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Importance of Information Systems

Importance of Information Systems

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  • KMS Architecture
  • KMS Tools
  • Techniques of SRS
  • Value Chain Analysis

Importance of Information Systems ‡Necessary for Decision Making ‡For Taking Rational, Timely & Accurate Decisions ‡For Taking

decisions in Complex Decision situations ‡Globalization 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 System is composed of three parts 1. Management 2. Information 3. System Management may be defined as µThe 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

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

Strategic Planning
‡Policies ‡Plans ‡Budgets ‡Objectives

Management control
‡Revenue ‡Costs ‡Profits ‡Schedules ‡Measurements

Operational control
‡Goods ‡Services ‡Performance

‡Information is the data that is processed and presented in the form that assists in decision making. Withdrawal slip in a bank is a information for data entry operator but data for the bank manager. Data Processing Information ‡ Concept of data & Information is a relative one. Information for one may be data for Another.Information ‡ One of the Most valuable resource required by the management in order to run the organization. e. .g.

2. 4. 3. Unstructured Non-Programmed Futuristic External & Internal 1. 2. Structured Programmed Historical Internal Exact . 4. 5.Information Different layers of Management require different types of information Senior Management Operating Management 1. 3.

2. 5. The set of elements for a system are: Input process Output Feedback/ Control Environment ‡ 1. 4. Input Process Output Feedback/Control . 3.System ‡ A System may be defined as a set of elements which are joined together to achieve a common objective.

operated and managed in manual mode. Manual Systems 2. and procedures that are configured to collect. ‡Order Entry System ‡Inventory Control System 2. ‡ Example: Inventory Register. Computer. store. databases. Manual Information Systems Information System is created. For example ‡Company¶s Payroll System. people. ‡ Lacks functionalities of Information Technology. and process data into information. telecommunications. manipulate. Accounts Register/book.TYPES of INFORMATION SYSTEMS Two Types: 1.based Systems 1. Computer ±based Information systems A Computer based Information System consists of hardware. software. .

And supplies Information to assist Manager in taking effective decisions in a speedy manner.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.MIS Defined A Management Information system (MIS) is an organized collection of ‡People ‡Procedures ‡Software ‡Databases.

production. Marketing. ‡Thus MIS is not a single system. Finance.MIS ‡The focus of MIS is primarily on Operational efficiency of resources. ‡Management Information Systems typically provide standard reports generated from the Transaction Processing Systems. and other functional areas are supported by Management Information systems and linked through a common database. rather it is an integrated system where subsystems fit into an overall design. .

Nature & Scope of MIS The discipline of MIS is interdisciplinary. Accounting Computer Science Management Information Systems Mathematics & Operations Research Behavioral Sciences Management . It involves different domains like ‡Accounting ‡Management ‡Computers ‡Organizations ‡Mathematics & Operations Research ‡Behavioral Sciences etc.

monitor. E.g. CPU. Programmers.Elements of MIS ‡ Hardware The computer equipment to perform input. drives. Printer. System software 2. etc. keyboard. Software Computer programs that direct the operation of the hardware. Utility Software Databases The databases contain all data that is generated and used by application software. processing and output activities. tapes. communication devices. Telecommunications and Networks People Analysts. System managers. Application software 3. Computer Operators ‡ ‡ ‡ ‡ . Software could be 1.

. policies. and rules for using the MIS.) ‡Procedures Procedures include the strategies.Elements of MIS (Contd. methods.

These may be as ‡Financial Information System ‡Marketing Information System ‡Personnel Information System ‡Production Information System and so on.Types of MIS Information Systems are developed around the functional areas of business like marketing. and are also termed as Functional Information Systems. finance etc. .

Functional Business IS .

‡Monitors and controls the use of funds over time. Financial MIS performs the following functions: ‡Makes financial data available on a timely basis to shorten analysis turnaround time. ‡Analyzes historical and current financial activity. customer etc. often through the use of corporate intranet. ‡For adhering to legal requirements Financial MIS aids managers in: ‡Capital Budgeting Decisions (firm's long term investments ) ‡Financing decisions (such as a decision to issue bonds. including the Internet. product. ‡Enables analysis of financial data along multiple dimensions-time. Bank Loans) ‡Dividend decisions (It relates to the amount and timing of any cash payments made to the company's stockholders) ‡Current asset management (managing cash. ‡Provides easy access to data for both financial and non-financial users. Equity Shares. and inventories in an organization) . geography. plant . into a single MIS. accounts receivable. ‡Integrates financial and operational information from multiple sources.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.

is a decision made by the directors of a company.Capital Budgeting Decisions Capital budgeting (or investment appraisal) is the planning process used to determine whether a firm's long term investments such as new machinery. replacement machinery. new products. in Corporate finance. and research development projects are worth pursuing. such as a decision to issue bonds. Dividend Decision The Dividend Decision. and inventories in an organization. The decision is an important one for the firm as it may influence its capital structure and stock price Current asset management Current asset management involves managing cash. new plants. It relates to the amount and timing of any cash payments made to the company's stockholders. accounts receivable. It is budget for major capital. . expenditures Financing decisions Decisions concerning the liabilities and stockholders' equity side of the firm's balance sheet. Accounts receivable is the net monetary value realized by an organization through sales. or investment.

stock markets. cheques.IFPS (Integrated Field Processing System) .Financial Information System ( Contd. etc. billing. payment vouchers. 3. Some of the Financial MIS are Tally.) Financial MIS composes of the Inputs 1. This needs to be reflected in the output of Financial MIS. Organizational Plan: Another important input to Financial MIS. BMS. Financial Intelligence : This data is collected from banks. which may be in the form of financial plans. Transaction Data: This data includes credit applications. journal and ledger entries etc. which is processed to determine its impact on the company¶s economy. govt. stock transfers. that portrays the objectives of the company. 2..

Financial Information System Database Of External Data ‡Sorted Data ‡Forecasts Business Transactions Transaction Processing System Database From TPS FINANCIAL MIS ‡Management Ratios ‡Audit & Control ‡Other Financial Decisions& Plans Datawarehouse ‡Financial DSS/EIS .

merchandising.Marketing MIS It is the MIS that supports managerial activities in marketing as product development. sales promotion. warehousing. ‡Transaction functions : Activities that transfer the title of ownership as order handling. where. credit management. psychological factors of customers. billing. ‡Purchase motivation factors: social. ‡Post transaction Function: Feedback. . packaging etc. after sales service support etc. publicity. and promotional effectiveness. The Marketing MIS help managers in marketing activities of: ‡Customer Identification: who. distribution. policy & guarantee etc. pricing decisions. in what quantity. ‡Communication function: This function includes decisions on advertising. etc. when. personal selling. ‡Physical distribution: optimum integration of transportation. economical. invoicing.

Marketing MIS .

Marketing MIS Database Of External Data Marketing DSS Business Transactions ‡Internet ‡CRM Datawarehouse Transaction Processing System Database From TPS MARKETING MIS Marketing EIS Marketing ES .

The HR functions that are facilitated by HRMIS are as: ‡Manpower Planning ‡Staffing ‡Training & Development ‡Performance evaluation ‡Wage & Salary administration ‡Separation activities .Human Resource Management Information System Human Resource MIS are concerned with activities related to employees and potential employees of the organization.

Human Resource Management Information System

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:

Manufacturing Management Information System

. Office Automation systems improve productivity of managers at various levels of management by providing secretarial assistance and better communication facilities. reports). ‡Message Switching.Office Automation System Office automation refers to the application of computer and communication technology to office functions. memos. ‡Data Storage. These systems include facilities for activities as ‡Typing ‡Mailing ‡Scheduling of meetings and conferences ‡Calendar keeping ‡Retrieving documents ‡Conferencing ‡Production of information( messages. ‡Data & Voice Communications. and so on Office Automation Systems provide support facilities in form of: ‡Word Processing ‡Electronic mail.

MIS adopts wholistic approach to the study of systems and its performance in the light of the objective of the MIS. ‡Exception Based MIS should be on Exception based reporting Principle and deviation should be reported to decision maker at the required level. management control level. and operations control level.e. . ‡Need based MIS should provide to specific information needs of managers at different levels i.MIS Characterstics A Management Information System has the following Characteristics: ‡Systems Approach MIS follows Systems approach i. ‡Management Oriented MIS should be designed in Top-down approach. It takes comprehensive view or complete look at the subsystems of the organization.e. for strategic planning level. MIS should be derived from the overall business plan.

MIS Characterstics( Contd. ‡Common Data Flow & Central Database .) ‡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. ‡Long Term Planning MIS designers should have future objectives and needs of the company in mind. ‡Integrated MIS should blend information from different departments or constitute of different possible subsystems of the organization.

Types of Information Systems INFORMATION SYSTEMS Operations Support Systems ‡Transaction Processing Systems ‡Enterprise Resource Planning Systems Management Support Systems Office Automation Systems ‡Management Information Systems ‡Decision Support Systems ‡Executive Information Systems ‡Expert Systems ‡Text Processing Systems ‡Electronic Document Management Systems ‡Electronic Message Communication Systems .

To generate useful information.control industrial processes. Such Systems don¶t produce specific information that can be used by the managers.Operations Support Systems The Operations Support Systems are the Information Systems that process the business transactions . further processing of output from these systems is required. The output of these Systems act as input for higher level systems.and update company¶s databases. .

Implementation and Maintenance. .g. Production etc are mapped in the ERP) More complex in design. HR. Accounts.( e. Marketing. The design of such system is specially made to incorporate all the processes of the company.Enterprise Resource Planning Systems A Single Information System that performs processing of all or most of the business transactions and has characteristics as I) Automation II) Integration. It has a single database.

mail marketing customers  Store location  Evaluation of Potential drilling sites. .  Targeting direct.  Flight Scheduling etc.Decision Support Systems Application of DSS:  For Inventory Management  To identify Customer buying patterns  Optimizing discounts/price markdowns.

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 Investments Homes. .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. etc.com.

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

Group Decision Support System GDSS software tools include: Electronic questionnaire Electronic brainstorming tools Idea Organizer Prioritizing tools Group dictionaries Stakeholder Identification &Analysis tools Policy Formation tools .

economic databases. 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. news services etc.Executive Information System Executive Information Systems are IS that help senior management take decision in unstructured problem situations. . as well as on internal information EIS have highly flexible and user friendly input & output interfaces. They have drill-down options.

in computers. ‡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 peoples heads.and distributing efficiently wherever it can help produce the biggest payoff. on paper or thru external sources.Knowledge Management System Knowledge is the ability of person to understand the situation and act effectively.

‡delivery and ‡application of the knowledge so as to maintain and improve the competitiveness of the organization. ‡construction. . ‡storage.. ‡acquisition.Knowledge Management System Knowledge Management Systems involve the tasks of ‡definition.

KMS Architecture KMS architecture deals with three main functions as : ‡Knowledge Identification ‡Knowledge Generation ‡Knowledge Delivery KMS Knowledge Identification ‡Definition & Categorization ‡Surveying & Locating ‡Build Knowledge Structure Knowledge Generation ‡Processing for Acquisition ‡Manupulating & Modelling Creation of KDB Knowledge Delivery ‡Access Control ‡Application Methods ‡Storage & Security .

Data mart.KMS Tools The tools for KMS are as: Database management tools -For data management and seeking knowledge thru SQL queries Data Warehousing.Internet& Intranet . 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.

It includes activities as : ‡ ‡ ‡ ‡ Understanding the Management Problem Deciding a Plan for a Solution Coding the Planned Solution Testing the Coded Program .System Development For MIS System Development includes the all activities of the development stages of any MIS solution.

3. These areas: 1. System Investigation System Analysis System Design System Construction System Implementation System maintenance . 2. the project is managed by breaking the total development process into different sub activities or stages. 6. 4. 5.System Development Stages To develop any system.

The Investigation stage constitutes of two sub-stages ‡Problem Definition ‡Feasibility .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.

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.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 objectives Identify scope of Problem Discover the causes of Problems. etc .

It is intended to assess the various alternatives and identify the most feasible and desirable system for development . Organizational Feasibility: The extent up to which the proposed MIS supports the strategic plans of the organization.Feasibility Study Feasibility addresses the viability of the intended MIS would be useful for the organization. . Feasibility is assessed in terms of the below categories: 1.

. Cost of Full System Investigation. Economic Feasibility: The costs and returns are evaluated to justify the investment in the system project. S/W. N/W. The factors evaluated are ‡ Cost of H/W. etc ‡ Benefits in form of targeted objectives of MIS. Maintenance.Feasibility Study 2.

Feasibility Study 3. regardless of locations ‡Can the system be expanded ‡Technical surety of accuracy. It concerns regarding ‡Does the necessary technology exist? ‡Does the proposed equipment have the technical capacity to hold the data. etc. ease of access. in required time. provide response to enquiries. capable of meeting the needs of the proposed system can be acquired or developed. reliability. Technical Feasibility: It deals as with issues as whether hardware and software. data security. .

employees.Operational Feasibility Operational Feasibility contains factors like management support and willingness. suppliers willingness to operate. etc. ‡Involvement of users in system development ‡Meeting regulatory/legal requirement. etc. etc. Customers to adopt new system and business methods ‡Support from suppliers. vendors. . customers. external partners. and adopt the proposed system.It includes ‡Support from Management ‡Willingness of employees.

Methods of System Preliminary Investigation 1. Conducting Interviews . Reviewing Documents 1.

resources. products) ‡The Expected Information System( expected capabilities) . along with its boundaries. ‡Existing Information Systems( their activities. 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. functions.System Analysis System Analysis is the detailed study of various operations of the business system/activity.

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 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.

using test data. debugged. . Feedback leads to improved System.System Construction Once the system specifications are understood. required programs are coded. System Testing Testing done on new Systems. and documented.

. 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 Implementation Even a well design System will fail if not implemented properly.

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

1. There are four most important system development approaches.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. Waterfall Model or SDLC Prototyping Approach Rapid Application Development Spiral Model . 2. 4. 3.

Waterfall Model This is also referred to as SDLC( Software Development Life Cycle) or Traditional approach . : . Once one stage is completed . This approach takes step-by -step approach to system development activities. only then next stage is taken up.

) 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 .Waterfall Model(Contd.

Each stage is considered as distinct which may not be in reality. However in large projects the hardware technology may become obsolete. Involves large documentation and time consuming 4. .Limitations: 1. Users cant easily review the intermediate product and evaluate whether it meets their requirements. This model involves freezing of requirements for hardware. 3. 2.

Prototyping is done in situations where identification of requirements is difficult and requirements may change during the development process. Users are encouraged to try the prototype and provide feedback. Iterations are done until the final system is developed. . instead of developing the complete system.Prototype Model In this approach a prototype is developed.

Prototype Model System Development Initiated Investigate & Analyze problem to develop workable solution Develop Prototype Put Prototype in operation Refine and Modify Prototype Complete System .

. There may be unending refinements desired by users. Users can try the system and provide the constructive feedback during the development process. 4 Higher motivation & positive response from users. Prototypes are not complete systems and many of the details are not built in the prototype.Prototype Model(Contd. 2 An operational prototype can be produced in short periods. 3 Prototyping enables early detection of errors and omissions.) Advantages: 1. Disadvantages: 1. 2. System documentation is ignored 3.

etc. RAD is also known as Extreme Programming. Agile Development. are used for RAD. Oracle. Joint Application Development. For example Powerbuilder by Sybase.Rapid Application Development Rapid Application Dvelopment( RAD) employs tools. techniques and methodologies to speeded the application development processs. Using RAD entire systems are developed in less than 6 months. . and other tools by IBM. automatically generates program source code. RAD reduces paper-based documentation. and facilitates user participation in the design and development activities.

3. 3. 2. RAD requires very high involvement & time of stakeholders and users affecting their routine functions. This approach requires system analysts and users to be skilled in RAD system development tools & techniques. Documentation produced a s a by-product of project tasks. . RAD involves team work and lots of interaction between users and stakeholders with the system developers. This approach completes the application in lesser time.) Advantages: 1. 2.This approach puts high pressure on system developers and other project participants.Rapid Application Development(Contd. Disadvantages: 1.

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

Spiral Model Planning Risk Analysis User Evaluation Engineering .

System Analysis System Analysis involves the identification. The objectives of System Analysis are as: ‡To know how existing system works ‡To identify the user¶s requirements in the new proposed System . understanding and examining the system for achieving pre-determined goals/ objectives of the system.

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 System Analysis is the process of collecting and interpreting facts. identifying problems.

Software Requirements Specifications SRS is the starting point of System Development Process. SRS constitutes of three activities ‡Requirement Anticipation ‡Requirement Investigation ‡Requirement Specification .

Software Requirements Specifications SRS leads to details on 1. Various constraints 4. Performance controls . The data which is used or produced during the process 3. The basic process 2.

2. The frequency. Identify Data Used and Information Generated : 3.Software Requirements Specifications ( Contd. time and user of the resulting information. Determining Timing. The Steps which and where are these performed. Frequency and Volume 4.) The activities involved in SRS are as: 1. Understand the Process:as The purpose of the business activity. The persons performing them. Know Performance Controls .

Techniques of SRS Interview Questionnaire Record Review Observation .

in computers. on paper or thru external sources.Knowledge Management System Knowledge is the ability of person to understand the situation and act effectively. in peoples heads. ‡Competition & Market forces demand that organizations today can be competitive if they manage the knowledge and continuously upgrade as per changing requirements.and distributing efficiently wherever it can help produce the biggest payoff. ‡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. .

things written down or stored on computers ‡ Tacit Knowledge ± the ³how-tos´ of knowledge. documents. which reside in workers .Types of Knowledge ‡ Explicit Knowledge ± data.

‡construction. ‡delivery and ‡application of the knowledge so as to maintain and improve the competitiveness of the organization. .. ‡storage.Knowledge Management System Knowledge Management Systems involve the tasks of ‡definition. ‡acquisition.

Levels of Knowledge Management .

KMS Architecture KMS architecture deals with three main functions as : ‡Knowledge Identification ‡Knowledge Generation ‡Knowledge Delivery KMS Knowledge Identification ‡Definition & Categorization ‡Surveying & Locating ‡Build Knowledge Structure Knowledge Generation ‡Processing for Acquisition ‡Manupulating & Modelling Creation of KDB Knowledge Delivery ‡Access Control ‡Application Methods ‡Storage & Security .

Internet& Intranet .KMS Tools The 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.

not only beating rivals ‡ Strategic Advantage: Using strategy to maximize company strengths .Strategy and Strategic Moves ‡ Strategy: plan to gain advantage over enemy ‡ Business strategy is plan to outperform competitors ± Done by creating new opportunities.

but the actual cause and driver.Why Study Strategic IT? ‡ Technology is no longer an afterthought in forming business strategy. . ‡ IT can change the way businesses compete.

‡ Information systems are a means of organizational renewal. .Strategic View of Information Systems ‡ Information systems are vital competitive networks. ‡ 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 .

Xerox. and NASA Information technology today is a knowledge-capital issue.Does IT Matter? Paul Strassman. Pentagon. but also companies like Pfizer or FedEx. former CIO of General Foods. . Look at the business powers ± most of all Wal-Mart. They¶re all waging information warfare.

.Concluding Remarks Michael Dell. really bad or you do it really. really well. CEO of Dell Computers Anything in business can be either a sinkhole or a competitive advantage if you do it really.

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

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 ‡ ‡ ‡ ‡ ‡ .Porter¶s Competitive Forces Model To survive and succeed.

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 .

better technology. more experience ‡ Critical mass: body of clients that is large enough to attract other clients .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.

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 .

e.Value Chain Analysis Input Process Output ADDED VALUE Value Chain is a series of activities that include inbound logistics. MIS/SIS helps in Value Chain Analysis Process and Value Addition to the Value chain. . outbound logistics. marketing & sales. and customer service. finished goods storage. warehouse and storage. Value Chain Analysis refers to understanding the value chain activities i. the activities performed in the transformation process and identify the areas where additional value may be generated at one or more value chain activities. production.

Administration 2.Service Support Activities: 1.Porter¶s Value Chain Model(SIS Framework) Porter¶s Model has divided organization¶s activities in two categories: Primary Activities: 1.Inbound Logistics 2.Outbound Logistics 4. Technology 4. Human Resources 3. Procurement Process .Operations 3.Marketing 5.

Porter¶s Value Chain Model .

.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.

MIS & BPR IT facilitates and enables Business Process Reengineering .

g. ‡ E.Interneterprise Information Systems Definition: ‡ Information systems implemented on an extranet among a company and its suppliers. CISCO . and competitors with whom it has formed alliances. customers. subcontractors.

Virtual Company .

. ‡ provides top-quality customer service.Customer-focused Organization A business that: ‡ can anticipate customers¶ future needs. ‡ responds to customer concerns.

MIS in Customer Focused Business .

Knowledge-Creating Companies ‡ Consistently creating new business knowledge. and quickly building the new knowledge into their products and services. . disseminating it widely throughout the company.

Secrecy 2. Computer Wastages . Confidentiality 4. Privacy 3. Destruction 5. Theft of Information 6.MIS RISKS The Security Issues that emerge from MISs are as: 1.

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: Hardware Software Network Telecommunication .

Sources of MIS Threats Human Actions: Illegal access Theft User Errors Program changes Natural Calamities Fire Earthquakes Floods & rains .

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 .

‡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 .MIS Security Plan MIS Security Management system is designed to meet security threats and involves: ‡Identification of threat sources & possibilities of its occurrence.

How Much Security Is Enough Security? Two costs to consider ±Cost of potential damage ±Cost of implementing preventative measure .

Buy the Off-the ±Shelf software 3.Software Procurement Software can be acquired in different ways. Combination of the above 4. Make the Software 2. ASP ( Application Service Providers) . These are 1. Outsourcing 5.

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

Steps in Procurement thru Buy Option:

1. 2. 3. 4. 5. 6.

Review Needs, Requirements, and Costs Negotiate & Acquire the Software Modify or Customize Software Acquire software interfaces Test the Software Monitor and Maintain the Software

Disadvantages of Buy Option: 1. 2. 3. 4. Dependence on Vendor High cost of maintenance Fit with the Company¶s Requirements 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. 2. 3. 4. Software meets the specific requirements. Customized Changes in the software possible Software acts as core competence Potential for commercialization of the developed software product 5. Higher learning environment in the company

IT & Business Process Life Business Process 40s-50s 15-20 IT Technology Customer Purchases Product Deal Structure Fixed Cost Variable costs IT Outsourcing BPO 10-20 60s-70s 10-12 8-10 Application IT Solution 5-8 3-5 80s-90s 00s Continuous 1-3 Business Outcomes .

IS OUTSOURCING DEFINED 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 .

Information System Outsourcing services ‡ ‡ ‡ ‡ ‡ ‡ System integration Facility management Contract programming Software support Network maintenance Minicomputer/Mainframe/ Workstation/PC maintenance .

TYPES OF SOURCING ‡ Total outsourcing ‡ Total insourcing ‡Selective Sourcing/Smart .

Yet Critical ‡ Accounting ‡Supply chain Management ‡HR Administration ‡Claims Administration ‡IS Likelihood to Outsource:Medium -High Core Business ‡Managing marketing Image/Trademark ‡Canning for patents ‡Find/Sell new products ‡Manufacture products ‡IS Likelihood to Outsource : LOW Non-Core. Non Critical ‡Security ‡Cafeteria ‡Laundry Likelihood to OutsourceHigh .WHAT TO OUTSOURCE Non-core.

Outsourcing IT has low set-up time Shortage of skilled manpower Expertise of outsourcer Organisation needs to focus on core function rather that IT activities Low Down time Improved output/performance of Inf.DRIVERS FOR OUTSOURCING Outsourcing IT leads to low running costs Outsourcing IT has low setup cost. System Better service to users High cost of maintaining and updating IT employees Availability of network bandwidth and technology .

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

‡High Costs ‡Customized application may not be possible ‡Changes in software difficult .Advantages: ‡Faster adoption of the software ‡No hassles in system development & Maintenance ‡Companies can focus on their core functions Disadvantages: ‡Dependence on ASP vendors.

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.System Implementation Implementation is the process of installing a newly developed MIS at the organization¶s site.

7. 3. 8. 2.System Implementation Stages The various stages in MIS Implementation are as: 1. 4. 6. Planning the Implementation Acquisition of Facilities and Space Planning Acquisition of Hardware & Software User Training & Hiring Data Preparation Installation Testing Changeover User Acceptance . 9. 5.

. ‡Scheduling the implementation activities. etc Gantt Charts and Network diagrams are used to monitor/schedule the implementation activities. The pre-implementation activities as: ‡Identifying MIS team and managing the project team.Implementation Planning It is the blue ±print of the MIS Implementation and is the detailed plan of implementing the MIS in the organization. ‡Control mechanism.

‡ Network Cabling ‡ People and their movement. etc. office.Acquisition of Facilities and Space Acquisition of facilities as computer room. etc . & Type of exits. ‡ Safety equipments & Measures. ‡ No. ‡ Printers. Space planning and Layout of following required as: ‡ Computer centres. ‡ Storage areas. ‡ Airconditioning.

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 ‡ ‡ ‡ ‡ .Acquisition of Hardware & Software Hardware & Software procurement is a detailed and exhaustive exercise and involves ‡ ‡ ‡ Requirement Analysis.

People with skills not in the organization may be hired. supervisors. These may be from management as well as technical background in the new set up. .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. Technical training is given to IT employees for maintenance etc. managers / senior management in the use of MIS.

. new data is handled by the new computerized MIS system. Once old data turned into MIS system.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.

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.

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

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

then there is straight-over implementation in one go. there are four approaches for changeover: 1. Pilot start-up 4. Parallel start-up . If there is no existing old system. Phase-in-approach 3.Changeover to New MIS Chageover is the event of switching to new MIS from the current system.Direct Conversion 2. However if there is existing system.

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

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

users.customers. .System Maintenance Reasons for Maintenance: ‡Changes in business processes ‡New requests from stakeholders. 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.

Adaptive Maintenance In Adaptive maintenance. In this processing or performance failures are repaired. . 2. policies ‡Change in information needs of managers ‡Change in system controls and security needs. program functions are changed to enable the information system to satisfy the information needs of the users. objectives. goals.Types of Maintenance 1. For example ‡Changes in organization¶s procedures. Corrective Maintenance This type of maintenance involves removal of errors in the program that may have creped into the system because of faulty design or wrong assumption.

Reasons for Perfective maintenance may be : ‡Changes in economic and competitive conditions. Perfective Maintenance This maintenance involves adding new programs or modifying the existing programs to enhance the performance of the information system. ‡New technology .3.

Classification of Maintenance System maintenance can be understood under four categories depending upon the change in the systems. Slipstream Upgrade Patch Release Version . 4. 2. 3. 1.

. Slipstream Upgrade A minor upgrade ± typically a code adjustment or minor bug fix. 2. Patch A minor change to correct a problem or make a small enhancement. which may not be announced. It is usually an addition to an existing program.1.

Version A Version involves major changes. usually encompassing new features.3. . Release A Release is a significant change in the program which may involve change in design and documentation. 4.

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