Mis Slides Merged

Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Why Information Systems Matter

There are four reasons why IT makes a difference to the
success of a business:
• Capital management
• Foundation of doing business
• Productivity
• Strategic opportunity and advantage
1.1
Capital Management:
• IT is the largest single component of capital

investment in the United States.
• About $1.8 trillion is spent each year by American

businesses.
• Managers and business students need to know how

to invest this capital wisely.
• The success of your business in the future may well

depend on how you make IT investment decisions.
1.2
Foundation of doing business:

• Most businesses today could not operate without
extensive use of information systems and
technologies.
• IT can increase market share.
• IT can help a business become a high-quality,

low-cost producer.
• IT is vital to the development of new products.
1.3
The Interdependence between Organizations and

Information Systems
There is a growing interdependence between a firm’s information systems and its business capabilities.
Changes in strategy, rules, and business processes increasingly require changes in hardware, software,
databases, and telecommunications. Often, what the organization would like to do depends on what its
systems will permit it to do.
1.4
Productivity:
• IT is one of the most important tools managers
have to increase productivity and efficiency of
businesses.
• According to the Federal Reserve Bank, IT has

reduced the rate of inflation by 0.5 to 1% in the
last decade. For firms this means IT is a major
factor in reducing costs.
• It is estimated that IT has increased productivity

in the economy by about 1% in the last decade.
For firms this means IT is a major source of labor
and capital efficiency.
1.5
Strategic Opportunity and Advantage:
• Create competitive advantage: IT makes it

possible to develop competitive advantages.
• New Business Models: Dell Computer has built its

competitive advantage on an IT enabled
build-to-order business model that other firms
have not been able to imitate.
1.6
Strategic Opportunity and Advantage:
• Create new services: eBay has developed the

largest auction trading platform for millions of
individuals and businesses. Competitors have
not been able to imitate its success.
• Differentiate yourself from your competitors:

Amazon has become the largest book retailer in
the United States on the strength of its huge
online inventory and recommender system. It has
no rivals in size and scope.
1.7
Why IT Now? Digital Convergence and the Changing

Business Environment
Growing impact of IT in business firms can be
assessed from the following five factors:
• Internet growth and technology convergence
• Transformation of the business enterprise
• Growth of a globally connected economy
• Growth of knowledge and information-based
economies
• Emergence of the digital firm
1.8
The Internet and Technology Convergence:
• Growth in e-business, e-commerce, and

e-government
• Internet is bringing about rapid changes in

markets and market structure: financial services
and banking such as eTrade.com.
• The Internet is making many traditional

business models obsolete: the corner music
store and video store.
1.9
Rise of the Information Economy:
• Time-based competition
• Shorter product life
• Turbulent environment
• Limited employee knowledge base
1.10
Emergence of the Digital Firm:

• Digital firm-All of org’s significant business
relationships with customers, suppliers, and
employees are digitally enabled
• Core business processes accomplished using
digital networks
• Agile sensing and responding to environmental
changes
• Seamless flow of information within the firm, and
with strategic partners
• Cisco & Dell computers – Digital firms
1.11
The Emerging Digital Firm
1.12
Business processes:
Refer to the set of logically related tasks & behaviors that
organizations develop over time to produce specific business
results & the unique manner in which these activities are
organized & coordinated.
• Eg: Developing a new product, generating & fulfilling order,

creating marketing plan, hiring an employee
1.13
PERSPECTIVES ON INFORMATION SYSTEMS
What Is an Information System?
Technology perspective: A set of interrelated

components that collect (or retrieve), process, store,
and distribute information to support decision
making and control in an organization
1.14
What is an Information System? (Continued)
• Data: Streams of raw facts representing events such

as business transactions
• Information: data that have been shaped into a form

that is meaningful and useful to human beings in
the processes such as making decisions
1.15
Perspectives on Information Systems
Data and Information
Raw data from a supermarket checkout counter can be processed and organized to produce meaningful information,
such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a specific store or sales
territory.
1.16
Functions of an Information System
1.17
Functions of an Information System
• I/p captures raw data from within the org. or from its external
environment
• Processing – converts raw i/p into a meaningful form
• O/P – transfers the processed information to the users
• Feedback – used to evaluate or correct the i/p stage
1.18
Computer-Based Information System (CBIS)
• Rely on computer hardware and software
• Processing and disseminating information
• Fixed definitions of data and procedures
• Collecting, storing, and using information
1.19
A Business Perspective on Information Systems

Information systems are more than just technology.
Businesses invest in IS in order to create value and increase
profitability.
• Information systems are an organizational and management

solution to business challenges that arise from the business
environment.
• Based on information technology but also require
significant investment in organizational and management
changes and innovations
• IS create value primarily by changing business processes
and management decision making
1.20
The Business Information Value Chain
1.21 Figure 1-7

Major Business Functions Rely on Information Systems

• Sales and marketing
• Manufacturing
• Finance
• Accounting
• Human resources
Dimensions of Information Systems
Three Important Dimensions of Information Systems
Organizations
Managers
Technology
You will need to understand and balance these

dimensions of information systems in order to create
business value.
1.22
The Organizational Dimension of Information Systems
• People ,Structure, Business processes, Culture, Politics
The Management Dimension of Information Systems

Managers are:
• Sense makers
• Decision makers
• Planners
Roles
• Senior managers - long term strategic decisions
• Middle managers - carry out the programs & plans of senior
managers
• Operational managers - monitor the firm’s daily activities
1.23
The Technology Dimension of Information Systems

Information technology is one of the tools managers
use to cope with change:
• Hardware: Physical equipment
• Software: Detailed preprogrammed instructions
that control h/w components
• Storage: Physical media for storing data and the software
• Communications technology: Transfers data from one
physical location to another
• Networks: Links computers to share data or resources
All these technologies represent resources that can be shared
throughout the organization & constitutes the firm’s IT infrastructure
(platform for building specific IS)
1.24
Management Information
System (MIS)
Information is critical
The information we have
is not what we want,
The information we want
is not the information we need,
The information we need
is not available.
Information is a Resource
฀ It is scarce
฀ It has a cost
฀ It has alternative uses
฀ There is an opportunity cost factor involved
if one does not process information
Data and Information
Data vs. Information
■ Data
฀ A “given,” or fact; a number, a statement, or an image
฀ Represents something (quantities, actions and objects) in the real
world
฀ The raw materials in the production of information
■ Information
฀ Data that have meaning within a context
฀ Data that has been processed into a form that is meaningful to the
recipient and is of real or perceived value in the current or in the
prospective actions or decisions of the recipient.
Data Manipulation
Example: customer survey
■ Reading through data collected from a customer survey with questions
in various categories would be time-consuming and not very helpful.
■ When manipulated, the surveys may provide useful information.
Types and classification of Information
Characteristics of Useful Information
System
System: A set of components that work together to
achieve a common goal. Computer-based Information
Systems take data as raw material, process it, and
produce information as output.
Components of an Information System
A Networked Information System:
Three-Tier Architecture
Corporate Corporate Mainframe
Databases Headquarters Divisional
Minicomputers
with Divisional
Databases
Marketing
and Sales Finance Production
Divisional
Databases
Regional
Office
Work-
stations Plant Minicomputers
Salesforce
Notebooks Local Area Network: Telecommunications
PCs with Local Databases Link
Types of Information Systems
฀ Operational-level systems support operational managers
by keeping track of the elementary activities and
transactions of the organization, such as sales, receipts,
cash deposits, payroll, credit decisions, and the flow of
materials in a factory.
฀ Management-level systems serve the monitoring,
controlling, decision-making, and administrative activities of
middle managers. The principal question addressed by such
systems is this: Are things working well?
฀ Strategic-level systems help senior management tackle
and address strategic issues and long-term trends, both in
the firm and in the external environment.
MAJOR TYPES OF SYSTEMS IN
ORGANIZATIONS
Transaction Processing Systems (TPS)
• A computerized system that performs and records the daily

routine transactions necessary to the conduct of the
business
• Batch processing & Online processing
• Sales order entry, reservation systems, pay roll
• Highly structured
• TPS failure for few hours - lead to firm’s demise
- UPS, airline reservation system
• Monitor status of internal operations & external
relationships
• Producers of info. for other types of IS
A Symbolic Representation for a Payroll TPS
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS)
MIS - Management level of the organization,

providing manager’s with reports & often online
access to the org. current performance & historical
records
- Depend on TPS for data
- Produces summarized weekly, monthly & yearly
results or even daily or hourly reports
• Inputs: High volume transaction level data

• Processing: Simple models
• Outputs: Summary reports
• Users: Middle managers
- Periodic schedule, Exception, demand & push reports
Example: sales report
Management Information Systems (MIS) (continued)

Management Information Systems (MIS) (continued)

A sample MIS
report
Outputs of MIS
฀ Scheduled reports
■ Produced periodically, or on schedule (daily,
weekly, monthly)
฀ Key Indicator Report
■ Summarizes the previous day’s critical
activities
฀ Demand Report
■ Gives certain report at manager's request
฀ Exception Report
■ Automatically produced when a situation is
unusual or requires management action
Decision Support System
■ Information system at the management level of an
organization that combines data and sophisticated
analytical models or data analysis tools to support
semi-structured and unstructured decision making.
■ Serves for middle management
■ Support non-routine decision making
฀ E.g. What is impact on production schedule if December sales
doubled?
■ Often use external information as well as information from
TPS and MIS
■ Processing is interactive in nature
■ Output in form of Decision analysis
■ Example: Contract Cost Analysis
Executive Support Systems
฀ Support senior management – Strategic Level
฀ Address non-routine decisions requiring judgment, evaluation,
and insight
฀ Incorporate data about external events (e.g. new tax laws or
competitors) as well as summarized information from internal
MIS and DSS
฀ User "seductive" interfaces; Users' time is a premium
฀ What if capabilities abound
฀ Input in form of Aggregate data
฀ Processing is interactive and output in form of projections
฀ Examples
■ ESS that provides minute-to-minute view of firm’s financial performance
as measured by working capital, accounts receivable, accounts payable,
cash flow, and inventory.
■ 5-year operating plan
Model of a Typical Executive Support
System
20
Interrelationship Among Systems
The various types of systems in the organization have interdependencies. TPS are major producers of information
that is required by many other systems in the firm, which, in turn, produce information for other systems. These
different types of systems are loosely coupled in most business firms, but increasingly firms are using new
technologies to integrate information that resides in many different systems.
฀ Expert system:
Knowledge based IS that uses its knowledge
about a specific, complex application area to
act as an expert consultant to end users.
฀ Strategic Information system:

apply IT to a firm’s products/ services/
business processes to help it gain a strategic
advantage over its competitors.
Information Systems in the Enterprise
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Sales and Marketing Systems

SYSTEM DESCRIPTION ORGANIZATIONAL
LEVEL
Order Enter, process, and track orders Operational

processing
Pricing analysis Determine prices for products and Management

services
Sales trend Prepare 5-year sales forecasts Strategic

forecasting
Table 2-2
Manufacturing and Production Systems

LEVEL
Machine Control the actions of machines and Operational

control equipment
Production Decide when and how many products Management

planning should be produced
Facilities Decide where to locate new production Strategic

location facilities
Financing & Accounting Systems (Continued)

SYSTEM DESCRIPTION ORGANIZATION-
AL LEVEL
Accounts Tracks money owed the firm Operational

receivable
Budgeting Prepares short-term budgets Management
Profit planning Plans long-term profits Strategic
Table 2-4
Human Resource Systems (Continued)

LEVEL
Training and Tracks employee training, skills, Operational

development and performance appraisals
Compensation Monitors the range and distribution Management

analysis of employee wages, salaries, and
benefits
Human resources Plans the long-term labor force Strategic

planning needs of the organization
Table 2-5
Outsourcing
The purchase of an externally produced good or
service that was previously produced internally
฀ Advantages
■ Economy
■ Predictability
■ Frees up human resources
฀ Disadvantages
■ Loss of control
■ Vulnerability of strategic information
■ Dependency
Outsourcing, In sourcing & Off shoring
PARTS OF THE COMPUTER SYSTEM
A complete computer system consists of mainly four parts.

1. Hardware (The computer)
2. Software (Programs)
3. Data (Information)
4. User (People)
Hardware
The mechanical devices that make up the computer are called
Hardware. A computer’s hardware consists of interconnected
electronic devices that you can use to control the computer’s
operation, input, and output.
Software
Software is a set of instructions that makes the computer perform
tasks. In other words we can say that, software tells the
computer what to do. Here the program refers to any piece of
software
Data
Data consist of individual facts or pieces of information that by
themselves may not make much sense to a person. A computer
primary job is to process these tiny pieces of data in various
ways, converting them into useful information
Users
Peoples are the computer operators, also known as users. One
can argue that some computer systems are complete without a
person’s involvement; however no computer is totally
autonomous.
Even if a computer can do its job without a person sitting in front

of it, people still design, build, program, and repair computer
system
INFORMATION
. PROCESSING CYCLE
Information processing cycle is a set of steps the
computer follows to receive data, process the data
according to instructions from a program, display the
resulting information to the user and store the results.
MEMORY
INPUT OUTPUT
CU
ALU
ESSENTIAL COMPUTER HARDWARE
A Computer’s hardware devices fall into one of four categories.
Processor: The procedure that transforms raw data into useful information is
called processing. The processor is like the brain of computer system. A
personal computer’s processor is usually a Single or a set of chips contained on
a circuit board.
Memory devices:
Memory devices are of two types.
R A M (Random Access Memory):RAM is like an electronic scratch pad inside
the computer.RAM is made up of a set of chips mounted on a small circuit
board.RAM is a volatile memory. RAM has a tremendous impact on the speed
and power of the computer.
R O M (Read Only Memory): ROM is a non-volatile memory.

ROM permanently stores its data, even when the computer is shut off.ROM
holds contents that the computer needs to operate.
C U (control unit):
All the computer’s resources are managed from the control unit.
It act as a traffic signal directing the flow of data through the CPU
as well as to and from other devices. The CPU instructions for
carrying out commands are built into the control unit.
The control unit is the logical hub of the computer.
A L U (Arithmetic logic unit):

The work of the ALU is to perform arithmetic and logical
operations.
Arithmetic operation include addition, subtraction, multiplication,
and division. Logical operation include comparison, such as
determining whether one number is equal to, greater than, or less
than another number.
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Computer
Software
Application Software System Software
General Purpose Application-Specific System Management System Development

Application Programs Programs Programs Programs
฀Software Suites ฀Business-Accounting, ฀Operating Systems ฀Programming

฀Web Browsers Transaction Processing, ฀Network Management Language
฀Electronic Mail Customer Relationship Programs Translators
฀Word Processing Management, ฀Database Management ฀Programming Editors
฀Spreadsheets Enterprise Resource Systems and Tools
฀Database Managers Planning, ฀Application Servers ฀Computer-Aided
฀Presentation Electronic Commerce, etc ฀System Utilities Software
Graphics ฀Science and Engineering ฀Performance and Security Engineering (CASE)
฀Personal Information ฀Education, Entertainment, Monitors Packages
Managers etc.
฀Groupware
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Programs Microsoft office Lotus Smart Corel Sun StarOffice

Suite WordPerfect
Office
Word Processor Word WordPro WordPerfect StarWriter
Spreadsheet Excel 1-2-3 Quattro Pro StarCalc
Presentation PowerPoint Freelance Presentations StarImpress

graphics
Database Managers Access Approach Paradox StarBase
Personal Outlook Organizer Corel central StarSchedule

Information Manager
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To have a clear picture
We first need to
understand...
• What is problem with existing
technology?
• Why Cloud Computing?
What is problem with existing technology?
Applications
• Oracle
• SAP
• Microsoft
Team of Experts
• Space
• Cooling
• Bandwidth
• Storage
• R&D
Business
Huge Servers
What is problem with existing technology?
Each of these Businesses has:
• Their own servers.
• Their own customized apps.
• Their own infrastructure.
• Their own team of experts.

Which in turn leads to:
• Complexities
• Slowdown
• Crashes
• Increased Costs
Now imagine a system with one
CENTRALIZED SERVER:
Benefits:
• Simplicity
• Increased Speed
• No Crashes
• More Security
• Reduced Costs
• No Limits
What is Cloud?
•The term Cloud refers to a Network or Internet.
•In other words, we can say that Cloud is something, which is present
at remote location.
•Cloud can provide services over network, i.e., on public networks or

on private networks, i.e., WAN, LAN or VPN.
•Applications such as e-mail, web conferencing, customer

relationship management (CRM) all run in cloud.
What is Cloud Computing?
Cloud Computing refers to manipulating, configuring, and

accessing the applications online.
It offers online data storage, infrastructure and application.
Cloud Computing is both a combination of software and hardware

based computing resources delivered as a network service.
Basic Concepts
There are certain services and models working behind the

scene making the cloud computing feasible and accessible
to end users. Following are the working models for cloud
computing:
1. Deployment Models
2. Service Models
Deployment Models
Deployment models define the type of access to the cloud, i.e.,

how the cloud is located? Cloud can have any of the four types
of access: Public, Private, Hybrid and Community.
PUBLIC CLOUD : The Public Cloud allows systems and services to be easily
accessible to the general public. Public cloud may be less secure because of its
openness, e.g., G-mail.
PRIVATE CLOUD : The Private Cloud allows systems and services to be

accessible within an organization. It offers increased security because of its private
nature. Ex. eBay
COMMUNITY CLOUD : The Community Cloud allows systems and services

to be accessible by group of organizations. Ex. Intel & Dell
HYBRID CLOUD : The Hybrid Cloud is mixture of public and private cloud.
However, the critical activities are performed using private cloud while the
non-critical activities are performed using public cloud. Ex. IBM
Service Models
Service Models are the reference models on which the Cloud

Computing is based. These can be categorized into three basic service
models as listed below:
1. Infrastructure as a Service (IaaS)
2. Platform as a Service (PaaS)
3. Software as a Service (SaaS)

Infrastructure as a Service (IaaS)
IaaS is the delivery of technology infrastructure as an on

demand scalable service.
IaaS provides access to fundamental resources such as physical
machines, virtual machines, virtual storage, etc.
•Usually billed based on usage

•Usually multi tenant virtualized environment
•Can be coupled with Managed Services for OS and
application support
IaaS Examples
Platform as a Service (PaaS)
PaaS provides the runtime environment for application development &
deployment tools, etc.
PaaS provides all of the facilities required to support the complete life
cycle of building and delivering web applications and services entirely
from the Internet.
Typically applications must be developed with a particular platform in

mind
•Multi tenant environments

•Highly scalable multi tier architecture
PaaS Examples
Software as a Service (SaaS)
SaaS model allows to use software applications as a service to end
users.
SaaS is a software delivery methodology that provides licensed

multi-tenant access to software and its functions remotely as a
Web-based service.
• Usually billed based on usage

• Usually multi tenant environment
• Highly scalable architecture
SaaS Examples
Types of Cloud Systems:
• Infrastructure as a Service (IaaS)
example: Google Drive.
• Platform as a Service (Paas)
example: Google App Engine.
• Software as a Service (Saas)
example: Google Docs.

Overall Benefits of Cloud Environment:
Non functional Technological Economical

• Elasticity • Virtualization • Cost Reduction
• Reliability • Multi-tenancy • Pay per Use
• Quality Service • Security • ROI
• Adaptability • Programming - • Going Green
• Availability enhancement
• Metering
• Tools
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Modes of communication
1. Simplex Data Communication:
The communication is unidirectional.
2. Half Duplex Data Communication:

Here the direction may be reversed. Each station can both
transmit and receive but one at a time.
3. Full Duplex Data Communication:

Each station can both transmit and receive simultaneously.
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Client/Server Computing
In client/server computing, computer processing is split between client machines and server
machines linked by a network. Users interface with the client machines.
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A Multitiered Client/Server Network (N-Tier)
In a multitiered client/server network, client requests for service are handled by different
levels of servers.
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It refers to the arrangement of the computers on the network or
shape of the network.
Topology describes where the cables are run and where the
workstations, nodes, routers, and gateways are located.
Clie
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Client Client Client
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• A DSL (Digital Subscribers Lines) modem is a
communication device that provides high speed
communication over the regular telephone lines. DSL
modem is also known as a broadband modem.
• DSL modems now have been used in home and office

networks to provide the high speed internet connection
by using the single telephone line.
• Almost all modems support the TCP/IP and other

communication protocols.
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Network Interface Card

- Add-on board or PC card
- Enables and controls the exchange of data between the
PC and LAN
BRIDGE
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Intelligence
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Design Activity
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Implementation
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DATA WAREHOUSING, DATA
MINING & OLAP (On
Line Analytical Processing)
Foundation Data Concepts
Foundation Data Concepts
• Bit – A smallest unit of data

• Byte/Character – A group of bits. single alphabetic, numeric or
other symbol
• Field – A group of related characters
• Record – A group of related fields
• File – A group of records of the same type
• Database – A group of related files makes up a database
• Entity – A record describes an entity. Person, place, object or
event
• Attribute – characteristic/ quality describing a particular entity
What is Data Warehouse?
• According to a study done at the University of

California at Berkeley, a total of 403 petabytes of
new data were created in 2002.
• 403 petabytes is roughly the amount of all printed
material ever written.
– The printed collection of the Library of Congress is .01
petabytes.
– 400 petabytes equals 40,000 copies of the print
collection of the Library of Congress.
Data warehouse
• A data warehouse is a subject oriented,

integrated, time-variant, and non-volatile
collection of data in a support of
management’s decision-making process.
– A data warehouse is created to hold data
drawn from several data sources, maintained
by different units, together with historical and
summary transactions.
Inmons’s definition
A data warehouse is
-subject-oriented,
-integrated,
-time-variant,
-nonvolatile
collection of data in support of
management’s
decision making process.
Subject-oriented
• Data warehouse is organized around subjects
such as sales,product,customer.
• It focuses on modeling and analysis of data
for decision makers.
• Excludes data not useful in decision support
process.
Integration
• Data Warehouse is constructed by integrating
multiple heterogeneous sources.
• Data Preprocessing are applied to ensure
consistency. RDB
MS
Data
Lega Warehous
cy e
Syst
em
Flat Data Processing

File Data
Transformation
Integration
• In terms of data.
– encoding structures.
– Measurement of
attributes.
– physical attribute.
of data remarks
– naming conventions.
– Data type format

Time-variant
• Provides information from historical
perspective e.g. past 5-10 years
• Every key structure contains either implicitly
or explicitly an element of time
Nonvolatile
• Data once recorded cannot be updated.
• Data warehouse requires two operations in
data accessing
– Initial loading of data
– Access of data
loa
access
d
Operational v/s Historic Data
Features Operational Historic
Characteristics Operational processing Informational processing
Orientation Transaction Analysis
User Clerk,DBA,database Knowledge workers
professional
Function Day to day operation Decision support
Data Current Historical
View Detailed,flat relational Summarized,
multidimensional
DB design Application oriented Subject oriented
Unit of work Short ,simple transaction Complex query
Access Read/write Mostly read
Operational v/s Historic System
Features Operational Historic

Focus Data in Information out
Number of records tens millions
accessed
Number of users thousands hundreds

DB size 100MB to GB 100 GB to TB
Priority High performance,high High
availability flexibility,end-user
autonomy
Metric Transaction throughput Query througput
Data Warehouse versus Data Marts
• Data marts:
– Small-scale data repository serving the needs of one

department.
– Based on a limited number of subjects (sometimes one).
– Constructed from few transactional databases or a subset of
EDW data.
– Provides a buffer between managers and EDW: managers
work with DM data, so that even if the DM data is corrupted,
EDW data is unchanged.
Building a Data Warehouse (DW
Architecture)
Flat ERP System
rd
files 3
Oracl party
e feeds
API
Transfor
Extract Load
m
ETL Methodology: Tempora Data

ry warehou
■ Extract data
data hub se
■ Transform
data
■ Load data Data
marts
ETL Methodology
• Data extraction:
– Process of copying relevant data from a variety of transactional
databases for inclusion in a DW.
– May occur at regular intervals (e.g., weekly, monthly) to add new
data.
– Data from incompatible databases, flat files, text documents, etc.
must be filtered through appropriate API (application programming
interfaces) as needed.
• Data transformation:
– Next slide.
• Data loading:
– Extracted, cleaned, and transformed data is loaded into DW at a
predetermined data refresh frequency.
Building a Data Warehouse
• Data transformation:
– Data extracted from transactional databases must be cleaned
(“scrubbed”) and transformed before loading into a DW.
– Format differences across different tables/databases must be
reconciled.
– Missing or misspelled data values must be resolved.
– Erroneous data are identified using application programs, and
scrutinized/ corrected by DW analysts using system-generated
exception reports.
– Transaction-level data is aggregated by business dimensions.
– Key step in DW construction since DW is very sensitive to data
errors.
Life Insurance Auto Insurance Home Insurance
Database
PK: SS# (123-45-6789) Database
PK: DL# Database
PK: Acc# (12345678905)
Name (Robert G. (FL-B12345678)
Name (R. G. Smith)
Smith) Name (Bob Smith)
Challenges of Data
Data Mining
Data Mining works with
Warehouse Data
• Data Warehousing provides
the Enterprise with a memory
● Data Mining provides

the Enterprise with
intelligence
Data mining
A process of searching for unknown
relationships or information in large
databases or data warehouses, using
intelligent tools such as neural computing,
predictive analytics techniques, or
advanced statistical methods
Data Mining
฀ Data mining is the process of extracting hidden patterns from data.
฀ These patterns can be rules, affinities, correlations, trends or
prediction models.
฀ As more data is gathered, with the amount of data doubling every
three years data mining is becoming an increasingly important tool to
transform this data into information.
฀ It is commonly used in a wide range of profiling practices, such as
marketing, surveillance, fraud detection and scientific discovery.
• 4 Stages of Data
– Data
– Information
– Knowledge
– Intelligence
Knowledge Discovery in Databases (KDD)
Steps in Knowledge Discovery in Databases
(KDD)
• Data Cleaning − In this step, the noise and inconsistent data is removed.
• Data Integration − In this step, multiple data sources are combined.
• Data Selection − In this step, data relevant to the analysis task are retrieved from the
database.
• Data Transformation − In this step, data is transformed or consolidated into forms

appropriate for mining by performing summary or aggregation operations.
• Data Mining − In this step, intelligent methods are applied in order to extract data patterns.
• Pattern Evaluation − In this step, data patterns are evaluated.
• Knowledge Presentation − In this step, knowledge is represented.

Examples: What is (not) Data Mining?
● What is not Data ● What is Data Mining?

Mining?
– Look up phone – Certain names are more

number in phone prevalent in certain US locations
directory (O’Brien, O’Rurke, O’Reilly… in
Boston area)
– Query a Web
search engine for – Group together similar
information about documents returned by search
“Amazon” engine according to their context
Data Mining – Two Main
Components
• Wikipedia definition: “Data mining is the entire process of
applying computer-based methodology, including new
techniques for knowledge discovery, from data.”
• Knowledge Discovery
Concrete information gleaned from known data. Data you may
not have known, but which is supported by recorded facts.
(ie: Diapers and beer example)
• Knowledge Prediction
Uses known data to forecast future trends, events, etc. (ie:
Stock market predictions)
• Wikipedia note: "some data mining systems such as neural

networks are inherently geared towards prediction and pattern
recognition, rather than knowledge discovery.“
Uses of Data Mining
• AI/Machine Learning
Combinatorial/Game Data Mining
Good for analyzing winning strategies to games, and thus
developing intelligent AI opponents. (ie: Chess-Deep
Blue)
• Business Strategies
Market Basket Analysis
Identify customer demographics, preferences, and
purchasing patterns.
• Risk Analysis
Product Defect Analysis
Analyze product defect rates for given plants and predict
possible complications (read: lawsuits) down the line.
Uses of Data Mining (Continued)
• User Behavior Validation
Fraud Detection
In the realm of cell phones
Comparing phone activity to calling
records. Can help detect calls made on
cloned phones.
Similarly, with credit cards, comparing

purchases with historical purchases. Can
detect activity with stolen cards.
Uses of Data Mining (Continued)
• Health and Science
Protein Folding
Predicting protein interactions and functionality within
biological cells. Applications of this research include
determining causes and possible cures for Alzheimers,
Parkinson's, and some cancers (caused by protein "misfolds")
• Extra-Terrestrial Intelligence
Scanning Satellite receptions for possible transmissions from
other planets.
Text Mining
•Text Mining: the procedure of synthesizing the information
by analyzing the relations, the patterns, and the rules
among textual data - semi-structured or unstructured text.
•80% information is stored in text documents, journals, web
pages, emails, memos, reports...
• An exploration and analysis of textual (natural-language) data by automatic and

semi automatic means to discover new knowledge.
Text Mining Applications
• Marketing: Discover distinct groups
of potential buyers according to a
user text based profile
– e.g. amazon
• Industry: Identifying groups of
competitors web pages
– e.g., competing products and
their prices
• Job seeking: Identify parameters in
searching for jobs
– e.g., www.flipdog.com
Web mining
It is the application of data miningis the application of data

mining techniques to discover patterns from the Web.
According to analysis targets, web mining can be divided into
three different types, which are Web usage mining, Web
content mining and Web structure mining.
1.Web usage mining:
Web usage mining is a process of extracting useful information

from server logs i.e. users history. Web usage mining is the
process of finding out what users are looking for on the
Internet. Some users might be looking at only textual data,
whereas some others might be interested in multimedia data.
Web content mining
Web content mining is the process to discover useful information
from text, image, audio or video data in the web.
Web content mining sometimes is called web text miningWeb

content mining sometimes is called web text mining, because the
text content is the most widely researched area. The technologies
that are normally used in web content mining are NLP (Natural
language processingWeb content mining sometimes is called web
text mining, because the text content is the most widely
researched area. The technologies that are normally used in web
content mining are NLP (Natural language processing) and IR
(Information retrieval).
Companies have used powerful computers to sift through volumes

Web structure mining
Web structure mining is the process of using graph theory to

analyze the node and connection structure of a web site.
According to the type of web structural data, web structure
mining can be divided into two kinds:
1. Extracting patterns from hyperlinks in the web: a hyperlink

is a structural component that connects the web page to a
different location.
2. Mining the document structure: analysis of the tree-like

structure of page structures to describe HTML2. Mining the
document structure: analysis of the tree-like structure of page
structures to describe HTML or XML tag usage.
Data Mining in Use
• The US Government uses Data Mining to track
fraud
• A Supermarket becomes an information broker
• Basketball teams use it to track game strategy
• Cross Selling
• Warranty Claims Routing
• Holding on to Good Customers
• Weeding out Bad Customers
Warehouse Products
• Computer Associates -- CA-Ingres
• Hewlett-Packard -- Allbase/SQL
• Informix -- Informix, Informix XPS
• Microsoft -- SQL Server
• Oracle -- Oracle7, Oracle Parallel Server
• Red Brick -- Red Brick Warehouse
• SAS Institute -- SAS
• Software AG -- ADABAS
• Sybase -- SQL Server, IQ, MPP
Data Mining Products
• DataMind -- neurOagent
• Information Discovery -- IDIS
• SAS Institute -- SAS/Neuronets
What are Operational
Systems?
• They are OLTP systems
• Run mission critical
applications
• Need to work with
stringent performance
requirements for routine
tasks
• Used to run a business!
On Line Analytical Processing
(OLAP)
• Online Analytical Processing - coined by EF Codd in 1994
paper contracted by Arbor Software.
• OLAP performs multidimensional analysis of business data
and provides the capability for complex calculations, trend
analysis, and sophisticated data modeling.
• OLAP supports multidimensional data analysis, enabling users
to view the same data in different ways using multiple
dimensions viz. product, cost, region or time period.
• OLAP enables users to obtain online answers to ad hoc
queries like “ How many units of Product No. 102 were
shipped to Eastern region in Dec 2009?”
OLAP Is FASMI
• Fast
• Analysis
• Shared
• Multidimensional
• Information
Nigel Pendse, Richard Creath - The OLAP Report

Dimensions and Hierarchies
• A cell in the cube may store values (measurements) relative to
the combination of the labeled dimensions
Sales of DVDs
DIMENSIONS
y
in NY in August
cit
NY
DVD PRODUCT LOCATION TIME
category region year
produc
product country quarter

t
state month week
city day
mont
August
h store
Common OLAP Operations
• Roll-up: move up the
hierarchy
– e.g given total sales per city, PRODUCT LOCATION TIME
we can roll-up to get sales category region year
per state
product country quarter
• Drill-down: move down the
hierarchy state month week
– more fine-grained
aggregation
city day
– lowest level can be the
detail records (drill-through)
store
Slice and Dice Queries
• Slice and Dice: select and project on one or

more dimensions
custome
rs
t
uc
od
pr
stor
e
customer =
“Smith”
“Slicing and Dicing”
The Telecomm Slice

Product
Household
Telecomm n s
io
eg
Video R Europe
Far East
Audio India
Retail Direct Special Sales Channel

A Visual Operation: Pivot
(Rotate)
NY
LA
th
SF
n
Mo
10
Juice 47
Region
Cola
Milk
30
Cream 12 Product
3/1 3/2 3/3 3/4

Date
CYBERCRIME
& INFORMATION
SECURITY
ISO 27002:2005 defines Information
Security as the preservation of:
– Confidentiality Ensuring that information is

accessible only to those
authorized to have access
Safeguarding the accuracy and

– Integrity completeness of information
and processing methods
Ensuring that authorized

– Availability users have access to
information and associated
assets when required
DID YOU KNOW?
In 1980 a computer cracked a 3-character
password within one minute.
In 1999 a team of computers cracked a

56-character password within one day.
In 2004 a computer virus infected 1

million computers within one hour.
High User Theft, Sabotage, Virus Attacks
Knowledge of IT Misuse
Systems
Systems & Lack Of Lapse in Natural

Network Documentation Physical Calamities &
Failure Security Fire
IT’S A JUNGLE OUT THERE
Computer Viruses Network Worms
Trojan Horses Logic Bombs
Address Book theft Hijacked Home Pages
Spywares Denial of Service Attacks
Salami Slicing Key Loggers
Password Grabbers Password Crackers

Threats:
Illicit Activities
Hackers: enjoy intellectual challenges of

overcoming software limitations and how to
increase capabilities of systems
Crackers: illegally break into other people’s
secure systems and networks
Cyber Terrorists: threaten and attack other
people’s computers to further a social or
political agenda
Threats:
Illicit Activities
Malware Writers: responsible for the creation

of malicious software
Samurai: hackers hired to legally enter secure
computer/network environments
‘Phreakers’: Focus on defeating telephone
systems and associated communication
technologies
Threats: MALWARE
Malware is Malicious Software -
deliberately created and
specifically designed to damage,
disrupt or destroy network
services, computer data and
software.
There are several types...
Malware Types
Viruses:
● Conceal themselves
● Infect computer systems
● Replicate themselves
● Deliver a ‘payload’
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
TYPICAL SYMPTOMS
⚫ File deletion
⚫ File corruption
⚫ Visual effects
⚫ Pop-Ups
⚫ Erratic (and unwanted) behavior
⚫ Computer crashes
Malware Types
Worms:
Programs that are capable of independently propagating
throughout a computer network.
They replicate fast and consume large amounts of the host
computers memory.
Malware Types
Trojan Horses:
Programs that contain hidden functionality that
can harm the host computer and the data it
contains.
These are not automatic replicators.
vertently set them off.

Malware Types
Software Bombs:
Time Bombs - triggered by a specific
time/date
Logic Bombs - triggered by a specific
event
Both are introduced some time before
and will damage the host system
Threats:
Illicit Activities
‘Phishing’: sending out ‘scam’ e-mails with the

criminal intent of deceit and extortion
Spam: unsolicited and/or undesired bulk
e-mail messages, often ‘selling’ a product
(See also SPIM – targeting of instant
messaging services)
⚫
⚫
Phishing
Phishing is a technique used by strangers to
"fish" for information about you, information that
you would not normally disclose to a stranger,
such as your bank account number, PIN, and
other personal identifiers such as your National
Insurance number. These messages often contain
company/bank logos that look legitimate and use
flowery or legalistic language about improving
security by confirming your identity details.
Phishing example
A final word:
Treat your password like you treat

your toothbrush.
Never give it to anyone else to use,
and change it every few months.
The Need for Security
• Computer Security - the collection of
tools designed
– to prevent
– To detect &
– To recover from a security attack.
• Network security or internet security-
security measures needed to protect
data during their transmission
Introduction
The art of war teaches us to rely not on the
likelihood of the enemy's not coming, but
on our own readiness to receive him; not on
the chance of his not attacking, but rather
on the fact that we have made our position
unassailable.
—The Art of War, Sun Tzu
SECURITY MEASURES:
o A Token
o Smart-card
o Biometric Authorization
o Firewalls
o Intrusion Detection System
o Antivirus and Antispyware software
o Digital Signature
SECURITY MEASURES:
• In addition, users have to practice “safe
computing”
– Not downloading from unsafe websites

– Not opening attachments
– Not trusting what you see on websites
– Avoiding Scams
BIOMETRIC SECURITY:
It exploits human’s unique physical or

behavioral traits in order to authenticate
people.
– Voice verification, Finger-prints, Hand
geometry, Signature dynamics, Keystroke
analysis, Retina scanning, Face recognition
– Special-purpose-Sensors
How to Tackle Such ATTACKS?
An important question arises that how can these crimes be prevented. A number of techniques and
solutions have been presented but the problems still exists and are increasing day by day.
Antivirus And Anti Spyware Software:

Antivirus software consists of computer programs that attempt to identify, thwart and eliminate
computer viruses and other malicious software. Anti spy wares are used to restrict backdoor
program, Trojans and other spy wares to be installed on the computer.
Firewalls:
A firewall protects a computer network from unauthorized access. Network firewalls may be
hardware devices, software programs, or a combination of the two. A network firewall typically
guards an internal computer network against malicious access from outside the network.
What is a Firewall?
• a choke point of control and monitoring
• interconnects networks with differing trust
• imposes restrictions on network services
– only authorized traffic is allowed
– It controls incoming and outgoing traffic
– Acts as a gatekeeper, identifies names, IP addresses. It
checks it with access rules
– It is a combination of hardware and software.
Firewalls – Packet Filters
Crypto
• Cryptology ⎯ The art and science of
making and breaking “secret codes”
• Cryptography ⎯ making “secret
codes”
• Cryptanalysis ⎯ breaking “secret
codes”
• Crypto ⎯ all of the above (and more)
Basic Terminology
• plaintext - original message
• ciphertext - coded message
• cipher - algorithm for transforming plaintext to ciphertext
• key - info used in cipher known only to sender/receiver
• encipher (encrypt) - converting plaintext to ciphertext
• decipher (decrypt) - recovering ciphertext from plaintext
• cryptography - study of encryption principles/methods
• cryptanalysis (codebreaking) - study of principles/ methods of
deciphering ciphertext without knowing key
• cryptology - field of both cryptography and cryptanalysis
Crypto as Black Box
key key
plaintext encrypt decrypt plaintext

ciphertext
A generic view of symmetric key crypto: https

https://
ACTION PLAN:
•Designate security support staff (and fund them)

•Make security awareness a corporate priority
(and educate your staff)
•Enable real-time protection
•Update all vendor security patches
•Subscribe to several security alert bulletins
•Periodically reboot or re-load all computers
•Control, limit or block all downloads and installs
•Install anti-virus software on computers
(keep it current)
Password Guidelines
฀ Always use at least 8 character password with combination of
alphabets, numbers and special characters (*, %, @, #, $, ^)
฀ Use passwords that can be easily remembered by you
฀ Change password regularly as per policy
฀ Use password that is significantly different from earlier passwords
฀ Use passwords which reveals your personal

information or words found in dictionary
฀ Write down or Store passwords
฀ Share passwords over phone or Email
฀ Use passwords which do not match above complexity
criteria
Internet Usage
฀ Use internet services for business purposes only
฀ Do not access internet through dial-up connectivity

฀ Do not use internet for viewing, storing or transmitting
obscene or pornographic material
฀ Do not use internet for accessing auction sites
฀ Do not use internet for hacking other computer systems
฀ Do not use internet to download / upload commercial
software / copyrighted material
Technology Department is continuously monitoring Internet

Usage. Any illegal use of internet and other assets shall call
for Disciplinary Action.
Think before you Click
A final word:
Treat your password like you treat

your toothbrush.
Never give it to anyone else to use,
and change it every few months.

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Management Information Systems

Managing the Digital Firm

WHY INFORMATION SYSTEMS?

Why Information Systems Matter

• Foundation of doing business

• Strategic opportunity and advantage

WHY INFORMATION SYSTEMS?

• IT is the largest single component of capital

• About $1.8 trillion is spent each year by American

• Managers and business students need to know how

• The success of your business in the future may well

WHY INFORMATION SYSTEMS?

Foundation of doing business:

• IT can increase market share.

• IT can help a business become a high-quality,

• IT is vital to the development of new products.

WHY INFORMATION SYSTEMS?

The Interdependence between Organizations and

WHY INFORMATION SYSTEMS?

• According to the Federal Reserve Bank, IT has

• It is estimated that IT has increased productivity

WHY INFORMATION SYSTEMS?

Strategic Opportunity and Advantage:

• Create competitive advantage: IT makes it

• New Business Models: Dell Computer has built its

WHY INFORMATION SYSTEMS?

Strategic Opportunity and Advantage:

• Create new services: eBay has developed the

• Differentiate yourself from your competitors:

WHY INFORMATION SYSTEMS?

Why IT Now? Digital Convergence and the Changing

WHY INFORMATION SYSTEMS?

The Internet and Technology Convergence:

• Growth in e-business, e-commerce, and

• Internet is bringing about rapid changes in

• The Internet is making many traditional

WHY INFORMATION SYSTEMS?

Rise of the Information Economy:

• Shorter product life

• Limited employee knowledge base

WHY INFORMATION SYSTEMS?

Emergence of the Digital Firm:

• Eg: Developing a new product, generating & fulfilling order,

PERSPECTIVES ON INFORMATION SYSTEMS

What Is an Information System?

Technology perspective: A set of interrelated

PERSPECTIVES ON INFORMATION SYSTEMS

What is an Information System? (Continued)

• Data: Streams of raw facts representing events such

• Information: data that have been shaped into a form

Perspectives on Information Systems

Data and Information

PERSPECTIVES ON INFORMATION SYSTEMS

Functions of an Information System

PERSPECTIVES ON INFORMATION SYSTEMS

Functions of an Information System

PERSPECTIVES ON INFORMATION SYSTEMS

Computer-Based Information System (CBIS)

• Rely on computer hardware and software

• Processing and disseminating information

• Fixed definitions of data and procedures

• Collecting, storing, and using information

PERSPECTIVES ON INFORMATION SYSTEMS

A Business Perspective on Information Systems