Information Systems and MIS (MS-07)

By
Dr. R.K. Singla
Professor, Department of Computer Science
Panjab University, Chandigarh
 
Abstract

In this article, we discuss the application systems that are included in a computer-
based information system (CBIS) - transaction (data) processing (TP/DP) systems,
management information systems (MIS), expert systems, decision support systems
(DSS), and executive information systems (EIS). It is important that we understand
the characteristics of each of these types of systems and how they are used in an
organization.

Next, the article discusses the systems analysis and design activities that are
preformed in the systems development life cycle (SDLC). The five phases of the
SDLC are reviewed.

Finally, the program development life cycle (PDLC) is presented. The PDLC is an
attempt to improve the quality of systems.
 
A system is a collection of components purposefully organized into
a functioning whole to accomplish a goal.

Functional Divisions of an Organization and IS

        Finance
        Marketing & sales

        Human resources

        Operation (manufacturing or services)

        Information systems (IS)

 
At the center of organizational units lies the information system. Each unit relies on the
information system in the generation of information. People in different functional areas
of the organization will need different types of information. Often it is not even
appropriate for people in one area to have information given to workers in another area.
For example, most companies do not allow people outside of the human resources and
payroll departments to have information about various employees' salaries.

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Therefore, one of the functions of a CIS, besides making information available to
employees who need it, is to keep information away from employees who should not
have it. Sometimes this second function is harder to manage than the first.
Simon’s Decision-Making Model
Renowned mathematician, Herbert Simon, born in 1916, is responsible for many of the
algorithms used in today's computer models. Dr. Simon spent his career developing
mathematical formulas to mimic human thinking. His work has added much to the study
of artificial intelligence. Herbert Simon describes the decision-making process as having
three phases.
1. Intelligence – In this phase we collect facts (the data).
2. Design – In this phase, we design the methods for studying the data, such as
models, decisions trees – tools that let us analyze the various alternatives
3. Choice - When we have reduced the alternatives down to a manageable
number, we make our decision
 
Decisions are easy to make when we can clearly see that one option is better than the
others. Unfortunately, most decisions we make are not this cut and dried. As the number
possible options increases, the decision-making process becomes more difficult. When
we are talking about decisions in terms of strategic issues, i.e., product decisions,
marketing decisions, cost/benefit decisions, etc. the number of alternatives can be
enormous.
 
In the world of business, you will be faced with three general types of problems --
structured, unstructured and semi structured.

1. Structured or programmable - The solution has a known set of steps. The data and
solution to all three phases of Simon’s decision-making model are known or can be
determined. An example of a structured problem would be figuring out a payment
amount, based upon a known principal, interest rate and time period. We know there is a
mathematical model to solve this problem. Solving this type of problem using this
model will always give us the same result. Structured problems are easy for us to
resolve.
2. Unstructured – The steps are not known. There may be too much or to little
information to allow us to arrive at the best conclusion. The data and solution to all three
phases of Simon’s decision-making model are unknown or not quantifiable. In an
unstructured problem there is no known set of steps to follow. There may not be enough
information about the situation, or there may be so much information that a model cannot
be formulated to reach a decision. Where will the NSE/ BSE close today? There is so
much information to disseminate it would be impossible to pinpoint. Stock behavior,
Indian, US and world economies, etc.
3. Semi-structured - We cannot say with absolute certainty the best decision, but we
are able to narrow it down to the most likely decision. Usually one or two of the phases
of Simon’s decision-making model are known and one or two are not known. Semi-
structured problems are somewhere in between. We cannot say with absolute certainty
that it will be sunny in Delhi tomorrow, but based upon forecasts we can be relatively

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 sure. In the case of certain diseases, it can be difficult to say with absolute certainty what
a diagnoses should be, but based upon data and various alternatives, we can narrow it
down to the most likely diagnoses. Managers are constantly faced with Semi-structured
problems.
Why Automate?
Basically, we create information systems to provide the following:
       Reduce costs
       Increase speed
       Increase accuracy
       Increase customer service
 Improve decision making

If the systems can not provide some or all of the above, then we should not consider
automation.

Computer Based Information Systems

Figure 1
Figure 1 depicts a model for Computer-Based Information Systems (CBIS).

Some people call CBISs management information system or management information

services, but both meanings are very general and include all types of systems shown in
figure 1. CBIS refers to a class of software that provides managers with tools for

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organizing and evaluating their department. The first part of this article will discuss the
types of systems in a CBIS.

Within companies and large organizations, the department responsible for computer
systems is sometimes called the MIS department. Other names for MIS include IS
(Information Services) and IT (Information Technology).
Transaction (Data) Processing
 
The objective of the transaction (data) processing (TP/DP) system is the collection and
maintenance of data. This is where most of the data in an organization is collected and
stored for use by members of the organization. It is interesting that most of the workers in
the TP/DP system are lower level workers. The tasks that must be accomplished in the
TP/DP system include:
 Data (transaction) gathering – The first task is to gather the data or transactions. This task
mostly deals with collecting new data – as close to source as possible – remember the
Source Data Automation concept.
 Data manipulation – This task includes editing, correction, classifying, coding, sorting,
calculating, summarizing, and maintenance of data. Data editing ensures the accuracy of
the data.
 Data storage – This task stores the data for future use.
 Reporting – Reports must be created for edits and operational control. Typical reports
include transaction logs, input and error lists, and summaries.
 
The TP/DP system has several characteristics.
1. A TP/DP system must perform all of the tasks listed above. If any task is not performed,
they data and system will not be complete.
2. The processing of the tasks must adhere to standardized procedures. These procedures may
be different for each organization, but they must be in place.
3. The TP/DP system handles detailed data. Sometimes this data is in the form of thousands
or millions of transactions per day.
4. The TP/DP system has a primarily historical focus.
5. Data collected in the TP/DP system provides little problem-solving information for the
TP/DP system. The data may be used by the other systems for problem solving, but not in
the TP/DP system.
6. Data gathering activities occur throughout the organization, but primarily at the lowest
level. For example, sales clerks record most retail transactions, tellers record most bank
transactions, and meter readers collect most utility transactions.
7. The TP/DP system has an immediate/short range focus.
 
There are two major ways that data is maintained – using batch processing and real time
processing. In a batch processing system, transactions are saved over some period of time and
processed all at once. A batch processing system may update records using sequential or random
processing. Remember, sequential processing processes each record in sequential or key order.
Both the transactions and master file must be in the same order. Random processing processed
transactions in any order. Typically, transactions are accumulated during the day and processed at
night. Batch processing is best used when all of the records need to be processed. For example,
during payroll processing, everyone will get a check, so all of the employee records must be
processed. In real time processing, transactions are processed as they are received and the results

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of the transaction are available for the next transaction. The main advantage of real time
processing is that current data is always available.
 
Typical TP/DP systems include order entry/order processing systems, inventory systems,
accounting systems, banking, and retail systems.
 
As a form of summary and review, think of who processes the transactions and how they
are processed for each of the following applications (note: there may be several people
and places that the transactions are processed):
 Bank
 Grocery store
   Retail store
   Airline
 
In each of the above examples, can you see how the concept of Source Data Automation
applies?
 
Management Information System
The management information system (MIS) provides useful and timely
information to support management’s (mostly middle management) information needs
and routine decision-making. The MIS is sometimes called the management reporting
system (MRS). It is aimed at providing more summarized information relevant to specific
information and decision-making needs of middle management. The MIS is more
medium range in focus. The MIS uses mostly organizational data, but may include some
environmental (data collected and maintained outside the organization) data.
 
The MIS provides detailed, summary, and exception reports. Report triggers (events that
cause a report to be produced) include periodic (also known as scheduled reports),
exception, and on demand. A periodic trigger occurs when some time period is reached
(such as the end of the month, or every Monday). An exception trigger causes a report to
be produced when the exception is encountered (such as a missed payment, or a sale).
 
Marketing, manufacturing, and financial systems are typical MISs.
 
Expert Systems
Expert systems are systems that emulate the thought process of an expert. There are
many types of expert systems. However, before looking at expert systems, we need to
visit the roots of expert systems – Artificial Intelligence.
 
Artificial intelligence (AI) applications are where the computer appears to "reason" or
display the ability to duplicate human reasoning. AI has not developed much, but has
taken a back seat to DSS and Expert Systems. AI includes:

 Vision Systems – These systems simulate the function of the human eye.

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  Natural Languages – Natural languages allow us to communicate with computers
in "normal English." Voice input is a good example of the use of natural languages
systems.
 Robotics – Robotics is the science of using robots to perform tasks. Robotics now
includes robots with vision and sight.
 Expert Systems – the fourth area and the one used in business systems.
As shown above, expert system is a subset of artificial intelligence. Expert systems
function in the same manner as a human expert; that is they emulate the thought process
of an expert. The objective of an expert system is to come to a conclusion; to make a
decision.
 

The parts of an expert system include:

1. User Interface (Explanation Subsystem) – The user interface enables the user to use
the expert system. Using the user interface, the user enters instructions and
information and receives explanations and solutions.

2. Knowledge base – The knowledge base contains the facts and rules used by the
expert system. The size and quality of the knowledge base determines complexity &
performance

3. Inference Engine – This part of the expert system performs the reasoning by using
the information provided and the knowledge base. Forward reasoning – The rules are
examined in a specific order. Backward reasoning – The rules are examined in any
order. Backward reasoning is more complicated and usually more expensive to create.

4. Development Engine (Knowledge Acquisition Subsystem) – this is the software

that creates the expert system. Currently, Lisp and Prolog are the two languages used.
 
Characteristics of an expert system (ES) include:

    The ES must demonstrate the expertise of the expert.

     It represents knowledge symbolically.
     It should be able to handle complex rules and problems.
    It should be able to estimate the accuracy of the conclusions.

Advantages of expert systems are numerous. They allow for better (more accurate)
solutions over a non-expert system. They allow a company to maintain control over the
knowledge. If an expert retires, dies, or leaves the company, the expert knowledge is
retained through the expert system. The sometimes allow for faster solutions. Finally,
they provide a consistency. The expert system will provide the same solution, given the
same inputs, every time. An expert can “forget” a rule or apply the data provided in an
inconsistent manner, thereby obtaining different “answers.” Disadvantages of expert
systems are threefold. First, expert systems are extremely costly, some costing many

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millions of dollars. Second, it is extremely difficult to emulate an expert's thinking
process. Many times an expert will follow the logic pattern instinctively. If the expert
cannot articulate the thought process, the efforts can fail.
 

Other terms and concepts relating to expert systems include:

 Expert System Shells - A ready-made inference engine tailored to a specific

problem domain. Many companies buy a expert shell and add additional facts and
rules to the knowledge base.
 Knowledge Engineer – An IS person that works with the expert to isolate and
define rules. Knowledge engineers are IS persons that specialize in programming
the thought process of experts.
 Neural Networks – Systems that attempt to emulate the biological structure of
the brain.
 Fuzzy logic/data – The science of inexact/ambiguous reasoning. Many expert
systems use types of fuzzy logic to define the facts and rules.
 Virtual Reality (cyberspace) – Systems that use multi-sensory human/computer
interfaces. Virtual reality (VR) works in 3-D space.
 
The following table shows some well-known expert systems.
 
System Application Purpose
Prospector Geology Evaluates field sites for mineral deposits
Adviser Petroleum Analyzes oil well production
Genplan Aircraft Creates complex manufacturing plans for airplane
Assembly manufacturing
Puff Medicine Diagnoses lung disorders
Xsel Sales Assists computer salespeople in selecting components
Dendral Chemistry Helps chemists determine the molecular structure of
compounds
Molgen Genetics Plans experiments involving structural analysis and
synthesis of DNA
Mycin Medicine Diagnoses bacterial infections and prescribes treatment
Cats-1 Manufacturing Diagnoses malfunctions in diesel locomotives and
suggests repairs

 
Decision Support Systems
A decision support system (DSS) is a system for use by a manager or a group of
managers that provides decision-making information to help solve semi-structured
problems. Characteristics of a DSS include:

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  It may use multiple data sources
 It may include user databases. These would be databases created and maintained
by the user and not part of the corporate data.
 It is usually model-oriented.
 It generally supports tactical-level decision making
 It provides information to HELP the decision maker make a specific decision.
It is important to emphasize that decision support systems provide help in decision-
making. They are usually very focused, that is, they are aimed at the decision to be made.
They can be fairly expensive depending on scope. Because they are usually very costly,
they are used for recurring decisions. The information provided/used in a decision
support system depends on the decision.
 
Decision support systems provide the organization with many benefits. These include:

 A DSS can evaluate more alternatives.

 It allows the user to better understand the problem.
 It can analyze new scenarios.
 It usually saves time and costs
 It usually allows for better decisions.
 
The risks associated with decision support systems include:

 Quality assurance (testing, backup, documentation) – Has a valid, quality decision

support system been created?
 Erroneous outcomes – Does the system provide valid outcomes or results? Without
a good quality assurance program, the system may not be accurate.
 Unknown alternatives – A DSS evaluates the alternatives that are programmed. If
the user is not aware of alternatives, they will not evaluate them.

Types of DSSs include the following:

 Personal DSSs - Personal DSSs are built for the individual knowledge worker
within an organization. Usually they run on a desktop PC , but may be processed
on a mainframe computer. Most personal DSSs contain only a single model for
processing.
 Intelligent DSS – An Intelligent Decision Support System (IDSS) is a personal
decision support system that contains several models for processing. It includes a
module that helps the user choose the appropriate model for solving a particular
problem. The IDSS is similar to an expert system
 Group DSS - Group Decision Support Systems (GDSS) are used when a group of
managers make decisions. They usually operate on a network. A GDSS is
designed for multiple users, with input arriving from more than one source. They
are set up to compensate for more than one opinion about the situation. One of the
most important uses of a GDSS is the idea of brainstorming. What is
brainstorming? Anonymity of participants is one of the major benefits of
brainstorming via a GDSS?

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  Geographic Information System (GIS) - These systems are used by organizations
that need geographic information to make decisions. For example, Wal-Mart uses a
GIS to decide where to put stores. Cellular phone companies use GISs to decide
where to put towers. Distributors use GISs to decide where to put warehouses in
relation to the stores to which they distribute.
 
Sensitivity Analysis (What if)-- The sensitivity of an outcome is high if
the outcome is affected significantly by a slight change in some
parameter.
 
How are DSSs used? One major advantage of using a DSS is being able to see what the
outcome might be based upon different variables. One type of testing for different
variables is Sensitivity Analysis.
What do we mean by the term “Sensitivity?” If the price of a Rs 2.00 product is lowered
by Rs 0.10, and this caused a marked increase in sales, would this be a highly sensitive
effect or a low sensitivity effect in price? If a small change causes a marked result, this is
known as high sensitivity to change in price. Coke and Pepsi are highly sensitive to this
type of change. Companies spend huge amounts of advertising rupees on a product
promotion, but have no marked increase in sales. This product would have low
sensitivity to advertising. So, companies want to concentrate their efforts in a direction
that will show a marked increase, one that will be highly sensitive. Therefore, companies
use DSSs to perform something called Sensitivity Analysis, or “What If” analysis.
The sensitivity of an outcome is high if the outcome is affected significantly by a slight
change in some parameter. The user enters parameters at varying degrees to see various
outcomes. How much will sales of Coke increase if advertising rupees in TV media are
increased by 10%, or 5%, or 3%.
 
How does a company decide if it needs a DSS? Basically, the following questions should
be answered:

 Do we need a DSS to aide in analysis?

 Are the data in computerized databases?
 How often do we need to solve these problems?
 Who will use the system?
 
Information systems are tremendous investments for companies, both in terms of rupees
and in terms of change for the organization.
So, before investing in a DSS, the questions asked above should be considered.
A Decision Support System simply gives managers more information to aid in the
decision making process. The manager, or human component, must make the ultimate
decision based upon the best information possible.

Executive Information Systems

EISs support executives (VP & above) in their decision roles. They rely heavily on the
ability to retrieve data and present information for an executive.

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Characteristics of a EIS include:

 Highly summarized – Most executives are looking for summary data upon which
to make decisions. They very seldom want detailed data. Top-level executives
making decisions for large organizations do not have time to wade through pages
of detail, but must be able to see enormous amounts of information in such a way
that is quickly meaningful and useful.
 Drill down – Although an executive usually needs summarized data, sometimes
more detailed data is needed. Drill down means that the transactions that created a
total can be accessed, when needed.
 Easy on-line access to internal and external data – Most EISs provide access to
external data, as well as internal data. For example, an executive may require
access to current stock prices.
 Problem solving ability – Many EISs contain “what if” analysis capabilities. This
allows the executive to analyze scenarios.
 Easy to use and easy to learn -
 Designed with executives CSFs in mind – The screens are usually customized to
the executives needs.
 On demand industry- and organization-wide indicators –The executive should be
able to find, at a moment’s notice, the company’s financial strengths and
weaknesses.
 Use state-of-the-art graphics, data storage, communications, and data retrieval.

Another way to look at an EIS is that it is basically a DSS to provide summary and decision
making information to an executive. Most EISs are aimed at the executive’s Critical Success
Factors (CSF). A critical success factor is any factor that an executive believes is critical for the
organization’s success. A CSF may be industry related (e.g. market share) or company related
(e.g. inventory turns or return on investment). EISs are usually very expensive to develop and
maintain. Executive support is required for an EIS to be a success. Since they are costly, they are
more often found in large companies.
 
Commercial EISs are bringing costs down. Commercial EISs are generalized EISs that
can be bought for a lower costs, but may not contain all of the executive’s CSFs. The use
of EISs is on the rise because of commercial EISs.
 
Computer-Supported Cooperative Work
Computer-supported cooperative work (Groupware) is a class of software that helps
groups of colleagues (workgroups), attached to a local-area network, organize their
activities. Typically, groupware supports the following operations:
 Scheduling meetings and allocating resources
 E-mail
 Password protection for documents
 Telephone utilities
 File distribution
 Video conferencing

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Groupware is sometimes called workgroup productivity software.
Much research has been done by organizational behaviorists with regard to group or team
oriented work processes. Researchers have found that individuals that work within a
team environment are more productive, efficient and effective than when working alone.
Thus, groupware facilitates this process.
Groupware also supports the concept of anonymity. Individuals are often reluctant to
share creative ideas in a group sitting. Groupware allows the sharing of such ideas
without necessarily revealing identities.
System Analyst  

A systems analyst is an information system professional who helps plan, develop, and
implement computer-based information systems. In short, they help organizations
determine their information system needs. Systems analysts are
problem-solving professionals who work with users & management to determine an
organization’s information system needs. They
define the requirements needed to modify an existing system, or to develop a new one.
Their
job involves communication, including listening skills.
 
Systems Analysis and Design
Systems analysis and design is the process of attempting to determine and fill the
information systems needs of an organization by a formal process. This process is known
as the Systems Development Life Cycle (SDLC).
 
The systems analysis and design process is a very costly, time-consuming, and difficult to
manage process. Many systems analysis and design projects fail. Some points to avoid
problems and failures include:

 User involvement is crucial.

 A problem-solving approach works best.
 Good project management skills are needed.
 Documentation is required.
 Use checkpoints to make sure the project is on track.
 Design systems for growth and change.
 
System Development Life Cycle

The Systems Development Life Cycle is the entire life cycle of an information
system - from inception to replacement. SDLC is a
five phase process:

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 1. Identify problems and opportunities,
2. Analyze and documenting existing systems,
3. Design the system,
4. Implement the system, and
5. Support and maintain the system.
 
At the end of each phase, a "deliverable" is produced, which is a tangible product that
both ends that phase and is used as input for the next phase. The most common reasons
that systems analysis and design fails to develop a successful project are lack of user
involvement, poor project management, and lack of documentation.

Waterfall Model
The waterfall model builds correction pathways into the model that
enable a return to a previous phase. It’s currently the most widely used
way to implement the systems development life cycle.
 
The waterfall model of system development is a method of developing systems
theta returns the focus of the system development project to a previous phase if an error is
detected.
 
Phase 1: Identify the Problem & Opportunities
Steps performed in Phase 1 include:

 Recognize the need for the system

 Define the problem
 Identify opportunities
 Develop a plan
 Determine feasibility
 Technical, operational, economical
 Tangible, intangible benefits
 Return on investment (ROI)
 Prepare the project proposal
 
To determine the problem, the system analyst talks to as many users as possible to
discover what they do, when they do it, how they do it, and why. The analyst then
recommends new system features or a new system.
 
Phase 2: Analyze & Document the Existing System
Steps performed in Phase 2 include:

 Analyze the existing system

 Determine the new system’s requirements
 

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Most of the true analysis and design efforts are concentrated in this phase of the project.
During this phase, emphasis is placed on what the system is to do. During this phase,
many activities will take place. These activities include:

 Analysis of the problems of the current system

 Data gathering (Interviews)
 Examine work flows, work distribution, and report problems.
 Data Flow Diagram (DFD) is a technique
 Identify how the system could work better.
 Identify strengths (good points) and weaknesses (bad points) of the current system.
 
Phase 3: Design the System
In Phase 3 includes the design of the new system. System and program specifications are also
created in this phase. Steps performed in phase 3
include:
 Define functional requirements and needs. These include:
 Outputs
 Transformations
  Inputs
  User interfaces
  Controls
   Performance requirements, and
  Organizational needs/changes.
 Develop a logical DFD of new system
 Develop a database/file design (ERD/Data Dictionary
 )
 
The design of the new system is accomplished through the use of various structural analysis &
design tools, including:
 Entity-relationship diagrams (ERD) – Define the data relationships.
 Data flow diagrams – Show how data moves through the system.
 Project dictionary – Explains all of the terminology used in the project.
 Data dictionary – Defines all of the data in the system.
 Prototyping, also called Joint application development (JAD) – Allows the creation of
small-scale mock-ups for users to try out.
 Computer aided software engineering (CASE) –Tools that automate development process.
 
Phase 4: Implementing the System
 In this phase, the system is either built or bought, and implemented. Steps include:
 Decide to buy or build – The buy versus build decision is an important one. Many
systems are bought nowadays. Two tools used to acquire systems are the Request for
quotation (RFQ) and the Request for proposal (RFP)
 Develop the software – This step is used only if the system is to be built.
 Test the new system - Application testing confirms that the programs are functioning
properly. Acceptance testing confirms that the system is working correctly and that the
system satisfies the users’ needs.
 Training – Potential users must be trained to use the new system. Training may include
computer-based training (CBT)

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  Convert the system – Users must start using the new system.
o Parallel conversion – Involves running both the old and new systems for a period
of time. This is the safest way to convert, but it is probably the most expensive.
Can you tell why it is probably the most expensive?
o Pilot conversion – Involves part of the organization implementing the new
system first, say one plant. After the system is running well, the rest of the
organization can convert to the new system.
o Phased conversion – Involves implementing the system one part at a time. For
instance, a hospital may implement admissions, followed by the Nurses’ stations,
followed by the pharmacy, etc. Implementation of the entire system may take a
long time using this method.
o Direct conversion – Involves turning off the old system and turning on the new
system all at once. It is the most risky, but it is usually the cheapest and fastest
way to get a system up and running.
Phase 5: Support the System
 
In the final phase, the new system receives ongoing assistance to ensure that it has met its
intended needs and works correctly.
 
In phase 5, the system is used, supported, and enhanced. Steps include:
 Operation/Production
 Post-Implementation Evaluation – The evaluation of the information system to
determine if it met its goals. A post-implementation system review is usually held
3-6 months after the system has been accepted.
 Maintenance – All information systems must be maintained. Types of
maintenance activities include:
- Fix errors
- Make required maintenance changes
- Continuous improvements
- Enhancements
 

Program Development
Program development is usually the most time consuming, and expensive, part of any
project. For years programmers knew that if the program did not work, they would fix the
developed systems. Also, programmers were notorious for not documenting systems and
for developing hard to follow code. These deficiencies lead to low quality systems.

Program Development Life Cycle

The program development life cycle (PDLC) is an organized method of software
development that bears many similarities to the system development life cycle.
 
The program development life cycle (PDLC) improves e quality of systems by breaking
down the program development activities. The PDLC consists of six phases. They are:

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        Phase 1: Define the problem
       Phase 2: Design the program
       Phase 3: Code the program
       Phase 4: Test and debug
       Phase 5: Formalize the solution
       Phase 6: Implement and maintain the program
 
Breaking down the program development process makes it easier to identify, localize,
and correct bugs. It also makes it possible for more than one programmer to work on a
project together, without individual programmer differences causing maintenance to be
difficult. Each programmer can be assigned a different module to work on and later the
modules can be combined into a total program. The result is better systems for the end
user.
 
Quality
Before moving on, the concept of quality should be explored. Quality is the degree to
which the attributes of a product or service enable it to meet the needs of its users.
Quality, as it relates to program development, involves software defects (errors). Most
software errors are made at the early stages of the project. If not detected, they can be
quite costly to correct later in the software development process. Quality also affects
maintenance. The cost of maintenance is directly related to the quality of a system. Errors
cost money to fix. Errors made early in the program development cycle are considerably
more costly to correct than errors made later in the cycle.
 
Software Development and Processing Alternatives
There are three basic software development alternatives: In-house development; Software
house development; and Packaged software.
 
In-house development is where the organization’s IS people develop the system. No
outside resources are normally needed. The advantage of in-house development is that
the application is built specifically for the needs of the organization. In addition, expertise
and maintenance of the system is resident in the organization’s IS people. The major
disadvantages of in-house development are that the time required to develop the software
is higher time and the costs are usually higher.
 
The second system development alternative is the use of a software house to custom
develop the applications. The advantages of this alternative are that software houses
usually have the expertise and resources to accomplish the job. The main disadvantages
are that there will be no internal expertise and the company may well have to rely on the
software house to correct problems or perform maintenance.
 
The third alternative is to buy packaged software. Many companies use this alternative
for non-mission critical needs. This alternative is usually faster and cheaper to
implementation. The main disadvantages are that it may not fit all of the needs of the

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organization and that the software house that developed the packaged software must be
contracted to make needed modifications or changes.
 
Part of the process of using information systems involves the selection of processing
alternatives. Not every organization needs or has a computer center. As par to the
development process, the processing alternatives must be evaluated and the optimal
alternative selected. The three processing alternatives include an in-house computer
system, outsourcing of computer operations, and the use of a service bureau or
timesharing. The advantages of an in-house computer system are control over the
organization’s hardware, software, people, and systems development. However, this is
probably the most costly alternative.
 
Many companies have gone to outsourcing. Outsourcing is the transfer of the computer
operations and/or systems development activities to an outside firm. Generally, the costs
are lower, but the organization has less control over their operations and/or system
development activities.
 
The final alternative, use of a service bureau or timesharing, is where you use someone
else’s computer system. This is probably best for smaller organizations. The advantage is
that the organization accesses and pays for what they use. The disadvantages are that the
organization loses control over their computer operations and the costs are usually higher.
 
Summary
The initial part of the article discusses the five applications that make up the computer-
based information systems. Together, these five types of applications provide the
information needs of an organization. The five applications include:

      Transaction (data) Processing (TP/DP)

       Management Information Systems (MIS)
       Expert Systems
       Decision Support Systems (DSS)
       Executive Information Systems (EIS)
 
Next, the systems analysis and design and systems development life cycle (SDLC) are
addressed. Systems analysis and design is the formal process used to determine and fill
the information systems needs of an organization. The SDLC is the life cycle of a system
from inception to replacement. The five phases of the SDLC include:

1.       Identify problems and opportunities,

2.       Analyze and documenting existing systems,
3.       Design the system,
4.       Implement the system, and
5.       Support and maintain the system.
  
Finally, the program development life cycle (PDLC) is reviewed. The PDLC attempts to
formalize the process of program development to improve the quality of systems. The

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concepts of quality and software development and processing alternatives are also
discussed.
 
Four important ideas need to be remembered regarding the SDLC and PDLC processes to
help ensure the development of quality information systems. First, documentation occurs
throughout the process, not just at the end. Second, testing and training are essential to
the success of an information system. Third, insist on and require user acceptance. This is
to ensure that the system meets the users’ needs. Finally, understand that maintenance is a
reality and necessity. With good maintenance, modifications, and enhancements, a
system can last a long time.
 

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