DMBA 204 - MANAGEMENT INFORMATION SYSTEM

Set – 1

Q1. Discuss the history of Computing.

Ans: Computers or general purpose computing devices were invented in the middle of the 20th
century, but the ideas they are based on evolved a century earlier. Charles Babbage, a renowned
British mathematician, fi rst conceived the idea of a computing device in the 1820s when he was
confronted with the problem of errors creeping into navigation charts at the time of their writing.
In those days this work was done by clerks who used manual methods of pencils, rough paper
and slide rules to make navigation charts used by sailors. These charts required extensive
numerical computations.

Each chart had to be created individually and owing to the tedious nature of the work was prone
to errors. The clerks who performed the calculations were known as ‘computers’. Babbage
designed a mechanical device that could be moved by pulleys and gears and could be used to
make computations. This device was known as the Difference Engine. He tried to construct the
Difference Engine but never succeeded in doing so. He also designed an advanced version of this
engine, which he called the Analytical Engine, in which instructions could be given by punched
cards. Ada Lovelace, who was a colleague of Babbage and also a mathematician, conceived of a
method of writing a series of punched cards for the Analytical Engine that could perform
complex calculations. Babbage is thus credited with inventing the idea of a computing device
and Lovelace with inventing the idea of programming.

ENIAC:

Way to commercial computers the first versions of modern-day computers were built in the
1940s, almost a hundred years after Babbage’s first designs. One of the earliest computers was
built by Konrad Zuse, an engineer working in Germany during World War II and was based on
electrical relay switches. Owing to the war this invention could not be publicized to the world.
Another computer was developed by the UK under the guidance of mathematician Alan Turing,
also during the war. This computer consisted of both electrical and mechanical parts and was
used to compute numbers quickly, mainly to break secret codes used by rival military operations.
World War II was also the period in which two other, independent efforts to build computers
were attempted in the USA.
The first was by some independent researchers at the Iowa State University who created the first
electronic and digital computer called the Atanas off-Berry computer. This project did not
receive much attention at that time. In contrast, a computer called Electronic Numerical
Integrator and Computer (ENIAC), built by John Mauchly and Presper Eckert in the University
of Pennsylvania also during World War II received much more attention and media coverage.
This computer consisted entirely of electronic components and differed from the earlier efforts
because it was ‘general purpose’ in nature.

Advent of artificial intelligence

Research in the field of artificial intelligence began in 1956 in the USA. This field dealt with
building computers and writing software that could emulate human capabilities in problem
solving. The field gained popularity and attracted a large number of researchers. It also initiated
a sister field of Robotics, whose main goal was to build human or animal-like devices called
robots that could move about independently. The researchers in these disciplines examined the
prospects of keeping information about the world within computer memory that could then be
used to generate useful conclusions.
Q2. What is IT interaction model? Explain.

Ans: Managing IS in organizations is a highly challenging and complex task. One reason for
this complexity is that neither organizations nor the IS they use remain static over time – both
change continuously, and it is the job of management to ensure that the systems remain useful
and relevant for their organizational goals at all times. Organizations change to respond to the
needs of the business and economic environment in which they thrive. They may have to change
their services, their products, their internal structure, and the manner in which they do their
business to meet the challenges of the environment. Organizations also change as their
employees gain more experience and learn and adjust to their work environment. The employees
change the manner in which they work, including the manner in which they work with IS, and
with this they change the way processes within organizations are carried out. One way to
understand IS and organizations is to see how these two entities interact.

System Implementation Process

Initiation Build Introduction Maintenance

The Organization

Competitive environment
Strategy The information Use &
Culture system consequences
IT infrastructure

External environment

IT interaction model

Figure depicts the IT interaction model. When organizations introduce new IS they expect certain
changes to happen. These changes are related to the functions that IS are supposed to perform. For
example, if the IS are supposed to process the monthly payroll for employees, then it is quite
possible that the organization has implemented this IS to increase the speed at which the payroll is
processed and also the accuracy of the calculations.
These are positive changes the organization wants as it has spent time and money in implementing
this new IS. If the changes the organization expects are realized then this may turn out to be a
positive outcome for it. For a commercial organization, this may lead to increased profits, which is
the very goal of the organization. The new IS could also lead to better employee satisfaction and an
improved ability to manage employee benefits and remuneration. These outcomes are what the
organization would have planned for and would welcome them. However, it is also possible that
these benefits are not realized. It is possible that the IS may not perform as expected and there is not
much improvement either in the organization’s profits or in employee’s satisfaction. This possibility
could arise if the implementation of the system was not according to the needs of the organization
or it was implemented in a faulty manner and had many problems in delivering its desired results.
Or it could be that even though the system was implemented properly, there were employees in the
organization who were opposed to its implementation and did not want to use it in the intended
manner. Such situations are known to happen and are often referred to as resistance to change in
organization.

THE IMPLEMENTATION PROCESS

Initiation Build/Buy Introduction Adaptation

THE ORGANIZATION
THE $
FIRM STRATEGY
INFORMATION
BUSINESS PROCESSES USE
SYSTEM CONSEQUENCES
STRUCTURE & CULTURE
IT INFRASTRUCTURE
∞

THE EXTERNAL ENVIRONMENT

The IT Interaction Model: An Overview Mark S. Silver M. Lynne Markus Cynthia Mathis
Beath The Information Technology (IT) Interaction Model is a stylized view of the dynamics of
information systems in organizations. The model asserts that the effects of an information system
for an organization emerge over time as the result of the interaction of the system with the
organization.

This view leads to a model with four interrelated elements: The Information Technology (IT)
Interaction Model is a stylized view of the dynamics of information systems in organizations.
The model asserts that the effects of an information system for an organization emerge over time
as the result of the interaction of the system with the organization.
Q3. How Information Technology could be used for competing in market?

Ans: The combination of network externalities and positive feedback leads to tippy markets. A
tippy market results when there are two or more products competing in the market, and in the
eventual outcome only one survives. Each product is tippy in the sense that it could either
succeed or fail, and with the effects of positive feedback only one succeeds and the others fail.

The competition between the two video recording standards, VHS and Beta max, is an example
of a tippy market resulting from network externalities and positive feedback. Beta max was
introduced as a video tape recording technology in 1975. It allowed users to tape-record
television programs and also enabled recording studios to pre-record and sell tapes of television
programs and films. VHS was a similar and competing technology that was introduced later. For
both formats, users had to buy tape recorders and playback units that could play the format. If
users committed to one, then they could not use the tapes made in the other format. The network
effects resulted from many users selecting one technology and then the market for pre-recorded
tapes growing for it. In the competition, the VHS format won out as the number of its users
grew, the number of manufacturers making and selling the recorder players for VHS grew, which
resulted in positive feedback, and drew more customers to VHS. Finally, the market tipped for
VHS, and the Beta max format lost out entirely and its recorder players went out of the market.
Figure shows the comparison of production of the two formats. Ironically, many users
considered Beta max a superior format than VHS.
 Set – 2

Q4. Discuss the properties of Information goods.

Ans: Properties of information goods Information goods have certain properties that make them
distinct from physical goods. Information goods are typically expensive to produce but very
cheap to reproduce. For example, the original cost of producing a music track by a professional
band may run into millions of rupees. However, once the digital version of the track is available,
it can be reproduced or copied for almost no cost or at a very low cost.

To broadcast cricket scores in India, the mobile phone companies have to pay a high upfront fee
to the cricket match organizers. Once the scores are purchased and sent out on SMS networks, as
is the case for many international cricket matches in India, the cost of reproducing the message
across the network is very low. It is widely believed that owing to the spread of MP3 music files
across the Internet, the music industry as a whole has been deeply affected. Many new
businesses have evolved that directly sell music files off the Internet; the most famous example
of this is the iTunes store that sells music files for the Apple music players. Many bands and
music groups have also started selling and distributing their songs directly over the Internet.

Many argue that the life of the physical, paper-based book is about to decline with the advent of
the digital book readers. Book buyers can now buy books directly over the Internet and have
them instantly available on their digital readers. The digital readers have massive capacities; one
such device can store thousands of books. Besides, some of them provide access through
wireless networks to a huge library of free and paid books that the readers can access instantly.

Another property of digital goods is that they can be converted into versions quite easily. A
version of a good is a form that is different from the original, yet of the same nature. For
example, physical books are typically released in the market as cloth-bound books that are more
expensive; and a few months later the same book is released in a paper-bound version. The
content of both the books is exactly the same except that the expensive version has a better
quality of binding and better printing; and the cheaper version usually has smaller print and the
paper is of lower quality. The main difference in the two is that one is released earlier and one
later.

Those customers who are keen to read the book early pay a higher price for the cloth-bound
book. Information goods that have a time value can be versioned quite easily using information
technology. For example, cricket scores that are sent out on SMS have a small price.
However, the same scores can be obtained a few minutes later in an online form for free. Many
providers of free stock quotes still give a delayed version, whereas the real-time quote is
available for a small fee.

Many software makers give away a free version of their software for users to sample, and keep a
priced version for sale. This addresses another property of digital goods – many information
goods are experience goods. This implies that the true value of the goods is evident only after
they have been experienced. For example, the value of a magazine article or a book can only be
realized after it has been read. This is true for all magazine articles and all books. Even the value
of weekly magazines, which arrive every week, can only be gauged when they have been read.
This is a strong contrast to consumables such as a soft drink whose value is known after
consuming it only once. Owing to the property of experience, sellers of information goods often
find it useful to allow customers to sample the goods, often through a free download of a lesser
quality version. Many websites allow visitors to hear portions of a music track or see clips of
videos to allow them to experience the goods and make a choice about purchasing them.
Q5. What are the facilities an organization could have from ‘Customer Relationship
Management System’?

Ans: The origins of CRM lie in the sales force automation systems that grew with the rise of
personal computing around the world in the 1980s. The systems would automate the processes of
recording sales calls by salespersons; recording customer data and reading historical customer
data; processing and relaying orders to the department; and enabling managers to plan for sales
campaigns and field personnel. The use of call centers too emerged in this period. A call centre
implies a facility in which customers could make phone calls to a particular number and have a
representative of the company speak to them about orders, shipments, payments, order tracking,
delivery schedules, return of goods, and refund of payments.

Call centers evolved as customer support mechanisms. In parallel, firms also realized that it is
possible to reach out to customers via phones and started campaigns known as telemarketing,
where sales representatives would call customers and market their goods and services. Calls
would be made to customers who are already in the database of the firm, or to others, known as
cold calls, who are likely customers. Telemarketing too relies on a database of customers, which
record details about who was called, when the call was made, and what response was obtained.

Various facilities created by CRM are as follows:

1. Manage customer data: The CRM system maintains data on customers that not only pertains
to the details about the customer – such as name, address, and demographic profile – and the
products the customer has purchased, but also maintains a history of the contacts with the
customer. A CRM system for a bank, for instance, will maintain data on when a potential
customer called or visited the website of the bank, when the customer enrolled and who he/she
talked to at the bank, when he/she began transactions, whom he/she has talked to or contacted
over the years regarding different services, and how many calls he/she has responded to. With
such data available to them, sales personnel can recall any prior transactions with the customer,
showing that they are aware of the customer’s needs.

2. Manage sales force: The CRM system allows sales managers to track activities of sales force
personnel and plan their tasks. The CRM system supports sales personnel by providing access to
data about customers, order, delivery status, invoice status, payments, and payment histories.
Furthermore, the system helps sales personnel follow up on leads and record details about their
visits and conversation. The system also enables creating quotes, based on the current prices of
products, in the field.
3. Marketing management: The system can be used to plan for and execute marketing
campaigns and then systematically analyze the results. The system can help plan events,
campaigns, promotions and retain data and results related to these. Marketing managers can then
use customized analysis to assess the impact of their campaigns.
The system can show maps, charts, graphs and dynamically adjusted visuals of marketing
activities across regions and products. Some special add-on analysis products can also enable
managers to simulate scenarios to decide on their campaigns.
Q6. Can you write brief outline on any two Business Intelligence techniques?

Ans: Analytics relies on a number of computational and statistical techniques that were
developed in the field of artificial intelligence. When applied to business problems, these are
known as business intelligence techniques. Brief descriptions of some business intelligence
techniques are provided below to highlight the kind of problems that can be solved and the kind
of data that is required.

Neural networks
A neural network is a mathematical model of neurons in animal brains. The network consists of
nodes and links between them. One set of nodes are called input nodes, and input data is
provided to these nodes. These nodes are connected to many others in a specified manner.
Another set of nodes are called output nodes and here the computations of the network are
terminated. When data is provided to an input node, the idea is to move the data through the
network, and as this is done, certain calculations are performed. Data is ‘moved’ through the
network by allowing it to be used in calculations from a source node to a destination node that is
connected by a link. Data from a particular node cannot be used in a node to which that
particular node is not linked. Each link in a neural network has a weight. This weight is initially
randomly assigned. In the most widely used form of neural network, data is propagated through
the network in a single direction, from input to output nodes. The weights on the links are used to
make the calculations as the data is moved. Neural networks are used in two types of analytics
problems:
1. Classification.
2. Prediction.

A classifier takes input data and puts it in one of several known categories. For example, neural
networks are used to determine if a loan should be given to an applicant at a bank. The network
has to be given past data of sanctioned loans given, and whether the borrower had paid them
back according to the contract.
Amount of loan

Profession of borrower

Income of borrower

Age of borrower
Approve
Debts of borrower
Deney
Gender of borrower

Repayment history

Input Hidden Output Layers

Layers Layers

The neural network for stock price prediction; the network consists of five input nodes and
one output node

Decision trees

A decision tree is used in a manner similar to neural networks, but only for classification
problems. A decision tree is built with past data and is used to classify fresh data from the same
type of problems. Figure shows an example of a decision tree. The figure shows a decision tree
for the problem of deciding to give a loan to an applicant. The tree begins with the most
important parameter for making the decision, which is that of the ‘income’ of the applicant. This
parameter is assumed to have three different values, those of ‘high’, ‘medium’ and ‘low’. For
each of these values there is a branch of the tree. If the applicant has a high income, then the tree
considers the next important parameter on that branch of the tree, which is ‘repayment history’ of
the applicant. This parameter then becomes the starting point of another branch of the tree, where
two values are considered ‘good’ or ‘poor’.
 Income

Medium Low
High
Profession Education
Repayment history

Good Poor Self-Emplyed Salaried Graduate High School

Yes No No Yes Yes No

Fig. The decision tree for loan approval