MANAGEMENT INFORMATION SYSTEMS

Management Information System (MIS) is the use of information

technology, people, and business processes to record, store and process data to
produce information that decision makers can use to make day to day decisions.

In a nutshell, MIS is a collection of systems, hardware, procedures and

people that all work together to process, store, and produce information that is
useful to the organization.

NEED FOR MIS

The following are some of the justifications for having an MIS system:

 Decision makers need information to make effective decisions.

 MIS systems facilitate communication within and outside the
organization – employees within the organization are able to easily
access the required information for the day to day operations. Facilitates
such as Short Message Service (SMS) & Email make it possible to
communicate with customers and suppliers from within the MIS system
that an organization is using.
 Record keeping – management information systems record all business
transactions of an organization and provide a reference point for the
transactions.

COMPONENTS OF MIS

The major components of a typical management information system are;

 People – people who use the information system

 Data – the data that the information system records
 Business Procedures – procedures put in place on how to record, store
and analyze data
 Hardware – these include servers, workstations, networking equipment,
printers, etc.
 Software – these are programs used to handle the data. These include
programs such as spreadsheet programs, database software, etc.
 ORGANIZATIONS, MANAGEMENT, AND

THE NETWORKED ENTERPRISE

INFORMATION SYSTEMS IN GLOBAL BUSINESS TODAY

INFORMATION SYSTEM

A set of interrelated components that collect (or retrieve), process, store,

and distribute information to support decision making and control in an
organization

DIMENSIONS OF INFORMATION SYSTEMS

 Organizations

An organization is a social group which distributes

tasks for a collective goal.

 Management

Management in all business and organizational activities is the act of

getting people together to accomplish desired goals and objectives using
available resources efficiently and effectively.

 Technology

Information Technology is one of the many tools manager use to coop

with changes. ( e.g.. Software, Hardware, Data Management Technology,
Networking and telecommunication technology.)
HOW INFORMATION SYSTEMS ARE TRANSFORMING BUSINESS AND
WHAT IS THEIR RELATIONSHIP TO GLOBALIZATION?

• Software

• Enterprise System

• Supply Chain Management System

• Customer Relation Management System

• Knowledge Management System

• Hardware

• Data Management System

• Telecommunication System

• Email

• Video
Conferencing

• VOIP

• Internetwork

THE ROLE OF INFORMATION SYSTEMS IN BUSINESS TODAY

• Operational excellence

• New products, services, and business models

• Customer and supplier intimacy

• Improved decision making

 • Competitive advantage

• Survival

CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

Technical approach:

Emphasizes mathematically based models, physical technology, and

formal capabilities of systems.

Behavioral approach:

Studies issues arising from development and maintenance of systems,

such as business integration and utilization.
 GLOBAL E-BUSINESS AND COLLABORATION

BUSINESS PROCESSES AND INFORMATION SYSTEMS

A business process is a logically related set of activities that define how

specific business tasks are performed, and it represents a unique way in which
an organization coordinates work, information and knowledge.

TYPES OF BUSINESS INFORMATION SYSTEMS

• Functional Perspective :

– Sales and marketing systems

– Manufacturing and production systems

– Finance and accounting systems

– Human resources systems

• Constituency Perspective:

– Transaction processing systems

– Management information systems and decision-support systems

– Executive support systems

• Relationship of systems to one another

TYPES OF INFORMATION SYSTEMS

The type of information system that a user uses depends on their level in an
organization. The following diagram shows the three major levels of users in an
organization and the type of information system that they use.

1. Transaction Processing Systems (TPS)

This type of information system is used to record the day to day

transactions of a business. An example of a Transaction Processing System is a
Point of Sale (POS) system. A POS system is used to record the daily sales.

A TPS is a computerized systems that performs and records the daily

routine transactions necessary to conduct business such as sales order entry,
hotel reservations, payroll, employee record keeping and shipping.

2. Management Information Systems (MIS)

Management Information
Systems are used to guide tactic
managers to make semi-structured
decisions. The output from the
transaction processing system is used
as input to the MIS system.

3. Executive Support Systems

(ESS)

A ESS help senior management make these decisions. ESS address non
routine decision requiring judgment, evaluation, and insight because there is no
agreed on procedure for arriving at a solution.
 4. Decision Support Systems (DSS)

Decision support systems are used by top level managers to make semi-
structured decisions. The output from the Management Information System is
used as input to the decision support system. DSS systems also get data input
from external sources such as current market forces, competition, etc.

A DSS is a computerized system that supports business or

organizational decision-making activities. DSSs serve the management,
operations, and planning levels of an organization and help to make decisions,
which may be rapidly changing and not easily specified in advance.

ENTERPRISE APPLICATIONS

Enterprise applications automate processes that span multiple business

functions and organizational levels and may extend outside the organization.

FOUR MAJOR TYPE OF ENTERPRISE APPLICATION

 Enterprise systems: Also known as enterprise resource planning (ERP)

systems solve this problem by collecting data from various key business
process in manufacturing and production, finance and accounting, Sales
and marketing , human resource and storing the data in a single central
data repository.
 Supply chain management systems : Also known as SCM which helps
businesses manage relationships with their suppliers. SCM systems are
one type of inter-organizational system because they automate the flow of
information across organization boundaries.
 Customer relationship management systems : Also know as CRM
system which help firms managing their relationships with their customers.
This system provide information to coordinate all of the business
 processes that deal with customers in dales, marketing and service to
optimize revenue, customer satisfaction and customer retention
 Knowledge management systems: This will enable organizations to
better manage processes for capturing and applying knowledge and
expertise.

SUPPLY CHAIN MANAGEMENT SYSTEM

Customer orders, shipping notifications, optimized shipping plans, and other

supply chain information flow among Haworth’s Warehouse Management
System (WMS), Transportation Management System (TMS), and its back-end
corporate systems.
DIFFERENCE BETWEEN SOFTWARE ENGINEERING AND COMPUTER
SCIENCE

System Engineering is concerned with all aspects of computer-based

systems development including hardware, software and process engineering.

SOFTWARE PROCESS

A set of activities whose goal is the development or evolution of software.

Generic activities in all software processes are:

 Specification - what the system should do and its development constraints

 Development - production of the software system
 Validation - checking that the software is what the customer wants
 Evolution - changing the software in response to changing demands.

CASE (COMPUTER-AIDED SOFTWARE ENGINEERING)

Software systems which are intended to provide automated support for
software process activities, such as requirements analysis, system modelling,
debugging and testing.

Upper-CASE
Tools to support the early process activities of requirements and design.
Lower-CASE
Tools to support later activities such as programming, debugging and
testing.

ATTRIBUTES OF GOOD SOFTWARE

The software should deliver the required functionality and performance to
the user and should be maintainable, dependable and acceptable.
• Maintainability
– Software must evolve to meet changing needs (scalable);
• Dependability
– Software must be trustworthy (reliable, secured and safe);
• Efficiency
– Software should not make wasteful use of system resources;
• Acceptability
– Software must accepted by the users for which it was designed.
This means it must be understandable, usable and compatible with
other systems.

KEY CHALLENGES FACING SOFTWARE ENGINEERING

• Heterogeneity
– Developing techniques for building software that can cope with
heterogeneous platforms and execution environments;
• Delivery
– Developing techniques that lead to faster delivery of software;
• Trust
– Developing techniques that demonstrate that software can be
trusted by its users.
– Reliable, Secured and Safe.
GENERIC SOFTWARE PROCESS MODELS

A simplified representation of a software process, presented from a

specific perspective.

Examples of process perspectives:

– Workflow perspective represents inputs, outputs and

dependencies
– Data-flow perspective represents data transformation activities
– Role/action perspective represents the roles/activities of people
involved in software process

Generic process models

– Waterfall
– Evolutionary development
– Formal transformation
– Integration from reusable components

THE WATERFALL MODEL

Waterfall Weakness

• High risk for new systems because of specification and design problems.
• Low risk for well-understood developments using familiar technology.
• Usually requirements change, are incomplete or even not known ( Result:
‘That’s not what I meant !’ ( go back to last step )
• WF-Model reacts very statically: Each stage must be completed before
next one starts
• Too expensive
• Doesn’t force to discipline
EVOLUTIONARY PROCESS MODEL

Concurr ent
activities

Initial
Specification
version

Outline Intermediate
Development
description versions

Final
Validation
version

Process Model Weakness:

Prototyping

-Low risk for new applications because specification and program stay in step.

-High risk because of lack of process visibility.

Transformational

-High risk because of need for advanced technology and staff skills.

SPIRAL PROCESS MODEL

Determine ob jectiv es
Ev aluate alt ern atives
alternatives and id en tify, resol ve risk s
cons traint s Risk
analys is
Risk
analys is
Risk
analys is Opera-
Prot otyp e 3 ti onal
Prot otyp e 2 prot oyp e
Risk
REVIEW anal ysis Prot o-
ty pe 1
Requi rement s pl an Simul ati ons, models, b en ch marks
Li fe-cycle pl an Concept o f
Operati on S/W
requi rement s Prod uct
desi gn Detail ed
Requi rement desi gn
Develop ment
pl an valid ati on Code
Desi gn Uni t t es t
Integrati on
and t est p lan V&V Integr ati on
Plan next p has e test
Accep tance
Serv ice test Develop, v erify
next -l evel p rod uct
 Focuses attention on reuse options.
 Focuses attention on early error elimination.
 Puts quality objectives up front.
 Integrates development and maintenance.
 Provides a framework for hardware/software
development.
 Contractual development often specifies
process model and deliverables in advance.
 Requires risk assessment expertise.
 INFORMATION SYSTEMS, ORGANIZATIONS, AND STRATEGY

Information technology and organizations influence each other.

– Relationship influenced by organization’s

• Structure
• Business processes
• Politics
• Culture
• Environment
• Management decisions

THE TWO-WAY RELATIONSHIP BETWEEN ORGANIZATIONS AND

INFORMATION TECHNOLOGY

This complex two-way relationship is mediated by many factors, not the

least of which are the decisions made or not made by managers. Other factors
mediating the relationship include the organizational culture, structure, politics,
business processes, and environment.
ORGANIZATION

– Technical definition:
• Formal social structure that processes resources from
environment to produce outputs
• A formal legal entity with internal rules and procedures, as
well as a social structure

– Behavioral definition:
• A collection of rights, privileges, obligations, and
responsibilities that is delicately balanced over a period of
time through conflict and conflict resolution
FEATURES OF ORGANIZATIONS

• Use of hierarchical structure

• Accountability, authority in system of impartial decision making
• Adherence to principle of efficiency
• Routines and business processes
• Organizational politics, culture, environments, and structures

ROUTINES AND BUSINESS PROCESSES

• Routines (standard operating procedures)

• Precise rules, procedures, and practices developed to cope with
virtually all expected situations
• Business processes: Collections of routines
• Business firm: Collection of business processes

ORGANIZATIONAL POLITICS

• Divergent viewpoints lead to political struggle, competition, and

conflict.
• Political resistance greatly hampers organizational change.

ORGANIZATIONAL CULTURE

• Encompasses set of assumptions that define goal and product

• What products the organization should produce
• How and where it should be produced
• For whom the products should be produced
• May be powerful unifying force as well as restraint on change

ORGANIZATIONAL ENVIRONMENTS

• Organizations and environments have a reciprocal relationship.

 • Organizations are open to, and dependent on, the social and physical
environment.
• Organizations can influence their environments.
• Environments generally change faster than organizations.
• Information systems can be instrument of environmental scanning, act
as a lens.

ENVIRONMENTS AND ORGANIZATIONS HAVE A RECIPROCAL

RELATIONSHIP

DISRUPTIVE TECHNOLOGIES

– Technology that brings about sweeping change to businesses,

industries, markets
– Examples: personal computers, word processing software, the
Internet, the PageRank algorithm
– First movers and fast followers
• First movers—inventors of disruptive technologies
 • Fast followers—firms with the size and resources to
capitalize on that technology

5 BASIC KINDS OF ORGANIZATIONAL STRUCTURE

1. Entrepreneurial:

• Small start-up business

2. Machine bureaucracy:

• Midsize manufacturing firm

3. Divisionalized bureaucracy:

• Fortune 500 firms

4. Professional bureaucracy:

• Law firms, school systems, hospitals

5. Adhocracy:

• Consulting firms

HOW INFORMATION SYSTEMS IMPACT ORGANIZATIONS AND BUSINESS

FIRMS

ECONOMIC IMPACTS

– IT changes relative costs of capital and the costs of information

 – Information systems technology is a factor of production, like capital
and labor
– IT affects the cost and quality of information and changes
economics of information
• Information technology helps firms contract in size because
it can reduce transaction costs (the cost of participating in
markets)
– Outsourcing

TRANSACTION COST THEORY

– Firms seek to economize on transaction costs (the costs of

participating in markets).
• Vertical integration, hiring more employees, buying suppliers
and distributors
– IT lowers market transaction costs for firm, making it worthwhile for
firms to transact with other firms rather than grow the number of
employees.

AGENCY THEORY

– Firm is nexus of contracts among self-interested parties requiring

supervision.
– Firms experience agency costs (the cost of managing and
supervising) which rise as firm grows.
– IT can reduce agency costs, making it possible for firms to grow
without adding to the costs of supervising, and without adding
employees.

ORGANIZATIONAL AND BEHAVIORAL IMPACTS

– IT flattens organizations
• Decision making is pushed to lower levels.
 • Fewer managers are needed (IT enables faster decision
making and increases span of control).
– Postindustrial organizations
• Organizations flatten because in postindustrial societies,
authority increasingly relies on knowledge and competence
rather than formal positions.

THE INTERNET AND ORGANIZATIONS

– The Internet increases the accessibility, storage, and distribution of

information and knowledge for organizations.
– The Internet can greatly lower transaction and agency costs.
• Example: Large firm delivers internal manuals to employees
via a corporate Web site, saving millions of dollars in
distribution costs

ORGANIZATIONAL FACTORS IN PLANNING A NEW SYSTEM

– Environment
– Structure
• Hierarchy, specialization, routines, business processes
– Culture and politics
– Type of organization and style of leadership
– Main interest groups affected by system; attitudes of end users
– Tasks, decisions, and business processes the system will assist

MICHAEL PORTER’S COMPETITIVE FORCES MODEL

– Provides general view of firm, its competitors, and environment

– Five competitive forces shape fate of firm:
• Traditional competitors
• New market entrants
• Substitute products and services
 • Customers
• Suppliers

FOUR GENERIC STRATEGIES FOR DEALING WITH COMPETITIVE

FORCES, ENABLED BY USING IT:

1. Low-cost leadership

– Produce products and services at a lower price than competitors

– Example: Walmart’s efficient customer response system

2. Product differentiation
– Enable new products or services, greatly change customer
convenience and experience
– Example: Google, Nike, Apple
– Mass customization
3. Focus on market niche
– Use information systems to enable a focused strategy on a single
market niche; specialize
– Example: Hilton Hotels’ OnQ system
4. Strengthen customer and supplier intimacy
– Use information systems to develop strong ties and loyalty with
customers and suppliers
– Increase switching costs
– Example: Netflix, Amazon

VALUE CHAIN MODEL

 Firm as series of activities that add value to products or services
 Highlights activities where competitive strategies can best be applied
o Primary activities vs. support activities
 At each stage, determine how information systems can improve
operational efficiency and improve customer and supplier intimacy
  Utilize benchmarking, industry best practices

VALUE WEB

 Collection of independent firms using highly synchronized IT to coordinate

value chains to produce product or service collectively
 More customer driven, less linear operation than traditional value chain

Information systems can improve overall performance of business units by

promoting synergies and core competencies.

SYNERGIES

 When output of some units used as inputs to others, or organizations

pool markets and expertise
 Example: merger of Bank of NY and JPMorgan Chase
 Purchase of YouTube by Google

CORE COMPETENCIES

 Activity for which firm is world-class leader

 Relies on knowledge, experience, and sharing this across business
units
 Example: Procter & Gamble’s intranet and directory of subject matter
experts

NETWORK-BASED STRATEGIES

 Take advantage of firm’s abilities to network with each other

 Include use of:
 Network economics
 Virtual company model
 Business ecosystems
 ETHICAL AND SOCIAL ISSUES IN IS

Software engineering involves wider responsibilities than simply the

application of technical skills. Software engineers must behave in an honest and
ethically responsible way if they are to be respected as professionals. Ethical
behaviour is more than simply upholding the law.

Confidentiality

– Engineers should normally respect the confidentiality of their

employers or clients irrespective of whether or not a formal
confidentiality agreement has been signed.

Competence

– Engineers should not misrepresent their level of competence.

– They should not knowingly accept work which is outside their
competence.

Intellectual property rights

– Engineers should be aware of local laws governing the use of

intellectual property such as patents, copyright, etc.
– They should be careful to ensure that the intellectual property of
employers and clients is protected.

Computer misuse

– Software engineers should not use their technical skills to misuse

other people’s computers.
– Computer misuse ranges from relatively trivial (game playing on an
employer’s machine, say) to extremely serious (dissemination of
viruses).
 The Code of Ethical Practice contains eight Principles related to the
behaviour of and decisions made by professional software engineers, including
practitioners, educators, managers, supervisors and policy makers, as well as
trainees and students of the profession.

• PUBLIC
– Software engineers shall act consistently with the public interest.
• CLIENT AND EMPLOYER
– Software engineers shall act in a manner that is in the best
interests of their client and employer consistent with the public
interest.
• PRODUCT
– Software engineers shall ensure that their products and related
modifications meet the highest professional standards possible.
• JUDGMENT
– Software engineers shall maintain integrity and independence in
their professional judgment.
• MANAGEMENT
– Software engineering managers and leaders shall subscribe to and
promote an ethical approach to the management of software
development and maintenance.
 • PROFESSION
– Software engineers shall advance the integrity and reputation of the
profession consistent with the public interest.
• COLLEAGUES
– Software engineers shall be fair to and supportive of their
colleagues.
• SELF
– Software engineers shall participate in lifelong learning regarding
the practice of their profession and shall promote an ethical
approach to the practice of the profession.

THE RELATIONSHIP BETWEEN ETHICAL, SOCIAL, AND POLITICAL

ISSUES IN AN INFORMATION SOCIETY

The introduction of new information technology has a ripple effect, raising

new ethical, social, and political issues that must be dealt with on the individual,
social, and political levels. These issues have five moral dimensions: information
rights and obligations, property rights and obligations, system quality, quality of
life, and accountability and control.
THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

• Information rights: Privacy and freedom in the Internet Age

• The European directive on data protection
• Internet challenges to privacy
• Technical solutions
• Property rights: Intellectual property
• Trade secrets
• Copyright
• Patents
• Challenges to intellectual property rights
• Accountability, liability, and control
• Computer-related liability problems
• System quality: Data quality and system errors
• Quality of life: Equity, access, and boundaries
• Balancing power: Center versus periphery
• Rapidity of change: Reduced response time to competition
• Maintaining boundaries: Family, work, and leisure
• Dependence and vulnerability

THE SPAMMING PROBLEM

 INFORMATION TECHNOLOGY INFRASTRUCTURE

IT infrastructure consists of a set of physical devices and software

applications that are required to operate the entire enterprise. But IT
infrastructure is also a set of firm wide services budgeted by management and
comprising both human and technical capabilities.

IT INFRASTRUCTURE AND EMERGING TECHNOLOGIES

EVOLUTION OF IT INFRASTRUCTURE

The IT infrastructure in organizations today is an outgrowth of over 50

years of evolution in computing platforms. There have been five stages in this
evolution, each representing a different configuration of computing power and
infrastructure elements. The five eras are general-purpose mainframe and
minicomputer computing, and cloud and mobile computing.

General-Purpose Mainframe and Minicomputer Era: (1959 to Present)

The introduction of the IBM 1401 and 7090 transistorized machines in

1959 marked the beginning of widespread commercial use of mainframe
computer. The mainframe era was a period of highly centralized computing under
the control of professional programmers and systems operators (usually in a
corporate data center), with most elements of infrastructure provided by a single
vendor, the manufacturer of the hardware and the software. This pattern began
to change with the introduction of minicomputers produced by Digital Equipment
Corporation (DEC) in 1965. In recent years, the minicomputer has evolved into a
midrange computer or midrange server and is part of a network.

Personal Computer Era: (1981 to Present)

The appearance of the IBM PC in 1981 is usually considered the

beginning of the PC era because this machine was the first to be widely adopted
by American businesses. The Wintel PC computer (Windows operating system
software on a computer with an Intel microprocessor) became the standard
desktop personal computer. Today, 95 percent of the world’s estimated 1.5 billion
computers use the Wintel standard.

Client/Server Era: (1982 to Present)

In client/server computing, desktop or laptop computers called clients are

networked by powerful server computers that provide the client computers with a
variety of services and capabilities. Simple client/server networks can be found in
small businesses, most corporations have more complex, multitiered (often
called N-tier) client/server architectures in which the work of the entire network is
balanced over several different levels of servers, depending on the kind of
service being requested.

At first level, a Web server will serve a Web page to a client in response to
a request for service. Application server software handles all application
operations between a user and an organization’s back-end business
systems. Novell NetWare was the leading technology for client/server
networking at the beginning of the client/server era. Today, Microsoft is the
market leader with its Windows operating systems.
Enterprise Computing Era: (1992 to Present)

In the early 1990s, firms turned to networking standards and software

tools that could integrate disparate networks and applications throughout the firm
into an enterprise-wide infrastructure. The enterprise infrastructure also requires
software to link disparate applications and enable data to flow freely among
different parts of the business, such as enterprise applications.

Cloud and Mobile Computing Era: (2000 to Present)

The growing bandwidth power of the Internet has pushed the client/server
model one step further, towards what is called the “Cloud Computing Model,”
refers to a model of computing that provides access to a shared pool of
computing resources over a network, often the Internet.

TECHNOLOGY DRIVERS OF INFRASTRUCTURE EVOLUTION

Moore’s Law and Microprocessing Power

The first microprocessor chip was introduced in 1959, the number of

components on a chip with the smallest manufacturing costs per component
(generally transistors) had doubled each year. This assertion became the
foundation of Moore’s Law. This law would later be interpreted in multiple ways.
There are at least three variations of Moore’s Law, none of which Moore ever
stated: (1) the power of microprocessors doubles every 18 months (2) computing
power doubles every 18 months; and (3) the price of computing falls by half
every 18 months.

Nanotechnology

Nanotechnology uses individual atoms and molecules to create computer

chips and other devices that are thousands of times smaller than current
technologies permit.
The Law of Mass Digital Storage

A second technology driver of IT infrastructure change is the Law of Mass

Digital Storage. The world produces as much as 5 exabytes of unique
information per year. The amount of digital information is roughly doubling every
year. Fortunately, the cost of storing digital information is falling at an exponential
rate of 100 percent a year.

METCALFE’S LAW AND NETWORK ECONOMICS

Robert Metcalfe – inventor of Ethernet local area network technology –

claimed in 1970 that the value or power of a network grows exponentially as a
function of the number of network members. Demand for information technology
has been driven by the social and business value of digital networks, which
rapidly multiply the number of actual and potential links among network
members.

Declining Communications Costs And The Internet

A fourth technology driver transforming IT infrastructure is the rapid

decline in the costs of communication and the exponential growth in the size of
Internet. As communication costs fall toward a very small number and approach
0, utilization of communication and computing facilities explodes.

OPERATING SYSTEM PLATFORMS

At the client level, 90 percent of PCs use some form of Microsoft Windows
operating system to manage the resources and activities of the computer.
Google’s Chrome OS provides a lightweight operating system for cloud
computing using netbooks. Android is a mobile operating system developed by
Android, Inc. and later the Open Handset Alliance as a flexible, upgradeable
mobile device platform. Multitouch interface, where users use their fingers to
manipulate objects on the screen.

ENTERPRISE SOFTWARE APPLICATIONS

The largest providers of enterprise application software are SAP and

Oracle (which acquired PeopleSoft). Microsoft is attempting to move into the
lower ends of this market by focusing on small and medium-sized businesses
that have not yet implemented enterprise applications.

DATA MANAGEMENT AND STORAGE

Enterprise database management software is responsible for organizing

and managing the firm’s data so that they can be efficiently accessed and used.
The leading database software providers are IBM (DB2), Oracle, Microsoft (SQL
server), and Sybase (Adaptive Server Enterprise), which supply more than 90
percent of the U.S. database software marketplace. Storage area networks
(SANS) connect multiple storage devices on a separate high-speed network
dedicated to storage.

CONTEMPORARY HARDWARE PLATFORM TRENDS

The exploding power of computer hardware and networking technology

has dramatically changed how businesses organize their computing power,
putting more of this power on networks and mobile handheld devices.
THE EMERGING MOBILE DIGITAL PLATFORM

Cell phones and smartphones such as the BlackBerry and iPhone have
taken on many functions of handheld computers, including transmission of data,
surfing the Web, transmitting email and instant messages, displaying digital
content and exchanging data with internal corporate systems. The new mobile
platform also includes small low-cost lightweight subnotebooks called netbooks
optimized for wireless communication and Internet access, with core computing
functions such as word processing; tablet computers such as the iPad; and
digital e-book readers such as Amazon’s Kindle with some Web access
capabilities.

GRID COMPUTING

Grid computing involves connecting geographically remote computers into

a single network to create a virtual supercomputer by combining the
computational power of all computers on the grid. Grid computing requires
software programs to control and allocate resources on the grid.

VIRTUALIZATION

Virtualization is the process of presenting a set of computing resources

(such as computing power or data storage) so that they can all be accessed in
ways that are not restricted by physical configuration or geographic location.
BUSINESS BENEFITS OF VIRTUALIZATION

By providing the ability to host multiple systems on a single physical

machine, virtualization helps organizations increase equipment utilization rates,
conserving data center space and energy usage. Most servers run at just 15-20
percent of capacity, and virtualization can boost server utilization rates to 70
percent or higher. Higher utilization rates translate into fewer computers required
to process the same amount of work.

 CLOUD COMPUTING

Cloud computing is which firms and individuals obtain computer

processing, storage, software, and other services as a pool of virtualized
resources over a network, primarily the Internet. These resources are made
available to users, based on their needs, irrespective of their physical location or
the location of the users themselves. The U.S. National Institute of Standards
and Technology (NIST) defines cloud computing as having the following
essential characteristics

 On-demand self-service – individual can obtain computing capabilities

such as server time or network storage on their own.
 Ubiquitous network access – individuals can use standard network and
Internet devices, including mobile platforms, to access cloud resources.
 Location independent resource pooling – Computing resources are pooled
to serve multiple users, with different virtual resources dynamically
assigned according to user demand. The user generally does not know
where the computing resources are located.
 Rapid elasticity – computing resources can be rapidly provisioned,
increased, or decreased to meet changing user demand.
 Measured service – charges for cloud resources are based on amount of
resources actually used.
  GREEN COMPUTING

Green computing or green IT refers to practices and technologies for

designing, manufacturing, using, and disposing of computers, servers, and
associated devices such as monitors, printers, storage devices and networking
and communications systems to minimize impact on the environment.

 AUTONOMIC COMPUTING

Autonomic computing is an industry-wide effort to develop systems that

can configure themselves, optimize and tune themselves, heal themselves when
broken, and protect themselves from outside intruders and self-destruction.

CONTEMPORARY SOFTWARE PLATFORM TRENDS

 LINUX AND OPEN SOURCE SOFTWARE

Open source software is software produced by a community of several

hundred thousand programmer around the world. It is by definition not restricted
to any specific system or hardware technology, although most open source
software is currently based on a Linux or Unix operating system.

 LINUX

Perhaps the most well-known open source software is Linux, an operating

system related to Unix. The rise of open source software, particularly Linux and
the applications it supports, has profound implications for corporate software
platforms: cost reduction, reliability and resilience, and integration, because Linux
works on all the major hardware platforms from mainframes to servers to clients.
SOFTWARE FOR THE WEB: JAVA AND AJAX

Java is an operating system-independent, processor-independent, object-

oriented programming language that has become the leading interactive
environment for the Web. Ajax (Asynchronous JavaScript and XML) is another
Web development technique for creating interactive Web applications that
prevents all of this inconvenience.

WEB SERVICES AND SERVICE-ORIENTED ARCHITECTURE

Web services refer to a set of loosely coupled software components that

exchange information with each other using universal Web communication
standards and languages. The foundation technology for Web services is XML
(Extensible Markup Language), developed in 1996 by the World Wide Web
Consortium as a more powerful and flexible markeup language than hyper text
marke up language (HTML) for Web pages. HTML is a page description
language for specifying how text, graphics, video, and sound are placed on a
Web page document. A service oriented architecture (SOA) is set of self-
contained services that communicate with each other to create a working
software application.
 FOUNDATIONS OF BUSINESS INTELLIGENCE: DATABASES AND
INFORMATION MANAGEMENT

An effective information system provides users with accurate, timely, and

relevant information. Accurate information is free of errors. Information is timely
when it is available to decision makers when it is needed.

File Organization Terms and Concepts

A computer system organizes data in a hierarchy that starts with bits and
bytes and progresses to fields, records, files, and databases.

 Database – Group of related files which are linked to each other

 File – Group of records of same type
 Record – Group of related fields
 Field - Group of characters as words or numbers

PROBLEMS WITH THE TRADITIONAL FILE ENVIRONMENT

In most organizations, systems tended to grow independently without a

company-wide plan. Accounting, finance, manufacturing, human resources, and
sales and marketing all developed their own systems and data files.

 Data Redundancy and Inconsistency

Data redundancy is the presence of duplicate data in multiple data
files so that the same data are stored in more than place or location. Data
redundancy wastes storage resources and also leads to data
inconsistency, where the same attribute may have different values.

 Program-Data Dependence
Program-data dependence refers to the coupling of data stores in
files and the specific programs required to update and maintain those files
such that changes in programs require changes to the data.
  Lack of Flexibility

A traditional file system can deliver routine scheduled reports after

extensive programming efforts, but it cannot deliver ad hoc reports or
respond to unanticipated information requirements in a timely fashion.

 Poor Security
Because there is little control or management of data, access to
and dissemination of information may be out of control. Management may
have no way of knowing who is accessing or even making changes to the
organization’s data.

 Lack of Data Sharing and Availability

Because pieces of information in different files and different parts of
the organization cannot be related to one another, it is virtually impossible
for information to be shared or accessed in a timely manner.

THE DATABASE APPROACH TO DATA MANAGEMENT

 DATABASE MANAGEMENT SYSTEMS

A database management systems (DBMS) is software that permits
an organization to centralize data, manage them efficiently, and provide
access to the stored data by application programs.

HOW A DBMS SOLVES THE PROBLEMS OF THE TRADITIONAL FILE

ENVIRONMENT

A DBMS reduces data redundancy and inconsistency by minimizing

isolated files in which the same data are prepared. The DBMS may not enable
the organization to eliminate data redundancy entirely, but it can help control
redundancy.

 RATIONAL DBMS

Cotemporary DBMS use different database models to keep track of

entities, attributes, and relationships. The most popular type of DBMS today for
PCs as well as for larger computers and mainframes is the relational DBMS.

 OPERATIONS OF A RELATIONAL DBMS

Relational database tables can be combined easily to deliver data
required by users, provided that any two tables share a common data element.

 OBJECT-ORIENTED DBMS

An object-oriented DBMS stores the data and procedures that act on

those data as objects that can be automatically retrieved and shared. Hybrid
object-relational DBMS systems are now available to provide capabilities of both
object-oriented and relational DBMS.

DATABASES IN THE CLOUD

Cloud computing providers offer database management services, but

these services typically have less functionally than their on-premises
counterparts.
CAPABILITIES OF DATABASE MANAGEMENT SYSTEMS

DBMS have a data definition capability to specify the structure of the

content of the database. A data dictionary is an automated or manual file that
stores definitions of data elements and their characteristics.

 Querying and Reporting

Most DBMS have a specialized language called a data
manipulation language that is used to add, change, delete, and retrieve
the data in the database.
 Designing Databases
To create a database, you must understand the relationships
among the data, the type of data that will be maintained in the database,
how the data will be used, and how the organization will need to change to
manage data from a company-wide perspective. The database requires
both a conceptual design and a physical design.
 Normalization and Entity-Relationship Diagrams
The process of creating small, stable, yet flexible and adaptive data
structures from complex groups of data is called normalization. The
relationship between the entities SUPPLIER, PART, LINE_ITEM, AND

USING DATABASES TO IMPROVE BUSINESS PERFORMANCE AND

DECISION MAKING
Businesses use their databases to keep track of basic transactions, such
as paying suppliers, processing orders, keeping track of customers, and paying
employees. But they also need databases to provide information that will help the
company run the business more efficiently, and help managers and employees
make better decisions.

DATA WAREHOUSES
A data warehouse is a database that stores current and historical data of
potential interest to decision makers throughout the company.
DATA MARTS
A data mart is a subset of a data warehouse in which a summarized or
highly focused portion of the organization’s data is placed in a separate database
for a specific population of users.

TOOLS FOR BUSINESS INTELLIGENCE: MULTIDIMENSIONAL DATA

ANALYSIS AND DATA MINING
 Online Analytical Processing (OLAP)
Online Analytical Processing (OLAP) supports multidimensional
data analysis, enabling users to view the same data in different ways
using multiple dimensions. OLAP enables users to obtain online answers
to ad hoc questions such as these in a fairly rapid amount of time, even
when the data are stored in very large databases, such as sales figures
for multiple years.
 Data Mining
Data mining is more discovery-driven. Data mining provides
insights into corporate data that cannot be obtained with OLAP by finding
hidden patterns and relationships in large databases and inferring rules
from them to predict future behavior.
  Text Mining and Web Mining
Text mining tools are now available to help businesses analyze
these data. These tools are able to extract key elements from large
unstructured data sets, discover patterns and relationships, and
summarize the information. Web mining is the discovery and analysis of
useful patterns and information form the World Wide Web. Businesses
might turn to Web mining to help them understand customer behavior,
evaluate the effectiveness of a particular Web site, or quantify the success
of a marketing campaign.

MANAGING DATA RESOURCES

Setting up a database is only a start. In order to make sure that the data
for your business remain accurate, reliable, and readily available to those who
need it, your business will need special policies and procedures for data
management.

ESTABLISHING AN INFORMATION POLICY

An information policy specifies the organization’s rules for sharing
disseminating, acquiring, standardizing, classifying, and inventorying
information. Data administration is responsible for the specific policies and
procedures through which data can be managed as an organizational
resource. Data governance used to describe many of these activities. Promoted
by IBM, data governance deals with the policies and processes for managing the
availability, usability, integrity, and security of the data employed in an enterprise,
with special emphasis on promoting privacy, security, data quality, and
compliance with government regulations.

ENSURING DATA QUALITY

Analysis of data quality often begins with a data quality audit, which is a
structured survey of the accuracy and level of completeness of the data in an
information system. Data cleaning, also known as data scrubbing, consists of
activities for detecting and correcting data in a database that are incorrect,
incomplete, improperly formatted, or redundant. ORDER is called entity-
relationship diagram.
TELECOMMUNICATIONS, THE INTERNET, AND WIRELESS TECHNOLOGY

NETWORKING AND COMMUNICATION TRENDS

Firms in the past used two fundamentally different types of networks:

telephone networks, handled voice communication, and computer networks
handled data traffic. Both voice and data communication networks have also
become more powerful (faster), more portable (smaller and mobile), and less
expensive. In few years, more than half the Internet users in the United States
will use smartphones and mobile netbooks to access the Internet.

COMPUTER NETWORK

It is a network consists of two or more connected computers. Each

computer on the network contains a network interface device called a network
interface card (NIC). The network operating system (NOS) routes and
manages communications on the network and coordinates network
resources. Hubs are very simple devices that connect network components,
sending a packet of data to all the other connected devices. A switch has more
intelligence than a hub and can filter and forward data to a specified destination
on the network. A router is a communications processor used to route packets of
data through different networks, ensuring that the data sent gets to the correct
address.
KEY DIGITAL NETWORKING TECHNOLOGIES

Contemporary digital networks and the Internet are based on three key
technologies: client/server computing, the use of packet switching, a dn the
development of widely used communications standards (the most important of
which is Transmission Control Protocol/Internet Protocol, or TCP/IP) for linking
disparate networks and computers.)

COMMUNICATIONS NETWORKS

Signals: Digital vs. Analog

An analog signal is represented by a continuous waveform that passes

through a communications medium and has been used for used for voice
communication. A digital signal is a discrete, binary waveform, rather than a
continuous waveform.
TYPE OF NETWORKS

Type Area
Local area network (LAN) Up to 500 meters (half a mile); an office or floor of
a building
Campus area network Up to 1,000 meters (a mile); a college campus or
(CAN) corporate facility
Metropolitan area network A city or metropolitan area
(MAN)
Wide area network (WAN) A transcontinental or global area

THE GLOBAL INTERNET

The Internet has become the world's most extensive, public

communication system that now rivals the global telephone system in reach and
range. An Internet service provider (ISP) is a commercial organization with a
permanent connection to the Internet that sells temporary connections to retail
subscribers.
THE DOMAIN NAME SYSTEM

Because it would be incredibly difficult for Internet users to remember

strings of 12 numbers, the Domain Name System (DNS) converts domain names
to IP addresses.

.com Commercial organizations/businesses

.edu Educational institutions
.gov U.S. government agencies
.mil U.S. military
.net Network computers
.org Nonprofit organizations and foundations
.biz Business firms
.info Information providers
INTERNET SERVICES AND COMMUNICATION TOOLS

INTERNET SERVICES

Capability Functions Supported

E-mail Person-to-person messaging; document sharing
Chatting and instant Interactive conversations
messaging
Newsgroups Discussion groups on electronic bulletin boards
Telnet Logging on to one computer system and doing work
on another
File Transfer Protocol Transferring files from computer to computer
(FTP)
World Wide Web Retrieving, formatting, and displaying information
(including text, audio, graphics, and video) using
hypertext links

THE WEB

A typical web site is a collection of web pages linked to a home page.

HYPERTEXT
Web pages are based on a standard Hypertext Markup Language
(HTML), which formats documents and incorporates dynamic links to other
documents and pictures stored in the same or remote computers. Hypertext
Transfer Protocol (HTTP) is the communications standard used to transfer
pages on the web.

WEB SERVERS

A Web server is software for locating and managing stored Web pages.
SEARCHING FOR INFORMATION ON THE WEB

SEARCH ENGINES

Search Engines attempt to solve the problem of finding useful information

on the Web nearly instantly, and arguably, they are the "killer app" of the Internet
era. Search engines have become major shopping tools by offering what is now
called search engine marketing. Search engine optimization (SEO) is the
process of improving the quality and volume of Web site achieve a higher ranking
with the major search engines when certain keywords and phrases are put in the
search field.

WEB 2.0

The second-generation interactive Internet-based services are referring to

as Web 2.0. It has four defining features: interactivity, real-time user control,
social participation (sharing), and user-generated content. A blog, the popular
term for a Weblog, is a personal Web site that typically contains a series of
chronological entries (newest to oldest) by its author, and links to related web
pages.

WEB 3.0: THE FUTURE WEB

The future of the Web involves developing techniques to make searching

the 100 billion public Web pages more productive and meaningful for ordinary
people. Web 1.0 solved the problem of obtaining access to information. Web 2.0
solved the problem of sharing that information with others and building new Web
experiences. Web 3.0 is the promise of a future Web where all this digital
information, all these contacts, can be woven together into a single meaningful
experience. Sometimes this is referred to as the Semantic Web which means
"meaning".
THE WIRELESS REVOLUTION

Wireless communication helps businesses more easily stay in touch with

customers, suppliers, and employees and provides more flexible arrangements
for organizing work. In addition to voice transmission, they feature capabilities for
e-mail, messaging, wireless Internet access, digital photography and personal
information management. The features of iPhone and BlackBerry illustrate the
extent to which cellphones have evolved into small mobile computers.

WIRELESS COMPUTER NETWORKS AND INTERNET ACCESS

If you have a laptop computer, you might be able to use it to access the
Internet as you move from room to room in your dorm, or table to table in in your
university library.

BLUETOOTH
Bluetooth is the popular name for the 802.15 wireless networking
standard, which is useful for creating small personal area networks
(PANs). Although Bluetooth lends itself to personal networking, it has uses in
large corporations.

WI-FI AND WIRELESS INTERNET ACCESS

The 802.11 set of standard for wireless LANs and wireless Internet access
is also known as Wi-Fi. The first of these standards to be widely adopted was
502.11b, which can transmit up to 11 Mbps in the unlicensed 2.4-GHz band and
has an effective distance of 30 to 50 meters. Hotspots typically consist of one or
more access points providing wireless Internet access in a public place
WIMAX
The range of Wi-Fi systems is no more than 300 feet from the base
station, making it difficult for rural groups that don't have cable or DSL service to
find wireless access to the Internet. The IEEE developed a new family of
standards known as WiMax to deal with these problems. WiMax, which stands
for Worldwide Interoperability for Microwave Access, is the popular term for IEEE
Standard 802.16.

RADIO FREQUENCY IDENTIFICATION (RFID)

Radio frequency identification (RFID) systems provide a powerful

technology for tracking the movement of goods throughout the supply chain.
RFID systems use tiny tags with embedded microchips containing data about an
item and its location to transmit radio signals over a short distance to RFID
readers.

WIRELESS SENSOR NETWORKS

Wireless sensor networks (WSNs) are networks of interconnected

wireless devices that are embedded into the physical environment to provide
measurements of many points over large spaces. These devices have built-in
processing, storage, and radio frequency sensors and antennas. Wireless sensor
networks are valuable in areas such as monitoring environmental changes,
monitoring traffic or military activity, protecting property, efficiently operating and
managing machinery and vehicles, establishing security perimeters, monitoring
supply chain management, or detecting chemical, biological, or radiological
material.
 SECURING INFORMATION SYSTEMS

SYSTEM VULNERABILITY AND ABUSE

When large amounts of data are stored in electronic form, they are
vulnerable to many more kinds of threats than when they existed in manual form.
Through communications networks, information systems in different locations are
interconnected. The potential for unauthorized access, abuse, or fraud is not
limited to a single location but can occur at any access point in the network.

INTERNET VULNERABILITIES

Large public networks, such as the Internet, are more vulnerable than
internal networks because they are virtually open to anyone. The Internet is so
huge that when abuses do occur, they can have an enormously widespread
impact. When the Internet becomes part of the corporate network, the
organization's information systems are even more vulnerable to actions from
outsiders.

WIRELESS SECURITY CHALLENGES

It depends on how vigilant you are. Even the wireless network in your
home is vulnerable because radio frequency bands are easy to scan. Both
Bluetooth and Wi-Fi networks is only several hundred feet, it can be extended up
to one-fourth of a mile using external antennae.

MALICIOUS SOFTWARE: VIRUSES, WORMS, TROJAN HORSES, AND

SPYWARE
Malicious software programs are referred to as malware and include a
variety of threats, such as computer viruses, worms, and Trojan horses. Worms
and viruses are often spread over the Internet from files of downloaded software,
from files attached to e-mail transmissions, or from compromised e-mail
messages or instant messaging. Many users find such spyware annoying and
some critics worry about its infringement on computer users' privacy.

HACKERS AND COMPUTER CRIME

A hacker is an individual who intends to gain unauthorized access to a

computer system. Within the hacking community, the term cracker is typically
used to denote a hacker with criminal intent, although in the public press, the
terms hacker and cracker used interchangeably. Cybervandalism is the
intentional disruption, defacement, or even destruction of a Web site or corporate
information system.

SPOOFING AND SNIFFING

Hackers attempting to hide their true identifies often spoof, or

misrepresent, themselves by using fake e-mail addresses or masquerading as
someone else. Spoofing also may involve redirecting a Web link to an address
different from the intended one, with the site masquerading as the intended
destination. A sniffer is a type of eavesdropping program that monitors
information traveling over a network.

DENIAL-OF-SERVICE ATTACKS

In a denial-of-service (DoS) attack, hackers flood a network server or

Web server with many thousands of false communications or requests for
services to crash the network. A distributed denial-of-service (DDoS) attack
uses numerous computers to inundate and overwhelm the network from
numerous launch points.

COMPUTER CRIME

Most hacker activities are criminal offenses, and the vulnerabilities of

systems we have just described make them targets for other types of computer
crime as well. No one knows the magnitude of the computer crime problem -
how many systems are invaded, how many people engage in the practice, or the
total economic damage. The most economically damaging kinds of computer
crimes are DoS attacks, introducing viruses, theft of services, and disruption of
computer systems.

IDENTITY THEFT

Identity Theft is a crime in which an imposter obtains key pieces of

personal information, such as social security identification numbers, driver's
license numbers, or credit card numbers, to impersonate someone else.

CLICK FRAUD

Click Fraud occurs when an individual or computer program fraudulently

clicks on an online ad without any intention of learning more about the advertiser
or making a purchase.

BUSINESS VALUE OF SECURITY AND CONTROL

Many firms are reluctant to spend heavily on security because it is not

directly related to sales revenue. However, protecting information systems is so
critical to the operation of the business that it deserves a second look.

LEGAL AND REGULATORY REQUIREMENTS FOR ELECTRONIC RECORDS

MANAGEMENT
If you work in the health care industry, your firm will need to comply with
the Health Insurance Portability and Accountability Act (HIPAA) of 1996. If
you work in a firm providing financial services, your firm will need to comply with
the Financial Services Modernization Act of 1999, better known as the Gramm-
Leach-Bliley Act after its congressional sponsors. If you work in a publicly traded
company, your company will need to comply with the Public Company
Accounting Reform and Investor Protection Act of 2002, better known as
the Sarbanes-Oxley Act after its sponsors Senator Paul Sarbanes of Maryland
and Representative Michael Oxley of Ohio.

ELECTRONIC EVIDENCE AND COMPUTER FORENSICS

Computer forensics is the scientific collection, examination,

authentification, preservation, and analysis of data held on or retrieved from
computer storage media in such a way that the information can be used as
evidence in a court of law. It deals with the following problems:

 Recovering data from computers while preserving evidential integrity

 Securely storing and handling recovered electronic data
 Finding significant information in a large volume of electronic data
 Presenting the information to a court of law

Electronic evidence may reside on computer storage media in the form of

computer files and as ambient data, which are not visible to the average user.

ROLE OF AUDITING

An MIS audit examines the firm's overall security environment as well as

controls governing individual information systems.

IDENTITY MANAGEMENT AND AUTHENTICATION

To gain access to a system, a user must be authorized and

authenticated. Authentication refers to the ability to know that a person is who
he or she claims to be. Authentication is often established by
using passwords known only to authorized users.

FIREWALLS
Firewalls prevent unauthorized users from accessing private networks. A
firewall is a combination of hardware and software that controls the flow of
incoming and outgoing network traffic.
INTRUSION DETECTION SYSTEMS

Intrusion Detection Systems feature full-time monitoring tools placed at the

most vulnerable points or "hot spots" of corporate networks to detect and deter
intruders continually.

ANTIVIRUS AND ANTISPYWARE SOFTWARE

Antivirus software is designed to check computer systems and drives for

the presence of computer viruses.

ENCRYPTION AND PUBLIC KEY INFRASTRUCTURE

Two methods for encrypting network traffic on the Web are SSL and S-
HTTP. Secure Sockets Layer (SSL) and its successor Transport Layer Security
(TLS) enable client and server computers to manage encryption and decryption
activities as they communicate with each other during a secure Web session.
Secure Hypertext Transfer Protocol (S-HTTP) is another protocol used for
encrypting data flowing over the Internet, but it is limited to individual messages,
where as SSL and TLS are designed to establish a secure connection between
two computers. A more secure form of encryption called public key encryption
uses two keys: one share (or public) and one totally private. The keys are
mathematically related so that data encrypted with one key can be decrypted
using only the other key.

Digital certificates are data files used to establish the identity of users and
electronic assets for protection of online transactions.

ENSURING SYSTEM AVAILABILITY

In online transaction processing, transactions entered online are

immediately processed by the computer. Multitudinous changes to databases,
reporting, and requests for information occur each instant. Fault-tolerant
computer systems contain redundant hardware, software, and power supply
components that create an environment that provides continuous, uninterrupted
service.

CONTROLLING NETWORK TRAFFIC: DEEP PACKET INSPECTION

A technology called deep packet inspection (DPI) examines data files and
sort out low-priority online material while assigning higher priority to business-
critical files.

SECURITY ISSUES FOR CLOUD COMPUTING AND THE MOBILE DIGITAL

PLATFORM

Security in the Cloud

Cloud users should ask whether cloud providers will submit to external
audits and security certifications. These kinds of controls can be written into the
service level agreement (SLA) before to signing with a cloud provider.

Securing Mobile Platforms

If mobile devices are performing many of the functions of computers, they

need to be secured like desktops and laptops against malware, theft, accidental
loss, unauthorized access, and hacking attempts. Mobile devices accessing
corporate systems and data require special protection.
 KEY SYSTEM APPLICATIONS FOR THE DIGITAL AGE

ACHIEVING OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY:

ENTERPRISE APPLICATIONS

ENTERPRISE SYSTEMS

Enterprise systems, or enterprise resource planning (ERP) systems,

integrate the key internal business processes of a firm into a single software
system so that information flows seamlessly throughout the organization,
improving coordination, efficiency, and decision making.

Enterprise software is based on a suite of integrated software modules

and a common central database. The database collects data from and feeds the
data into numerous applications that supports nearly all of an organization's
internal business activities. When new information is entered by one process, the
information is made available immediately to other business processes.

Enterprise software is built around thousands of predefined business

processes that reflect best practices. Best practices are the most successful
solutions or problem-solving methods in an industry for consistently and
effectively achieving a business objective.
 Organizations implementing commercial enterprise software first select
the business processes they wish to use from the software and map their own
processes to these, using the software's configuration tables. Although
businesses may choose to rewrite portions of the software to match their existing
processes, this can degrade system performance and fail to reap the benefits of
this software.

Enterprise systems produce value by increasing organizational efficiency

and by providing firmwide information to help managers make better decisions.
Enterprise systems create a foundation for a more customer-driven organization
by integrating firm data to enable quicker responses to customer requests and
information.

Enterprise systems:

 Use analytical tools to evaluate a firm's overall performance

 Use standard definitions, formats, and performance figures across the
organization

SUPPLY CHAIN MANAGEMENT SYSTEMS

Supply chain management refers to the coordination of activities and

involved in making and moving a product. The supply chain is the network of
businesses and business processes involved the creation and selling of a
product, from suppliers that procure raw materials through retail outlets and
customers. The upstream portion of the supply chain includes the organization's
suppliers and the processes for managing relationships with them. The
downstream portion consists of the organizations and processes for distributing
and delivering products to the final customers. The manufacturer also has
internal supply chain processes for transforming the materials and services
furnished by suppliers into finished goods and for managing materials and
inventory.
 Inefficiencies in the supply chain, such as parts shortages, underutilized
plant capacity, excessive inventory, or runaway transportation costs, are caused
by inaccurate or untimely information and can waste as much as 25% of
operating costs. Uncertainties also arise because many events cannot be
foreseen—product demand, late shipments from suppliers, defective parts or raw
material, or production process breakdowns. More accurate information from
supply chain management systems reduces uncertainty and the impact of
the bullwhip effect, in which information about the demand for a product gets
distorted as it passes from one entity to the next across the supply chain. With
perfect information about demand and production, a firm can implement an
effective just-in-time strategy, delivering goods in the right amount and as they
are needed.

Supply chain software can be classified as either:

 Supply chain planning systems: Systems which enable the firm to

generate demand forecasts for a product, develop sourcing and
manufacturing plans for that product, make adjustments to production and
distribution plans, and share that information with relevant supply chain
members. One of the most important supply chain planning functions
is demand planning, which determines how much product a business
needs to make to satisfy all of its customers' demands.
 Supply chain execution systems: Systems that manage the physical
flow of products through distribution centers and warehouses to ensure
that products are delivered to the right locations in the most efficient
manner.

Before the Internet, supply chain coordination was hampered by the

difficulties of making information flow smoothly among disparate internal supply
chain systems. Today, using intranets and extranets, all members of the supply
chain can instantly communicate with each other, using up-to-date information to
adjust purchasing, logistics, manufacturing, packaging, and schedules. The
Internet provides a standard set of tools that are used by companies all over the
world to coordinate global supply chains that include participants from many
countries

The business value of supply chain management systems includes:

 Streamlined supply chain and accurate information

 Reduced supply chain costs
 Increased sales through accurate product availability

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

Customers can be seen as an enterprise's most valuable asset, and

customer relationship management systems enable large firms to understand
and work with their customers.

CRM systems capture and integrate customer data from all over the
organization, consolidating the data, analyzing the data, and then distributing the
results to various systems and customer touch points across the enterprise. A
touch point (also known as a contact point) is a method of interaction with the
customer, such as telephone, e-mail, customer service desk, conventional mail,
Web site, or retail store.

Well-designed CRM systems provide a single enterprise view of the

customer and provide customers with a single view of the company regardless of
the touch point the customer uses.

Commercial customer relationship management (CRM) software

packages range from niche tools that perform limited functions, such as
personalizing Web sites for specific customers, to large-scale enterprise
applications. The more comprehensive CRM packages contain modules for:
  Partner relationship management (PRM): PRM software uses many of
the same data, tools, and systems as customer relationship management
to enhance collaboration between a company and its selling partners. It
provides a company and its selling partners with the ability to trade
information and distribute leads and data about customers, integrating
lead generation, pricing, promotions, order configurations, and availability.
 Employee relationship management (ERM). ERM software deals with
employee issues that are closely related to CRM, such as setting
objectives, employee performance management, performance-based
compensation, and employee training.

CRM systems typically provide software or tools for:

 Sales force automation (SFA): SFA modules help sales staff increase
their productivity by focusing sales efforts on the most profitable
customers. They provide sales prospect and contact information, product
information, product configuration capabilities, and sales quote generation
capabilities.
 Customer service: Customer service modules provide information and
tools to make call centers, help desks, and customer support staff more
efficient. They have capabilities for assigning and managing customer
service requests and may include Web-based self-service capabilities.
 Marketing: Marketing modules support direct-marketing campaigns with
capabilities for capturing prospect and customer data, qualifying leads,
and scheduling and tracking campaign mailings. They include tools for
analyzing marketing and customer data-identifying profitable and
unprofitable customers, designing products and services to satisfy specific
customer needs and interests, and identifying opportunities for cross-
selling, up-selling, and bundling. Cross-selling is the marketing of
complementary products to customers. Up-selling is the marketing of
higher-value products or services to new or existing customers. Bundling
 is cross-selling in which a combination of products is sold as a bundle at a
price lower than the total cost of the individual products.

CRM applications may support either:

 Operational CRM: Customer facing applications such as tools for sales

force automation, call center and customer service support, and marketing
automation.
 Analytical CRM: Applications that analyze customer data generated by
operational CRM applications to provide information for improving
business performance management. Analytical CRM applications are
based on data warehouses that consolidate the data from operational
CRM systems and customer touch points for use with online analytical
processing (OLAP), data mining, and other data analysis techniques. An
important output of analytical CRM is the customer lifetime value (CLTV).
CLTV is based on the relationship between the revenue produced by a
specific customer, the expenses incurred in acquiring and servicing that
customer, and the expected life of the relationship between the customer
and the company.

The business value of CRM systems includes:

 Increased customer satisfaction

 Reduced direct-marketing costs
 More effective marketing
 Lower costs for customer acquisition and retention
 Increased sales revenues through identifying profitable customers
 Reduced churn rate: The churn rate measures the number of customers
who stop using or purchasing products or services from a company and is
an important indicator of the growth or decline of a firm's customer base.
 E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS

ELECTRONIC BUSINESS, ELECTRONIC COMMERCE, AND THE EMERGING

DIGITAL FIRM
E-commerce refers to:
 The use of the Internet and the Web to transact business
 Digitally enabled commercial transactions between and among
organizations and individuals.

The rapid growth of e-commerce since 1995 is due to the unique features
of the Internet and the Web as a commercial medium:
 Ubiquity: Internet/Web technology is everywhere, at work, home, and
elsewhere, and anytime, providing a ubiquitous marketspace, a
marketplace removed from a temporal and geographical location.
 Global reach: The technology reaches across national boundaries.
 Universal standards: There is one set of Internet technology standards,
which greatly lower market entry costs (the costs to bring goods to market)
and reduce search costs (the effort to find products) for the consumer.
 Richness: Information richness refers to the complexity and content of a
message. Internet technology allows for rich video, audio, and text
messages to be delivered to large numbers of people.
 Interactivity: The technology works through interaction with the user.
 Information density: Information density is the total amount and quality
of information available to all market participants. Internet technology
reduces information costs and raises quality of information, enabling price
transparency (the ease for consumers of finding a variety of prices)
and cost transparency (the ability of consumers to determine the actual
costs of products). Information density allows merchants to engage
in price discrimination (selling goods to targeted groups at different
prices).
  Personalization/customization: E-commerce technologies
permit personalization (targeting personal messages to consumers)
and customization (changing a product or service based on consumer
preference or history.
The Internet also shrinks information asymmetry, which occurs
when one party in a transaction has more information with respect to the
transactions than the other party. For instance, the Web has reduced the
information asymmetries surrounding auto purchases.
Digital markets are very flexible and efficient because they allow:
 Reduced search and transaction costs
 Lower menu costs (merchant's costs of changing prices)
 Price discrimination
 Dynamic pricing (prices changing based on the demand characteristics
of the customer or the seller's supply situation)
 Disintermediation: Elimination of intermediaries such as distributors or
retailers

E-commerce technologies have revolutionized commerce and enabled a

variety of new business models. Some are pure-play models, based purely on
the Internet. Others may be hybrid clicks-and-mortar models, using Web sites as
an extension of a traditional business, such as LLBean.com. New business
models include:
 Virtual storefronts: Such as Amazon.com
 Information broker: Such as Realtor.com
 Transaction broker: Such as E*Trade.com
 Online marketplace: Such as Ebay.com
 Content provider: Such as iTunes.com. The ability to deliver digital
goods and digital content over the Web has created new alternatives to
traditional print and broadcast media. Popular digital content includes
online games, digital versions of print newspapers, Internet radio,
 downloadable movies, online television broadcasts, Podcasting (Internet
audio broadcasts).
 Online service provider: Such as Salesforce.com.
 Virtual community: Such as YouTube.com; Online communities
include social networking sites, online communities used by individuals for
expanding business or social contacts, and social shopping sites, in which
users swap shopping ideas.
 Portal: Such as Yahoo.com. Some portals combine content from various
sources, using syndication as well providing additional value.

Online syndicators aggregate content or applications from multiple

sources, package them for distribution, and resell them to third-party Web sites.

These new business models may have revenue generated from:

 Sales of traditional or digital goods
 Selling advertising space for banner ads and pop-up ads
 Transaction fees
 Sales of marketing information collected by users
 Directing buyers to sellers

MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS

Many firms obtain extraordinary business value from enterprise

applications because of their power to improve process coordination and
management decision making.

However, enterprise systems, supply chain management, and customer

relationship management systems are very expensive to purchase and
implement. Costs run even higher for organizations with global operations, which
must manage organizational and technology changes in many different
languages, time zones, currencies, and regulatory environments.
 Enterprise applications require not only deep-seated technological
changes but also fundamental changes in the way the business operates,
including changes to business processes, employee responsibilities, and
functions.

Enterprise applications also introduce "switching costs." Once an

enterprise application is purchased and implemented, it becomes very costly to
switch vendors.

Enterprise applications require defining and implementing standardized

definitions of data throughout the organization.

Solutions for gaining more value from enterprise applications include:

 Enterprise solutions (enterprise suites or e-business suites): Flexible

enterprise software that enables close linking between CRM, SCM, and
enterprise systems, as well as to customer and supplier systems.
 Service platforms: A service platform integrates multiple applications from
multiple business functions, business units, or business partners to deliver
a seamless experience for the customer, employee, manager, or business
partner. Enterprise-wide service platforms provide a greater degree of
cross-functional integration than the traditional enterprise applications. To
accomplish this, software tools (such as Web services and XML) use
existing applications as building blocks for new cross-enterprise
processes. Portal software can integrate information from enterprise
applications and disparate in-house legacy systems, presenting it to users
through a Web interface so that the information appears to be coming
from a single source.
 MANAGING KNOWLEDGE

THE KNOWLEDGE MANAGEMENT LANDSCAPE

Knowledge management systems have become one of the fastest-
growing areas of corporate and government software investment.

Studies have found that a substantial part of a firm's stock market value is
related to its intangible assets, of which knowledge is one important component,
along with brands, reputations, and unique business processes. Knowledge-
based projects have been known to produce extraordinary returns on investment,
although knowledge-based investments are difficult to measure.

To transform information into knowledge, a firm must expend additional

resources to discover patterns, rules, and contexts where the knowledge
works. Wisdom is thought to be the collective and individual experience of
applying knowledge to the solution of problems.

Tacit knowledge is knowledge residing in the minds of employees that

has not been documented.
Explicit knowledge is knowledge that has been documented.

The most important dimensions of knowledge are:

 Knowledge is a firm asset: Knowledge is an intangible asset requiring
organizational resources and whose value increases as it is shared.
 Knowledge has different forms: Knowledge includes craft, skills,
procedures, and understanding of causality
 Knowledge has a location: Knowledge resides with individuals, social
groups, is difficult to transfer or extract
 Knowledge is situational: Knowledge may be applicable only in certain
contexts or situations
 Organizational learning is the process of gaining experience through
data collection, measurement, experiment, and feedback and using these
experiences to create new business processes and management decision
making.
Knowledge management is a set of processes to create, store, transfer,
and apply knowledge in the organization. Knowledge management increases the
ability of the organization to learn from its environment and to incorporate
knowledge into its business processes. The knowledge management value chain
includes four main steps that add value to raw data and information as it is
transformed into usable knowledge:
1. Knowledge acquisition: Knowledge may be acquired by building
repositories of documents, enabling systems for expert advice, analyzing
data for patterns, or by using knowledge workstations. An effective
knowledge system requires systematic data from a firm's transaction
processing systems and data from external sources.
2. Knowledge storage: Storing knowledge in databases and document
management systems
3. Knowledge dissemination: Knowledge may be transferred to managers
and employees via portals, e-mails, search engines, collaborative office
systems, training programs, and other means.
4. Knowledge application: New knowledge must be built into an
organizations processes and application systems and become a part of
decision-making systems.

For each step, management and organizational activities, or

organizational capital, are required to obtain returns on IT investments and
systems used for that step.
 Effective knowledge management systems require organizational and
management capital to promote a "knowledge culture" and programs for
knowledge management, including the creation of a chief knowledge officer
(CKO) and communities of practice (COPs).

There are three major types of knowledge management systems:

 Enterprise-wide knowledge management systems
 Knowledge work systems
 Intelligent techniques
 ENHANCING DECISION MAKING

DECISION MAKING AND DECISION-SUPPORT SYSTEMS (DDS)

Decisions are made at all levels of the firm. Some decisions are very
common and routine but exceptionally valuable. Although the value of improving
any single one of these decisions may be small, improving hundreds of
thousands of these small decisions adds up to a large annual value.

Decisions are classified according to type:

 Unstructured decisions are those in which the decision maker must
provide judgment, evaluation, and insights into the problem definition.
 Structured decisions, by contrast, are repetitive and routine, and
decision makers can follow a definite procedure for handling them to be
efficient.
 Semistructured decisions are those in which only part of the problem
has a clear-cut answer provided by an accepted procedure. In general,
structured decisions are more prevalent at lower organizational levels, and
unstructured decision making is more common at higher levels.
There are different types of decision-making at different levels:
 Senior executives face many unstructured decision situations, such as
establishing the firm's five or ten-year goals
 Middle management faces more structured decision scenarios but their
decisions may include unstructured components.
 Operational management and rank-and-file employees tend to make more
structured decisions.

There are four different stages in decision making:

1. Intelligence: Consists of identifying and understanding a problem
2. Design: Involves exploring various solutions
3. Choice: Consists of choosing among available solutions
 4. Implementation: Involves making the chosen alternative work and
monitoring how the solution is working.

The classical model of management describes 5 functions of managers:

Planning, organizing, coordinating, deciding, and controlling.

Contemporary behavioral models of management state that the actual

behavior of managers appears to be less systematic, more informal, and less
well organized than the classical model envisions.

Managerial roles fall into three categories:

 Interpersonal roles: Managers act as figureheads, leaders, liaisons.
 Informational roles: Managers act as a nerve center, information
disseminators, and spokespersons.
 Decisional roles: Managers act as entrepreneurs, disturbance handlers,
resource allocators, and negotiators.
In some of these roles, information systems are not helpful for improving
decisions, such as for the roles of figurehead, leader, entrepreneur, or
disturbance handler.

Additionally, IT investments for supporting decision making may not

produce positive results for three main reasons:
 Information quality: High-quality decisions require high-quality
information regardless of information systems. There are seven
dimensions of information quality when designing decision-support
systems: Accuracy, integrity, consistency, completeness, validity,
timeliness, and accessibility. Even with timely, accurate information, some
managers make bad decisions.
 Management filters: Managers filter by turning off information they do not
want to hear because it does not conform to their prior conceptions.
 Organizational inertia and politics: Organizations are bureaucracies
with limited capabilities and competencies for acting decisively. When
environments change and new business models should be followed,
strong forces within organizations resist making decisions calling for major
change.
 BUILDING AND MANAGING SYSTEMS

BUILDING INFORMATION SYSTEMS

SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE

The process of building a new information system is one kind of planned

organizational change. System builders must understand how a system will affect
the organization as a whole. They must consider how the nature of work groups
will change and how much change is needed.

Four kinds of structural organizational change which are enabled by

information technology are:

 Automation: Enables employees to perform their tasks more efficiently

and effectively
 Rationalization of procedures: The streamlining of standard operation
procedures, eliminating obvious bottlenecks, so that automation can make
operating procedures more efficient
 Business process reengineering: Analyzes, simplifies, and redesigns
business processes with a mind to radically reduce business costs
 Paradigm shift: A radical reconceptualization of the nature of the
business and the nature of the organization

Paradigm shifts and re-engineering often fail because extensive

organizational change is difficult to orchestrate. However, the rewards of
successful paradigm shifts can also be very high.

Business process reengineering involves radical restructuring of business

processes before applying information technology to make them more efficient.
The mortgage industry has benefited from extensive reengineering of the
mortgage application process to replace "desk-to-desk" sequential work on
documents with a "work cell" approach in which many people work on the same
document simultaneously. Reengineering sometimes uses workflow
management software to move documents easily and efficiently between
different users and locations.

Effective reengineering requires understanding which business processes

need improvement and how this improvement helps the firm execute its strategy.
Identifying the business processes with the highest priority includes performing a
strategic analysis and identifying pain points, processes that produce the most
complaints.
After identification, the business process itself must be analyzed in terms
of its inputs and outputs, flow of products or services, activities, resources,
information flow and structure, and process owners, actors, and decision makers.
Further analysis identifies the process costs and time taken to perform the
process. Business processes are typically measured along the following
dimensions:

 Process cost
 Process time
 Process quality
 Process flexibility

Once a business process is understood, a variety of techniques or

principles can be used to improve it, such as:

 Replace sequential steps in the process with parallel steps

 Enrich jobs by enhancing decision authority and concentrating information
 Enable information sharing throughout to all participants
 Eliminate buffers (decision delays and inventories)
 Transform batch processing and decision making into continuous flow
 Processes
 Automate decision tasks where possible
 Business process management (BPM) provides a methodology and
tools for dealing with the organization's ongoing need to revise its numerous
internal and inter organizational business processes.

BPM includes work flow management, business process modeling, quality

management, change management, and tools for recasting the firm's business
processes into a standardized form where they can be continually manipulated.
Process-mapping tools are used to identify and document existing processes and
to create models of improved processes that can then be translated into software
systems. BPM software tools automatically manage processes across the
business, extract data from various sources and databases, and generate
transactions in multiple related systems. BPM also includes process monitoring
and analytics to verify that process performance has been improved and
measure the impact of process changes on key business performance indicators.

Quality management is another area of continuous process

improvement. Total quality management (TQM) is a concept that sees quality
as a responsibility shared by everyone in the organization. TQM focuses on
making a series of continuous process improvements rather than dramatic bursts
of change and is considered more incremental than business process
reengineering. Six sigma is another quality concept, signifying a quality goal of
3.4 defects per millions of opportunities.

Benchmarking consists of setting strict standards for products, services,

and other activities, and then measuring performance against those standards.
Companies may use external industry standards, standards set by other
companies, internally developed high standards, or some combination of the
three.
 PROJECT MANAGEMENT: ESTABLISHING THE BUSINESS VALUE OF
SYSTEMS AND MANAGING CHANGE

THE IMPORTANCE OF PROJECT MANAGEMENT

29 percent of all technology investment projects are completed on time, on

budget, and with all features and functions originally specified, with 30-40 percent
of all software projects considered "runaway" projects, far exceeding schedules
and projects.

A systems development project without proper management will most

likely suffer these consequences:

 Costs that greatly exceed budgets

 Unexpected time slippage
 Technical performance that is less than expected
 Failure to obtain anticipated benefits

Other types of project failings include:

 Systems not being used as intended

 Failing to achieve business requirements
 Poor user interface
 Poor data quality

A project is a planned series of related activities for achieving a specific

business objective.

Project management refers to the application of knowledge, skills, tools,

and techniques to achieve specific targets within specified budget and time
constraints. Project management for information systems must deals with five
major variables:
  Scope: Defines what work is or is not included in a project
 Time: The amount of time required to complete the project
 Cost: Based on the time to complete a project multiplied by the cost of
human resources required to complete the project
 Quality: How well the end result of a project satisfies the objectives
specified by management
 Risk: Refers to potential problems that would threaten the success of a
project

SELECTING PROJECTS

Because there are far more ideas for systems projects than there are
resources, it is important to select projects that promise the greatest benefit to
the business and complement the firm's business strategy.

In a large corporation, the management structure for information systems

projects helps ensure that the most important projects are given priority.

An information systems plan helps identify projects that will deliver the
most business value. The plan is a road map indicating the direction of systems
development (the purpose of the plan), the rationale, the current
systems/situation, new developments to consider, the management strategy, the
implementation plan, and the budget. Other important components of an
information systems plan include target dates and milestones to help evaluate
the plan's future progress and management decisions regarding hardware and
organizational change.

There are two principal methodologies for establishing the essential

information requirements of the organization as a whole:

 Enterprise analysis (or business systems planning): Examines the

entire organization in terms of organizational units, functions, processes,
and data elements to identify the key entities and attributes of the
 organization's data. The central method used in the enterprise analysis
approach is to take a large sample of managers and ask them how they
acquire and use information, what their objectives are, how they make
decisions, and what their data needs are. The weakness of enterprise
analysis is that it produces an enormous amount of data that is expensive
to collect and difficult to analyze.
 Critical success factors (or strategic analysis): This methodology sees
a firm's success as based on a small number of critical success factors
(CSFs) defined by top managers. New information systems requirements
should be focused on providing the information to help meet CSF goals.
The principal method used in CSF analysis is personal interviews with
three or four top managers identifying their goals and the resulting CSFs.
Systems are built to deliver information on these CSFs. Although this
method produces less data than enterprise analysis, there is no
particularly rigorous way in which individual CSFs can be aggregated into
a clear company pattern, and difficulty may arise distinguishing between
individual and organizational CSFs.

Once the overall direction of systems development has been defined,

portfolio analysis can be used to evaluate alternative system projects. Portfolio
analysis inventories all of the organization's information systems projects and
assets, and identifies risks and benefits associated with them. Most desirable, of
course, are systems with high benefit and low risk.

By using portfolio analysis, management can determine the optimal mix of

investment risk and reward for their firms, balancing riskier high-reward projects
with safer lower-reward ones.

A scoring model is a quick method of deciding among alternative systems

based on a system of ratings for selected objectives. Scoring models give
alternative systems a single score based on the extent to which they meet the
selected objectives.
 MANAGING GLOBAL SYSTEMS

THE GROWTH OF INTERNATIONAL INFORMATION SYSTEMS

An international information systems architecture consists of the basic

information systems required by organizations to coordinate worldwide trade and
other activities.

When building an international system, one must first understand the

global environment in which your firm is operating, including the business
drivers that are pushing your industry toward global competition and
management challenges. The structure of the organization, locations, job
functions, management issues, technology platforms will all factor in to a
successful globalization plan.

The global business drivers can be divided into two groups: general
cultural factors and specific business factors.

General cultural factors include:

 Global communication and transportation technologies

 Development of global culture
 Emergence of global social norms
 Political stability
 Global knowledge base

Specific business factors include:

 Global markets
 Global production and operations
 Global coordination
 Global workforce
 Global economies of scale
 Likewise, challenges and obstacles to global business systems include
global and specific business challenges:

Global challenges include:

 Cultural particularism: Regionalism, nationalism, language differences

 Social expectations: Brand-name expectations, work hours
 Political laws: National laws governing transborder data flow and privacy,
commercial regulations

Specific business challenges include:

 Standards: Different standards for EDI, e-mail, telecommunications

 Reliability: Phone networks not uniformly reliable
 Speed: Different data transfer speeds, many slower than the U.S
 Personnel: Shortages of skilled consultants

Most companies have inherited patchwork international systems from the

distant past with little online control and communication. Corporations in this
situation increasingly face powerful competitive challenges in the marketplace
from firms that have rationally designed truly international systems.
MANAGEMENT
INFORMATION
SYSTEMS

SUBMITTED BY:

KARL ONIEL T. AUSTRIA

BSBA-4