

become obsolete.

3. Involves large documentation and time consuming

4. Users cant easily review the intermediate product and

evaluate whether it meets their requirements.

Prototype Model

In this approach a prototype is developed, instead of developing the complete system. Users are encouraged to try the prototype and provide feedback. Iterations are done until the final system is developed.

Prototyping is done in situations where identification of requirements is difficult and requirements may change during the development process.

Investigate & Analyze problem to develop workable solution

Develop Prototype

Put Prototype in operation

Refine and Modify Prototype

Complete System

System Development Initiated

Prototype ModelPrototype Model

Prototype Model(Contd.)

Advantages:1. Users can try the system and provide the constructive feedback during the development process.2 An operational prototype can be produced in short periods.3 Prototyping enables early detection of errors and omissions.4 Higher motivation & positive response from users.

Disadvantages:1. There may be unending refinements desired by users.2. System documentation is ignored3. Prototypes are not complete systems and many of the details are not built in the prototype.

Rapid Application Development

Rapid Application Dvelopment( RAD) employs tools, techniques and methodologies to speeded the application development processs. For example Powerbuilder by Sybase, and other tools by IBM, Oracle, etc. are used for RAD.

RAD reduces paper-based documentation, automatically generates program source code, and facilitates user participation in the design and development activities. Using RAD entire systems are developed in less than 6 months.

RAD is also known as Extreme Programming, Agile Development, Joint Application Development.

Rapid Application Development(Contd.)

Advantages:1. This approach completes the application in lesser time.2. Documentation produced a s a by-product of project tasks.3. RAD involves team work and lots of interaction between users and stakeholders with the system developers.

Disadvantages:1.This approach puts high pressure on system developers and other project participants.2. This approach requires system analysts and users to be skilled in RAD system development tools & techniques.3. RAD requires very high involvement & time of stakeholders and users affecting their routine functions.

Spiral Model

Developed by Boehm, this is the recent approach to System development. This model suggests that the various activities involved in system development should be organized like a spiral. Each cycle of spiral consists of four stages represented by one quadrant each. This approach is suitable for high-risk and large projects.

User Evaluation

Planning Risk Analysis

Engineering

Spiral ModelSpiral Model

System Analysis

System Analysis involves the identification, understanding and examining the system for achieving pre-determined goals/ objectives of the system.

The objectives of System Analysis are as:•To know how existing system works•To identify the user’s requirements in the new proposed System

System Analysis is the process of collecting and interpreting facts, identifying problems, and using the relevant information to suggest improvements in the system either through modifications in the existing systems or changing the system altogether.

System Analysis leads to Requirement Determination or Software Requirement Specification(SRS)

System Analysis

Software Requirements Specifications

SRS is the starting point of System Development Process. SRS constitutes of three activities

•Requirement Anticipation•Requirement Investigation•Requirement Specification

SRS leads to details on1. The basic process2. The data which is used or produced during the process3. Various constraints4. Performance controls

Software Requirements SpecificationsSoftware Requirements Specifications

Software Requirements Specifications ( Contd.)

The activities involved in SRS are as:

1. Understand the Process:asThe purpose of the business activity, The Steps which and

where are these performed; The persons performing them; The frequency, time and user of the resulting information.

2. Identify Data Used and Information Generated :

3. Determining Timing, Frequency and Volume

4. Know Performance Controls

Techniques of SRS

Interview

Questionnaire

Record Review

Observation


Knowledge is the ability of person to understand the situation and act effectively.

•Competition & Market forces demand that organizations today can be competitive if they manage the knowledge and continuously upgrade as per changing requirements.

•Knowledge Management is the process of capturing, maintaining and updating continuously the company’s expertise both internal as well as external where-ever it resides- in computers, in peoples heads, on paper or thru external sources- and distributing efficiently wherever it can help produce the biggest payoff.

Types of Knowledge

• Explicit Knowledge – data, documents, things written down or stored on computers

• Tacit Knowledge – the “how-tos” of knowledge, which reside in workers


Knowledge Management Systems involve the tasks of

•definition, •acquisition, •construction, •storage, •delivery and •application of the knowledge

so as to maintain and improve the competitiveness of the organization..

Levels of Knowledge Management

KMS ArchitectureKMS architecture deals with three main functions as :

•Knowledge Identification•Knowledge Generation•Knowledge Delivery

KMS

KnowledgeIdentification

KnowledgeGeneration

KnowledgeDelivery

•Definition &Categorization

•Surveying & Locating

•Build KnowledgeStructure

•Processing forAcquisition

•Manupulating &Modelling

Creation of KDB

•Access Control

•Application Methods

•Storage &Security

KMS ToolsThe tools for KMS are as:

Database management tools-For data management and seeking knowledge thru SQL queries

Data Warehousing, Data mart, Data Mining tools

Process Modeling and Management tools-For recording standard processes for knowledge use

Search Engine tools

Document Management tools-like Lotus Notes

Web based tools- Internet& Intranet

Strategy and Strategic Moves

• Strategy: plan to gain advantage over enemy

• Business strategy is plan to outperform competitors– Done by creating new opportunities, not only

beating rivals

• Strategic Advantage: Using strategy to maximize company strengths

Why Study Strategic IT?

• Technology is no longer an afterthought in forming business strategy, but the actual cause and driver.

• IT can change the way businesses compete.

Strategic View of Information Systems

• Information systems are vital competitive networks.

• Information systems are a means of organizational renewal.

• IS are a necessary investment in technologies that help a company adopt strategies and business processes that enable it to reengineer or reinvent itself in order to survive and succeed in today’s dynamic business environment.

What is IT?

A bunch of networks and computers

OR

Hardware plus the software that mediates and manages human knowledge or information

Does IT Matter?

How important is IT to GE?

– Business imperative

– Lifeblood for productivity

– 20% return on technology investments and GE invests $2.5 to $3 billion a year

Does IT Matter?

Paul Strassman, former CIO of General Foods, Xerox, Pentagon, and NASA

Information technology today is a knowledge-capital issue.

Look at the business powers – most of all Wal-Mart, but also companies like Pfizer or FedEx. They’re all waging information warfare.

Michael Dell, CEO of Dell Computers

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.

Concluding Remarks

Strategic Information Systems

Definition:

Any kind of information system that uses information technology to help an organization gain a competitive advantage, reduce a competitive disadvantage, or meet other strategic enterprise objectives.

Porter’s Competitive Forces Model

To survive and succeed, a business must develop and implement strategies to effectively counter the:

• Rivalry of competitors within its industry• Threat of new entrants into an industry and its

markets• Threat posed by substitute products which

might capture market share• Bargaining power of customers• Bargaining power of suppliers

Competitive Forces and Strategies

Initiative #1: Reduce Costs

• Customers want to pay little for service

• Reduce costs to lower price

• Automation greatly reduces costs

• Web can automate customer service

Initiative #2: Raise Barriers to Market Entrants

• Less competition is better for company• Raise barriers to entrants to lower

competition• Techniques include obtaining copyrights

and patents on inventions, techniques, and services

• Building unmatchable information systems blocks entrants

Initiative #3: Establish High Switching Costs

• Switching costs: incurred when customer stops buying from company and starts buying from another company– Explicit: charge customer for switching– Implicit: indirect costs over period of time

• High switching costs locks in customers

Initiative #4: Create New Products or Services

• Having unique product or service gives competitive advantage

• First mover: organization that is first to offer a new product or service– Superior brand name, better technology, more

experience

• Critical mass: body of clients that is large enough to attract other clients

Initiative #4: Create New Products or Services (continued)

EBay created a new service that established it as an industry leader

Initiative #5: Differentiate Products or Services

• Product differentiation: persuading customers that product is better than competitors’– Achieved through advertising– Exemplified by brand name success– Promotes brand name– Develop new IT features to differentiate

product and service

Initiative #5: Differentiate Products or Services (continued)

Google did not offer an original service, but the service has grown superior to other Web search services

Initiative #6: Enhance Products or Services

• Enhance existing products or services to increase value to consumer

• Many products and services have been enhanced by the Web

Initiative #6: Enhance Products or Services (continued)

Dell continues to enhance its service to maintain the competitive advantage of its online order site

Initiative #7: Establish Alliances

• Alliance: two companies combining services– Makes product more attractive– Reduces costs– Provides one-stop shopping

• Affiliate program: linking to other companies and rewarding the linker for click-throughs

Initiative #7: Establish Alliances (continued)

Strategic alliances combine services to create synergies

Initiative #8: Lock in Suppliers or Buyers

• Accomplished by achieving bargaining power

• Bargaining power: leverage to influence buyers and suppliers– Achieved by being major competitor or

eliminating competitors– Uses purchase volume as leverage

• Lock in clients by creating high standards

Value Chain Analysis

Input OutputProcess

ADDED VALUE

Value Chain is a series of activities that include inbound logistics, warehouse and storage, production, finished goods storage, outbound logistics, marketing & sales, and customer service.

Value Chain Analysis refers to understanding the value chain activities i.e. the activities performed in the transformation process and identify the areas where additional value may be generated at one or more value chain activities.

MIS/SIS helps in Value Chain Analysis Process and Value Addition to the Value chain.

Porter’s Value Chain Model(SIS Framework)

Porter’s Model has divided organization’s activities in two categories:

Primary Activities: 1.Inbound Logistics2.Operations3.Outbound Logistics4.Marketing5.Service

Support Activities:1. Administration2. Human Resources3. Technology4. Procurement Process

Porter’s Value Chain Model

This model can be used to design MIS can be used to gain competitive advantage by identifying specific, critical leverage points in the Value Chain activities.

Porter’s Value Chain Model

MIS & BPR

IT facilitates and enables Business Process Reengineering

Interneterprise Information Systems

Definition:

• Information systems implemented on an extranet among a company and its suppliers, customers, subcontractors, and competitors with whom it has formed alliances.

• E.g. CISCO

Virtual Company

A business that:

• can anticipate customers’ future needs.

• responds to customer concerns.

• provides top-quality customer service.

Customer-focused Organization

MIS in Customer Focused Business

Knowledge-Creating Companies

• Consistently creating new business knowledge, disseminating it widely throughout the company, and quickly building the new knowledge into their products and services.

MIS RISKS

The Security Issues that emerge from MISs are as:1. Secrecy2. Privacy3. Confidentiality4. Destruction5. Theft of Information6. Computer Wastages

The Reasons that affect the security threats to MIS are as:

•Destruction•Deletion•Bugs Infection•Theft•Corruption

Sources of MIS Threats

Threats to MIS can be caused by different sources and these are

Failure of System: HardwareSoftwareNetworkTelecommunication

Human Actions:

Illegal access

Theft

User Errors

Program changes

Natural Calamities

Fire

Earthquakes

Floods & rains

Sources of MIS Threats

Security Controls

Security Controls that can be used by the organizations to counter the security threats.These may be the combination of below:

•Access Controls Systems•Hardware & Software Controls•Fault Tolerant Computer Systems

( Mirroring/ Clustering)•Monitoring the Usage/Security Monitors•Biometrics•Anti Virus Protection tools•Firewalls•Cryptography•Disaster management Plan•Employees’ Conduct & Performance Audit

MIS Security Plan

MIS Security Management system is designed to meet security threats and involves:

•Identification of threat sources & possibilities of its occurrence.•Protecting the Information and MIS from unauthorized access•Ensure the privacy of individual & personal information•Check the misuse of information and MIS•Provide methods and systems to recover from damage and to put the MIS on normal track

How Much Security Is Enough Security?Two costs to consider

–Cost of potential damage–Cost of implementing preventative measure

Software Procurement

Software can be acquired in different ways. These are1. Make the Software2. Buy the Off-the –Shelf software3. Combination of the above 4. Outsourcing5. ASP ( Application Service Providers)

Buy the Software

The company buys the software developed by vendors in that application area. These are also referred to as off- the -shelf software products.

Reasons/ Advantages for this type of procurement:• Lower cost of development• Faster acquisition• Tested product• Known Costs• Doest not require IT development skills• Upgradations available from vendors

Steps in Procurement thru Buy Option:

1. Review Needs, Requirements, and Costs2. Negotiate & Acquire the Software3. Modify or Customize Software4. Acquire software interfaces5. Test the Software6. Monitor and Maintain the Software

Disadvantages of Buy Option:

1. Dependence on Vendor2. High cost of maintenance3. Fit with the Company’s Requirements4. Employee learning & Motivation

Make the Software

In this option company performs all the activities of system analysis to system development and maintenance.

Reasons / Advantages:

1. Software meets the specific requirements.2. Customized Changes in the software possible3. Software acts as core competence4. Potential for commercialization of the developed software product5. Higher learning environment in the company

Business Process

IT Technology

Customer Purchases

Deal Structure

Fixed CostProduct

40s-50s

60s-70s

80s-90s

00s

15-20

10-12

5-8

10-20

8-10

3-5

Application

IT Solution

Business Outcomes

Variable costs

IT Outsourcing

BPOContinuous 1 - 3

IT & Business Process Life

IS Outsourcing

IDC Defines IS Outsourcing as a long term contractual arrangement in which the service

provider takes ownership of and responsibility for managing all or part of a client’s IS operations or

department based on a service level agreement

IS OUTSOURCING DEFINED

Information System Outsourcing services

• System integration

• Facility management

• Contract programming

• Software support

• Network maintenance

• Minicomputer/Mainframe/ Workstation/PC maintenance

• Total outsourcing

• Total insourcing

•Selective Sourcing/Smart

TYPES OF SOURCING

WHAT TO OUTSOURCE

Non-Core, Non Critical•Security•Cafeteria•LaundryLikelihood to OutsourceHigh

Core Business•Managing marketing Image/Trademark•Canning for patents•Find/Sell new products•Manufacture products•ISLikelihood to Outsource : LOW

Non-core, Yet Critical• Accounting•Supply chain Management•HR Administration•Claims Administration•ISLikelihood to Outsource:Medium -High

DRIVERS FOR OUTSOURCING

Outsourcing IT leads to low running costsOutsourcing IT has low setup cost.Outsourcing IT has low set-up timeShortage of skilled manpowerExpertise of outsourcerOrganisation needs to focus on core function rather that

IT activitiesLow Down timeImproved output/performance of Inf. SystemBetter service to usersHigh cost of maintaining and updating IT employeesAvailability of network bandwidth and technology

Application Service Providers

An ASP provides contract-based service to supply and host software and computing applications, data storage, reporting tools, upgrades, and technical support to its clients using a web platform via the Internet or an extranet.

Applications are generally leased on need basis with flexible monthly fixed rates ranging anywhere from $ 10 to $ 10,000 per month and variable according to usage.

Advantages:

•Faster adoption of the software•No hassles in system development & Maintenance•Companies can focus on their core functions

Disadvantages:

•Dependence on ASP vendors.•High Costs•Customized application may not be possible•Changes in software difficult

System Implementation

Implementation is the process of installing a newly developed MIS at the organization’s site. This may involve either installing new system in case there is no earlier system OR installing modified system..Implementing the MIS means putting the new system into operation.

The various stages in MIS Implementation are as:

1. Planning the Implementation2. Acquisition of Facilities and Space Planning3. Acquisition of Hardware & Software4. User Training & Hiring5. Data Preparation6. Installation7. Testing8. Changeover9. User Acceptance

System Implementation Stages

Implementation Planning

It is the blue –print of the MIS Implementation and is the detailed plan of implementing the MIS in the organization. The pre-implementation activities as: •Identifying MIS team and managing the project team, •Scheduling the implementation activities, •Control mechanism, etc

Gantt Charts and Network diagrams are used to monitor/schedule the implementation activities.

Acquisition of Facilities and Space

Acquisition of facilities as computer room, office, etc.

Space planning and Layout of following required as:• Computer centres,• Printers,• Network Cabling• People and their movement,• No. & Type of exits,• Storage areas,• Airconditioning,• Safety equipments & Measures, etc

Acquisition of Hardware & Software

Hardware & Software procurement is a detailed and exhaustive exercise and involves

• Requirement Analysis,• Procurement mode (Inhouse OR off-the-shelf OR thru ASP)• Inviting vendor quotations ( Tender process in

public / large contracts)

• Comparison of Different offerings( Technical & Financial aspects)

• Negotiations• Delivery & Installation• Post installation review

User Training & Hiring

User training is very important for the success of MIS implementation. Training of varying nature is to be given to different levels of employees: data entry operators/clerks, supervisors, managers /senior management in the use of MIS. Technical training is given to IT employees for maintenance etc.

People with skills not in the organization may be hired, These may be from management as well as technical background in the new set up.

Data Preparation

Data Preparation refers to the activity of converting data that have been earlier in the manual processes into computer form according to the designed structure of MIS.

Normally outsourced or made by temporary staff.Once old data turned into MIS system, new data is handled by the new computerized MIS system.

Installation

Installation is the process of physically placing the computer equipment on the site, install & configure the software so as to make it operational.

IS manager is generally responsible for the installation, though some of the installation activities are performed by vendors.

Testing

Testing is performed at system construction stage. However testing is performed at implementation with actual data.Testing is performed on individual components of the MIS as well as whole system.•Equipment•Forms•Programs•Work procedures•Out puts & Reports

Testing is done from the perspectives of:•Accuracy•Range of inputs•Frequency of inputs•Operating conditions•reliability

Testing

Changeover to New MIS

Chageover is the event of switching to new MIS from the current system.

If there is no existing old system, then there is straight-over implementation in one go.However if there is existing system, there are four approaches for changeover:

1.Direct Conversion2. Phase-in-approach3. Pilot start-up4. Parallel start-up

User Acceptance

The stage at which, user takes the final ownership from the vendor and subsequently vendor is not responsible for the problems in the MIS.

This is done in the form of user- acceptance document.

System Maintenance

System Maintenance refers to the stage that involves checking, changing, and enhancing the system to make it more useful in achieving user and organizational goals.

System Maintenance

Reasons for Maintenance:

•Changes in business processes•New requests from stakeholders,customers, users, and managers•Bugs or errors in the program•Technical and hardware problems•Corporate mergers and acquisitions•Government regulations•Changes in the operating system or hardware on which the application runs.

Types of Maintenance

1. Corrective MaintenanceThis type of maintenance involves removal of errors in the

program that may have creped into the system because of faulty design or wrong assumption. In this processing or performance failures are repaired.

2. Adaptive MaintenanceIn Adaptive maintenance, program functions

are changed to enable the information system to satisfy the information needs of the users.For example•Changes in organization’s procedures, objectives, goals, policies•Change in information needs of managers•Change in system controls and security needs.

3. Perfective Maintenance

This maintenance involves adding new programs or modifying the existing programs to enhance the performance of the information system.

Reasons for Perfective maintenance may be :

•Changes in economic and competitive conditions;•New technology

System maintenance can be understood under four categories depending upon the change in the systems.

1. Slipstream Upgrade2. Patch3. Release4. Version

Classification of Maintenance

1. Slipstream Upgrade

A minor upgrade – typically a code adjustment or minor bug fix, which may not be announced.

2. Patch

A minor change to correct a problem or make a small enhancement. It is usually an addition to an existing program.

3. Release A Release is a significant change in the program which may involve change in design and documentation.

4. Version

A Version involves major changes, usually encompassing new features.