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Study Notes

ASHRAF REHMAN
CFE

ACCA Paper

3.4
Business Information
Management

Summer 2006
3.4 BUSINESS INFORMATION MANAGEMENT
CHP 1 - ORGANIZATIONAL INFORMATION REQUIREMENTS
BY: Ashraf Rehman

INFORMATION
Basic concepts
- Data: raw information relating to facts, events and transactions, such as
numbers, descriptions, etc.
- Information: data processed in such a way that it is meaningful to the person
receiving it
- strategic level: topmost policy making level where the long term objectives and
direction of the Organization is decided upon (e.g. industry, new products, new markets)
- tactical level: level where decision is takes as to how the resources of the business
should be employed to achieve the business objectives
- operational level: level where day to day activities are planned, monitored and controlled
- structured decision: decision taken objectively, based on clearly defined procedures
- unstructured decision: decision taken subjectively, based on hunch, experience or
trial-error basis
- semi structured decision: a combination of structured and unstructured decision

- information is used for:


- planning (strategic, tactical and operational)
- recording transactions
- controlling
- performance measurement
- decision making

- categories of decision making:


- planning decisions (budgets, forecasts, investment appraisals, etc)
- control decisions (variance reports, working capital statements, fin. Stments)

- qualities of good information


A accurate
C complete
C cost beneficial
U user targeted
R relevant
A authentic
T timely
E easy to use
- see table on pg. 8 as to how poor information can be improved

- the cost of obtaining info and the benefit from using that info should be kept in
mind, but practically it is not easy to quantify the same

- internal users of info - directors, GMs, departmental heads, supervisors, staff, etc.

- external users of info - bankers, creditors, customers, suppliers, media,


government, tax authorities, etc.

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Cost and benefit of a new information system
- costs of a new information system are as follows:
- equipment cost (hardware)
- installation cost (hardware installation, e.g. room. A/C, wiring)
- system development cost
- personnel cost (training cost, salaries)
- operating cost (maintenance cost, consumables)

- benefits of a new information system are as follows:


- savings in cost by not using the old system (salaries, consumables)
- additional savings resulting from the new and enhanced system (e.g. increased
sale revenue, better stock control leading to less stock losses, etc.
- revenue from the sale of old equipment / system

- there are other 'intangible' costs and benefits of a new info system which cannot be
quantified in monetory terms, such as:
- cost: staff dissatisfaction, learning curve
- benefits: customer satisfaction, better decision making abilities

TYPES OF INFORMATION SYSTEMS

- organization requires different types of info systems provide different level of


information to different functional areas

Office Automation Systems (OAS)


- OAS are designed to increase the productivity of data workers
- includes document management, facilitating communication, etc.

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Transaction Processing System (TPS)
- records basic transaction of the organization
Batch processing
- all data inputted is being saved in a temporary file, and will be processed after the
processing' command is given
- processing delays should be acceptable (I.e. response time is not immediate)
Real time / online processing
- data is processed as soon as it is inputted
- very fast response time

Management Information Systems (MIS)


- extracts summarized information from the TPS in the format required by Tactical Mgmnt
- mostly includes internal data to be used by departmental heads
- used for planning, monitoring and controlling operations

Executive Support Systems (ESS)


- uses data from both internal and external sources and presents it to the Senior
Management for strategic and unstructured decision making
- salient characteristics of an Executive System:
F Filter down capability
E external information available
S summarized information
G GUIs
M manipulation features available
P presentation tools available
M modeling features available

Decision Support System


- provides support for making semi-structured or unstructured decisions
- DSS distinguishes between the structured portion and the un-structured portion
in the data, so that effective analysis / decision making can be done
- DSS normally consists of:
- large database of facts
- problem 'exploring' facility, I.e. users can explore different scenarios using
'what-if' and sensitivity analysis approaches
- graphical tools to present statistical data

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Structured decisions
- based on pre-defined rules or formula
- clearly defined method of solving a problem
Un-structured decisions
- not based on pre-defined rules or formula
- involves subjectivity
- based on experience, sixth sense or 'educated guess'
Semi-structured decisions
- combination of structured and un-structured decisions
- some portion is objective (I.e. based on pre-defined rules / formula) and some
portion is subjective (I.e. based on experience or sixth sense)

Expert Systems
(discussed in chapter 3)

Knowledge Work Systems (KWS)


- knowledge work means creating new knowledge or information by research,
experimentation and investigation into existing trends and products
- KWS are info systems that facilitate the creation, storing and usage of new knowledge
- knowledge workers: people whose primary job is creating new knowledge or products which
Organization may sell in future. Eg. includes engineers, graphic designers, scientists, etc.
- KWS includes virtual reality, computer aided design (CAD), investment workstation, etc.

INFORMATION SYSTEMS SECURITY

Security ??
- protection of data from
- accidental or deliberate threats
- which might cause unauthorized modifications, disclosure or destruction of data
AND
- protection of information systems from
- degradation or non-availability of services

Aspects covered:
- prevention - 100% prevention practically impossible
- detection - normally used in combination with prevention techniques, e.g. user logs
- deterrence - e.g. computer misuse could lead to termination of employee
- recovery procedures - taking regular backups
- correction procedures - introducing stricter controls
- threat avoidance - change the entire design of the system

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Types of controls
- security controls
un-controllable physical threats
fire , water, weather, lightning, terrorism, etc.
physical access controls:
personnel - guards
mechanical & electrical controls - swipe cards, PIN, password locks, etc.
bio-chemistry controls - hand prints, eye retina, etc.
logical controls:
- passwords:
- problems with passwords
- users may forget their password
- password may be very easy to guess
- users may share the password with colleagues / friends
- users may write the password somewhere
- recommended passwords arrangements includes:
- password to be changed on a regular basis
- password must not be told or written down
- password to be easy to remember
- password be hard to guess
- should not appear on the screen

- audit trails (system logs)


- administrative controls (employee selection, job rotation)

- integrity controls
- to ensure CAV (completeness, accuracy, validity) of data at input, processing and
output stage
- input controls - field checks, sequence checks, control totals, range & limit checks

- contingency controls
- backup procedures
- contingency (disaster recovery) plans

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3.4 BUSINESS INFORMATION MANAGEMENT
CHP 2 - STRATEGIC ROLE OF IS
BY: Ashraf Rehman

STRATEGIC PLANNING

Strategic Planning
- Strategic Planning (SP) is a long term (L/T) plan to achieve set mission / goals.
The time horizon for this type of planning is 5-10 years

- SP is done keeping in mind the following:


- mission, goals and objectives
- external evaluations
- customers - substitute products
- suppliers - new entrants
- competitors - PEST (political, economic, social, technological)
- in-house evaluations
- capacity and resources
- 4 M evaluation (men, material, machinery & money)

- strategic plan formulation technique:


- strategic analysis (including options generation)
- strategic choice
- strategy implementation

Types of strategy
- corporate: what type of business to do
- business: how to do the business
- functional / operational: grassroot departmental planning for day-to-day operations

INFORMATION MANAGEMENT STRATEGY

Information management strategy


- focuses on 'how information is managed within the organization'
- IM strategy is concerned with:
- developing and implementing IS/IT strategies
- overall IS/IT control environment

Importance of forming an IM strategy - EARL's Theory


- information is an important resource, just like any other resources of the company
- IS/IT activities can have a major impact on the business
- technologies are changing rapidly all the time, hence you have to manage IS/IT properly
- IS/IT is increasingly being used as a strategic weapon for business
IS / IT STRATEGY
Information System (IS) Strategy ?
- deals with WHAT Business Objectives can be achieved by using IT
- exploits IS/IT options to support current business strategies or create new strategic options
- integrates IS planning with organization's L/T strategy
- e.g. use of robotic machinery, online systems (ticketing, credit cards,), etc.
- IS strategy planning is done keeping in mind:
- corporate plans
- business needs

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- Management's expectations

Information Technology (IT) Strategy ?


- Addresses the concept of HOW the IS strategy will be achieved
- Deals with IT options (hardware and software) that can be used to achieve
the IS strategy
- e.g. use of computers, electronic data processing & communication, softwares, etc.
- IT strategy planning is done keeping in mind:
- current use of IT equipment
- current infrastructure
- cost & benefit of making a particular function / department computerized
- implications on workforce (training, etc.)

Why is IS/IT strategy important ???


- aligns IS/IT activities with the overall corporate strategies / needs
- supports strategic and operational activities
- involves high costs
- critical to success - specially if its your strategic weapon or competitive
advantage or serving as a barrier to entry for new companies
- affects on the quality of analysis and presentation of Management Info. for DM
- facilitates better customer service

Steps to prepare an IS/IT strategy


- understanding the business strategy
- understanding the CSF
- highlighting the information requirements in line with the business strategy / CSF
- reviewing the current information systems, focusing on
- the overall IS environment (management awareness and response to IS/IT)
- hardware - software - database
- position comparison on the basis of business strategy, information requirements
and the current infrastructure, I.e. analyze the gaps and ways to eliminate it
- developing an IS/IT strategy focusing on a balance between the following:
- contribution towards the business strategy
- risks and returns
- development and maintenance costs

Contents of an IS/IT strategic plan


- business strategy
- CSF
- IS/IT strategies (hardware, software, database)
- how IS/IT strategies would support business strategy and CSF
- Resource requirments
- major milestones of implementation
- performance indicators

Challenges with IS
- lack of specialist knowledge
- lack of overall control and coordination
- pace of technology
- cost controls
- compatibility of systems

Use of IT
- planning and forecasting

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- recording transactions
- scenario building and decision making
- measuring and improving performance
- service improvement
- gaining competitive edge

ESTABLISHING THE INFORMATION REQUIREMENTS


Two methodologies to determine what sort of information is required by an Organization
is detailed below:

Enterprise Analysis
- also known as Business Systems Planning
- involves examining Organization's entire
- structure
- process
- functions
- data elements
to identify the key elements and attributes of data and information

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- 3 different methods of carrying out enterprise analysis:
- bottom-up planning approach (infrastructure led): focuses on ensuring that
transaction systems are in place to provide basic operational information
- top-down planning approach (business led): focuses on the overall business
objectives of the Organization and then the underlying systems are put in
place to ensure compliance
- mixed approach: a combination of bottom-up and top-down
- advantage - gives a comprehensive view of the use of data, information and systems
- disadvantages:
- results in tooooo much data
- might be costly to review each and every process and functions
- focuses on existing information only and does not concentrate on future needs
- ignores external environment / factors

Critical Success Factors (CSF)


- also known as Strategic Analysis Approach
- small number of key operational goals vital to the success of the Organization
- denotes those important business areas where 'everything must go right', in
order to achieve the business objectives
- monitoring CSF are used to maintain the current performance
- building CSF are used to expand business
- CS factors are determined keeping in mind:
- organization's business objectives
- identifying factors critical to the business objectives
- setting key performance indicators and benchmark targets
- CSF could relate to:
- the industry trends
- internal activities (competitive strategies, new products, parent company targets)
- environment (economy, customers, competitors, etc.)
- performance indicators are used to measure how you are performing against the
established CSF targets, I.e. compares budgets with actuals
- advantages of CSF:
- considers environment as well
- focuses on information rather than processes
- facilitate top management participation
- disadvantages of CSF:
- there might be numerous CSF at grass root level, which needs to be aggregated
- focuses towards the needs of top management
- CSF change often

PEST ANALYSIS
PEST Analysis ??

P political
E economic
S social
T technical

- an organization works in two environments:


- general environment - PEST

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- task environment - factors directly relevant, e.g. customers, suppliers, competitors
- strategic planning has to take into account both the general as well as the task
environment

Examples of PEST (general)


Political countries laws & regulations environmental protection acts
safety acts tax / fiscal laws
employment laws government policy

Economic economic growth demand and supply


inflation and interest rates business stability
exchange rates business cycle (boom periods, etc.)
overseas market

Social demographics (study of local people and their habits)ethnicity


age and gender groups family structures
geography employment rates

Technological availability support and maintenance options


compatibility communication infrastructure
required skills available frequency of changes

Examples of PEST (IS/IT)


Political systems should address government laws, e.g. tax laws, etc.
protection / privacy of personal data (Data Protection Act 1998)
protecting intellectual property, i.e. software licensing

Economic is there economic stability and growth - otherwise no IT investment would be made
is your customers and suppliers technologically advanced
is the organization is flexible to change and fast changing technology
is the investment in IS/IT justified
Is system has ability to manage exchang,Inflation & interest rate

Social society's trends towards IT, e.g. Internet, e-commerce


lay-off of staff due to automation
user resistance to systems and changes

Technological availability of IS/IT skilled staff


availability of hardware and related technologies
existing systems and their compatibility
system maintenance, modifications and upgradeness
the need for having quick and reliable information

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uld be made

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3.4 BUSINESS INFORMATION MANAGEMENT
CHP 3 - KNOWLEDGE MANAGEMENT
BY: Ashraf Rehman

KNOWLEDGE MANAGEMENT
Definitions:
- knowledge: information within people's minds
- knowledge management: process of
- collecting
- storing, and
- using
the knowledge held within the Organization
- Knowledge Work Systems (KWS): info systems that facilitate the creation,
storing and usage of new knowledge
- knowledge workers: people whose primary job is creating new knowledge or products which
Organization may sell in future. E.g.. includes engineers, graphic designers, scientists, etc.
- data workers: people who processes and distributes information, e.g. accountants

Purpose of knowledge management systems


- capturing, processing, storing and using of
- explicit knowledge
knowledge (facts, transactions and events) already known to the Organization
- tacit knowledge
knowledge known to the people of the Organization, which has not yet been
documented, I.e. the people have not yet shared it with the organization

- four types of knowledge management systems


- knowledge distribution (Office Automation systems)
- knowledge sharing (Group Collaboration Systems)
- knowledge creation (KWS)
- knowledge capturing and codification (Artificial Intelligence Systems)

Knowledge distribution systems


- uses Office Automation Systems for distributing knowledge
- e.g. includes:
- word processing
- voice mails
- emails
- knowledge is distributed
- within the same department
- between various department
- to the external environment (e.g. customers, government, etc.)

Knowledge sharing systems


- used to provide access to databases and communication systems to workers, so that
they can share the knowledge amongst themselves
- software systems normally used for knowledge sharing
- GroupWare
- Intranet
- Extranet

GroupWare
- GroupWare is a term used to describe a software that provides functions for the

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use of collaborative groups
- widely dispersed group members can work together through GroupWare, e.g. project teams
- popular GroupWare are Lotus Notes, Microsoft Exchange, etc.
- features of a GroupWare includes:
- messaging (advanced e-mail facilities)
- conferencing (e.g. video, tele, etc.)
- specialized folders / project databases
- scheduler (electronic diaries)
- documentmanagement (everyone can update the same document)
- workflow management (keep track of task status of a project)
- journal (which keeps track of pre-specified important activities)
- jotter (for jotting down quick notes / reminders)
- others: to do list, hyperlinks, address books

Intranet
- a 'private' internet being used internally by the Organization, using web browser
- sort of a mini internet of an Organization, which uses firewall to protect it from outsiders
- potential applications includes
- company news letters
- online documents, e.g. policies & procedure manual
- employee pages / details
- objectives of intranet
- easy access to corporate information and reference materials (e.g. policies)
- decreased paper work
- creates sense of organizational unity
- ensures consistency across the organization
- benefit of intranet:
- low startup cost
- reduced distribution cost for information
- low training cost
- easy expansion

Extranet
- Extranet can also be used by authorized outsiders, through passwords (e.g. by
business partners and suppliers, etc.)

Difference b/w GroupWare and intranet


GroupWare Intranet
cost relatively expensive relatively cheap
document tracking strong relatively weak
security strong relatively weak
services vast limited
environment fast paced large teams medium paced small teams

Knowledge creation system


- uses Knowledge Work Systems (KWS)
- KWS are info systems that facilitate the creation, storing and usage of new knowledge
- KWS uses tools such as :
- analytical tools
- powerful graphics facilities
- communication tools
- user friendly interface
- e.g. of KWS are
- Computer Aided Design (CAD)

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- Virtual Reality Systems (VRS)
- VRS simulates realistic atmosphere which are very close to real sensations
- interactive software and hardware (e.g. headgear) are used

Knowledge capturing and codification systems


- capturing means entering knowledge into the computer systems
- codifying means finding rules that explain how the knowledge is to be used
- denotes Artificial Intelligence (AI)
- AI is developing a system which behaves like a human, based on human expertise,
knowledge and reasoning patterns
- AI applications includes:
- expert systems
- neural networks
- fuzzy logics
- intelligent agents
- advantages of AI:
- knowledge becomes permanent, even if the expert leaves the Organization
- knowledge could be consistently applied (I.e. AI excludes emotions and feelings)
- knowledge can be documented

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- eliminates involvement of humans in routine tasks
- disadvantage of AI:
- expensive systems
- takes a long time to develop
Expert Systems
- consists of pre-feeded knowledge, facts and reasoning of a human expert, which is
used by the system to recommend a decision
- views, experience and decision making patterns of experts are feeded
- ES focuses more on reasoning rules (IF & THEN), as compared to DSS which
focuses more on computation and presentations of facts
- normally used in circumstances where there is incomplete information and experts
are not available to take an immediate decision
- ES normally consists of:
- knowledge database, where the experience, rules, facts are stored
- reasoning engine, which correlates the problem with the knowledge database
and recommends an appropriate decision
- explanation function, which explains as to how and why the recommended
decision was taken by the ES
- ES is normally used in
- legal advice
- tax advice
- investment decisions / forecasting
- education & training
- problems with ES
- long development time
- high cost
- only functions in those areas where rules can be applied to the knowledge

Neural Network
- modeled on the basis of biological process of a human brain
- it learns from the experiences
- more advanced from Expert Systems as Neural Network do not rely on a 'set of
pre-fed rules' but also develops a hidden layer of experience and logic

Fuzzy Logics
- traditional programming requires precise commands, such as 'yes' or 'no'
- fuzzy logics involves using more generic commands
- for e.g.
- traditional command: if room temperature is less than '60 degrees', raise
heater to 'high'
- fuzzy command: if room temperature is hot, increase the heater power

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Intelligent Agents
- software which are given specific tasks to undertake and then the programme is
left running and the human operator carries on with other tasks
- the programme reports back to the human operator at the end of the task or when
it requires further information in order to complete the task
- e.g. is intelligent search engines

General problems relating to knowledge management


- inadequate system to capture knowledge
- inadequate system to process and distribute knowledge
- organization does not know what knowledge is already available to it
- difficulties of measuring intangible benefits from implementing knowledge system
- sometimes leads to information overload

INTRODUCTION TO DATABASES

Definition
- Database: a collection of data, which services many application softwares
- Database Management System (DBMS):
Software that creates and maintain a database and manages access of the application
softwares to the data
Software that allows for the organization, manipulation, processing, storing,
retrieval, and sorting of data held within a system
- Data independence: data is separate (i.e. independent) from the application softwares
- Data redundancy: duplication of data items
- Data integration: the ease at which application softwares accesses the data
- Data integrity: data is accurate, secure and reliable

Characteristics of a database
Shared different users access the same data, hence reducing data redundancy
Control enhances integrity and security of the data
Flexibility able to meet all sort of user requirements, I.e. evolutionary to future needs

Independence separate from the application software - two main advantages:


- data layout can be altered without affecting the application programme
- database can present many styles of presentation to different
users using the same data

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Factors considered when designing a database
- analysis of information needs (e.g. CSF monitoring, audit requirements, etc,)
- logical design of the database
- physical design and setup of the data base
- data entry and upkeep functions
- data retrieval and reporting functions
- monitoring, maintenance and security requirements

Facilities offered by a DBMS


- ability to add, amend and delete records
- ability to retrieve data
- ability of controlling access to data (e.g. password management)
- ability to recover from system breakdown
- ability to interface with all application softwares

Elements of a DBMS
- Data Definition Language (DDL) - defines the form of each Data item in the database
e.g. defining input field checks for each data
- Data Manipulation Language (DML) - specialized language to manipulate data
within the data, e.g. of a DML is Structured Query Language (SQL)
- Data Dictionary - program used to organized and store the data and maintains a
directory of the stored data

Advantages of database
- unanimous and integrated data
- data integrity
- data security
- data independence
- minimum redundancy
- evolutionary capabilities, I.e. adopts changes in the Organizational requirements with ease
- flexibility - reports can be generated from the database in any format required

Disadvantages of database
- high security risks, as the entire data of the Organization is in one place
- initial development cost may be high

Database Administrator (DBA)


- person responsible for the entire electronic data of the Organization
- strategic tasks includes:
- defining Organization's present and future data / information needs
- choosing suitable file structure
- defining hardware needs to support the database

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- operational tasks includes:
- ensuring data integrity
- ensuring data security (including access rights to users)
- preparation and maintenance of data dictionary
- taking backups

DATABASE STRUCTURES
Introduction to database structures
- Logical data structure: defines the relationships of the data items with each
other which reflects the business requirements of the data
- Physical data structure: describes how the data is physically stored on the storage
media
- Logical design shows what the system will do and the physical design shows how
that would be done

Types of databases
- hierarchical - network - relational

Hierarchical Database Model


- shows data in a 'reverse-tree' format
- data is stored in a parent-to-children relationship, I.e. one to many relationship
- one parent can have many children but one child can only have one parent
- each data item is related to one item above it, but to any number of data items below it
- see diagram 2.3 on pg. 79
- the hierarchical model is unsuitable for situations involving / requiring
many-to-many relationships, as it would result in data redundancies
- the model is only appropriate where there are large numbers of routine requests
for information, e.g. airline reservation systems
- uses pointers (elements attached to record the location of related records)

Network Database Model


- this model allows many-to-many relationships between data items
- parents can have many children and children can have many parents
- see diagram 2.4 on pg. 79
- the model minimizes data redundancies and leads to a better response time to queries
- uses pointers to a much larger extent than the hierarchical model

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Relational Database Model
- designed to overcome some limitations of the above two models
- data items are stored in a series of two-dimensional tables consisting of a row
and a column which are then linked together via unique (primary) key
- a row represents a record
- a column represents a part of the record
- see diagram on pg. 84
- data from the tables are extracted and the desired report is formed, provided
that there is a common element between the two
- instead of pointers, following three operations can be used to extract data:
- select - creates a list of records (rows) that meet a given criteria (e.g. list
of customers of a particular product)
- join - combines elements from more than one table to provide additional
information not available from a single table
- project - create new tables containing only the required columns and removing
unnecessary fields

DATA WAREHOUSING

Introduction
- Data warehouse is a database that accumulates and stores the entire data taken
from various Transaction Processing Systems (TPS) in the Organization as well as
external data (e.g. competitor's prices)
- it is a combination of various operational databases of past many years
- data warehouse is used because operational data resides in many different types of
systems (e.g. financial accounting, stock systems, point of sale systems), I.e. scattered
- the data is consolidated to provide reports, analysis, reporting and query facilities
- data warehouse could be updated daily, weekly or monthly, depending on the
information needs of the Organization and availability of the information

- Data mart are alternatives to data warehouse, which focuses on small portions of
the entire data warehouse
- data marts contain data related to a particular function / areas, such as sales,
stocks, etc.

Features of data warehouse


- subject oriented: i.e. focused on data groups and not application softwares
- integrated: info being transferred from various software should be in similar format
- time variant: data kis organized over time period
- non volatile: data cannot be edited

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Tools available to extract information
- various tools are available to extract information from data warehouse or data
marts, such as Online Analytical Programming (OLAP)
- these tools provides the following features:
- query and reporting tools - to generate simple queries and reports
- intelligent agents - try to discover any hidden pattern / relation between the
data, by using neural networks and fuzzy logics
- multi-dimensional analysis tools - through which information can be viewed
from various perspectives, e.g. pivot tables

Advantages of data warehousing


- data can be accessed without affecting the use of the TPS
- wide range of data available at a central platform
- ease of analysis, decision making and queries
- data marts leads to a higher focus on specific functions / areas
- data mining can be done effectively

DATA MINING

Introduction
- Data mining software looks for hidden patterns and relationships in large pools of data

- it discovers previously unknown relationships by taking a thorough insight into the


historic behavior
- data mining helps in predicting future trends, based on historic patterns
- data mining helps in revisiting:
- marketing strategies
- advertising campaigns / loyalty schemes
- product design
- pricing strategies
- customer segmentation and focus
- data mining uses statistical analysis tools as well as neural networks, fuzzy logics, etc.

- see case example 3.12 on pg. 89


- see case example 3.13 on pg. 90
- the following types of result may be obtained from data mining
- association (linked to a single event)
- sequences (timing)
- classifications (identify related groups)
- clustering (advanced form of classifications)
- forecasting (discovers future patterns)

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- the data mining process involves the following:
- identify clusters of useful and significant data from a huge and apparently
unimportant data
- finding hidden patterns
- finding the 'rules' of the hidden patterns
- finding possible dependencies

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3.4 BUSINESS INFORMATION MANAGEMENT
CHP 4 - SYSTEM THINKING AND BUSINESS SYSTEMS
BY: Ashraf Rehman

PROBLEM SOLVING APPROACHES


- based on general system theory, there are two main approaches to solve problems
- Hard - concentrates on procedures and technologies to solve problems
- Soft - focuses more on social and cultural aspects of problems
- there are numerous methodologies which exist for hard and soft approaches, the
following two will be discussed:
- for hard approach: SDLC developed by National Computing Centre (NCC)
- for soft approach: Checkland's Soft System Methodology
HARD SYSTEMS APPROACH
Introduction
- 'hard' is associated with the physical or mechanical aspects of the problems,
rather than human or psychological problems
- hard approach is hence more suitable for structured problems / situations
- for e.g. increase production capacity of the factory to 1 million units p.a.

Suitable in following circumstances


- problem is clearly defined
- objectives are clear
- information needs are known
- standard solutions are applicable

System Development Life Cycles (SDLC)


- SDLC approach is part of hard system approach
- SDLC stages includes:
- feasibility study - identification of alternatives in line with the business
objectives and carrying out technical, operational, social & economic feasibility
- investigation - fact finding exercise of the existing systems, e.g.
volume of transactions, response time, etc.
- analysis - the above facts are analyzed in light with the various
proposed alternatives
- design - technical phase addressing detailed specifications, e.g. input,
outputs, program design, file design and security
- programme coding - system design is converted into a software
- implementation - steps to put software into operation
- review & maintenance - ensures that the system is meeting the objectives set
out in the feasibility study and is running smoothly

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SOFT SYSTEMS APPROACH

Introduction
- 'soft' is associated with the human or psychological aspects of the problems,
rather than physical or mechanical problems
- soft approach is hence more suitable to unstructured or 'fuzzy' problems / situations
- the purpose of SSM is to enhance the understanding of complex social situations
which entails many diversified views / requirements
- for e.g. Organization losing customers

Suitable in following circumstances


- problem is difficult to define
- judgments, experience and sixth sense is also involved
- not clear what is known and what is needed
- no standard solution is available

Examples of soft problems in IT system development


- job security (employee may feel that they would be fired due to automization)
- career prospects (employee may feel that their career would stop as they are not expert in IT)
- changes in the working environment (may disturb the existing social environment)
- bewilderment (system may cause confusion relating to responsibilities / reportings)
- fear of depersonalization (system may take back authority / position)
Examples through which the above could be solved
- inform staff (of the purpose, plans, event, staffing changes, etc.)
- logical explanations (the change is for betterment)
- participation (in design and defining user requirments)
- training
- management commitments
- maintaining existing work patterns as far as possible

Stages of Checkland's Soft System Methodology (SSM)


- Checkland SSM is a way to analyze soft system problems (i.e. complex human situations)
- it provides an organized approach which can be used to tackle unstructured and poorly
defined problems
- it focuses on issues related to Human Activity Systems, such as culture,
frustations, conflicts, expectations, etc.
1- Problem situation analysis
- problem is identified and analyzed

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2- Situation expressed
- The problem is documented / expressed using 'rich picture' diagram
- Rich pictures are cartoon-like freehand pictorial representation of the situation
- see BPP diagram on pg. 107

3- Relevant systems & root definitions


- root definition describes the stakeholders' perspective (viewpoint) of the system
i.e. what is the core purpose and expectation from the system from his point of view
- CATWOE is a mnemonic which helps in ensuring the completeness of the
information acquired relating to root definition
- CATWOE stands for:
C Customers (beneficiaries of the system)
A Actors (people who perform the tasks in the system)
T Transformation process (the core activity of the system or the change
brought about by the system)
W World view / Weltanschauung (underlying expectations from the system)
(e.g. could be the objextive / purpose of the system)
O Owner (highest authority / owner of the system)
E Environment (factors outside the system that impose constraints on its
operations (e.g. laws, business environment / requirments, workload, etc.)

4- Conceptual models
- CM documents key activities that needs to be performed to satisfy the root definition
- CM focuses 'what' activities needs to be done and not on 'how' activities are to be done
- CM provides a basis for discussions and stimulates 'in-depth' thinking and better
understanding for the proposed system
- see diagram on pg 104
- practice case e.g. on pg 103

5- Comparison of conceptual model with rich picture (problem situation)


- this brings together the reality (rich picture) and the required system
(concept model) to achieve the root definitions

6- Debate on feasible and desirable changes


- requires everyone involved to discuss the ideas triggered by the various
analysis, and to arrive at a win-win situation
- consensus may not be easy

7- Implement agreed changes

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BUSINESS SYSTEMS
Definition
- System: a set of interacting components that operate together to accomplish a purpose
- Business System: collection of people, machine and methods to accomplish the
business objectives

Hierarchy of systems
- Corporate level: supports the Organization as a whole and includes strategic
outlook and relationships with external elements. System includes overall forecasting,
financial planning
- Divisional level: many organizations are divided into distinct sub-units operating in
different industrial sector or providing different goods & services. System includes
analysis of the concerned industry
- Department level: emphasis is on the implementation of Organizations strategies
System includes tactical analysis / MIS
- Operational level: emphasis is on the control of day-to-day operations. System
includes TPS

Socio-technical systems
- an organization consists of 3 sub-systems:
- structure
- technological systems (systems and facilities available)
- social systems (concerning with people, their thinking and styles)

BUSINESS AUTOMATION & RATIONALIZATION


Business automation
- use of automated working methods to speed up the performance of existing tasks
- the risk and reward of automization is low
- IT based e.g.:
- general purpose softwares (Word, Excel, etc.) - email
- electronic cash registers - intranet

Business rationalization
- streamlining of operating procedures to eliminate obvious inefficiencies
- rationalization usually involves automation
- the risk and reward of rationalization is low / medium
- IT based e.g.:
- integration - laptops
- shared database - TPS / MIS / EIS
- telecommunication links - ERPs
- intranet / extranet - data warehousing / minng
- EPOS

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BUSINESS PROCESS RE-ENGINEERING

Introduction (extreme, thorough)


- BPR is the fundamental rethinking and radical redesign of business processes to
achieve dramatic improvements in major areas of business, such as costs,
performance, quality, speed, etc.
- entire business processes are overhauled
- fundamental and radical indicates that BPR starts from scratch, I.e. the basic
objectives / questions are addressed
- dramatic means that the results of BPR should be very apparent, not just a
marginal increase / decrease

How is BPR done


- the essence of BPR revolves around the final customers, and hence the processes are
mostly reviewed in the following sequence
- understanding of customer needs and sensitivity (reactions to quality, price, etc.)
- customer ordering process
- marketing and sales
- product distribution channels
- product manufacturing processes including quality and look of the product
- purchasing and materials logistics
- support services - administration , finance and personnel deptts.

- following questions are asked for each and every process


- why is it being done in this way?
- are their better alternates of this process (what if)
- how can we better able to serve customer needs at a lower cost

- successful BPR depends on


- strong hands-on commitment from the management
- sense of 'ownership' by all involved
- spirit of shared learning and progress
- see example 5.12 on pg. 114

Characteristics of a re-engineered process


- several jobs are combined into one job
- workers are given decision making powers to a defined extent
- work is performed where it makes the most sense
- one manager provides a single point of contact, rather than a 'tall' hierarchy

BPR methodology

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- develop clear business vision and process objectives
- identify the processes to be redesigned
- understand and analyze the existing procedures
- review how IT could be built-in to achieve the process objectives in a better way
- design and build a prototype of the new process and share it with the users
- implement
- monitor results

IT and BPR
- using IT does not mean that a process as been re-engineered
- IT should be in line with the process requirements to meet the process objectives
- some aspects where IT has been used as a re-engineering tool:
- E-commerce - shared databases and integration
- virtual busines - wireless data communication
- AIs (expert systems, KWS, etc.)
- online services
- EFTs / EDIs

Advantages of BPR
- revolves around customers' needs
- provides cost advantages, resulting in a competitive edge
- encourages a long-term strategic view of the operational processes
- reduces organizational complexities by eliminating duplication / wasteful processes

Limitations of BPR
- often misunderstood as a narrow focused activity
- often seen as a cost cutting exercise, which is not the only case
- requires far-reaching and long term commitment by the management
- BPR enthusiasm may result in some 'good' practices being discontinued
- often taken as a 'fashionable cure-all' exercise

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Major reasons why BPR fails
- cost of BPR may exceed the benefits
- BPR has been done too late
- BPR reforms were not suitable for the culture or structure of the organization
- inherent risk with BPR is quite high

Hammer's 7 principles of BPR


- process should be 'outcome' oriented and not 'task' oriented
- personnel who uses the output from the process should perform the process
- geographical dispersed resources should be treated as centralized
- parallel activities should be 'linked' rather than integrated
- doers should be allowed 'self managing'
- info should be captured at source
- information processing should be done in the work that produces information

Zuboff's Automate, Informate & Transformate Theory


- Automate: automation
- Informate: rationalization
- Transformate: business process re-engineering
- Zuboff is similar but focuses 100% on IT involvement

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3.4 BUSINESS INFORMATION MANAGEMENT
CHP 5 - BUSINESS CASE DEVELOPMENT & GAP ANALYSIS
BY: Ashraf Rehman

BUSINESS CASE DEVELOPMENT

- Business case is a justification for a project (investment) to be undertaken

General approach to business case development


- where we are W2R
- where we want to be W3B
- how to get there (GT)2 - going to get there
- overall decision
also used by examiner in past papers - to cover historic situations:
- where we were W3
- where we went wrong W4

Cost benefit analysis


- key part of business case development
- various methods includes:
- payback period
- accounting rate of return
- discounted cash flows:
- net present value
- internal rate of return

- cost of a new system are as follows:


- equipment cost (hardware)
- installation cost (hardware installation, e.g. room. A/C, wiring)
- system development cost
- personnel cost (training cost, salaries)
- operating cost (maintenance cost, consumables)

- benefits of a new system are as follows:


- savings in cost by not using the old system (salaries, consumables)
- additional savings resulting from the new and enhanced system (e.g. increased
sale revenue, better stock control leading to less stock losses, etc.
- revenue from the sale of old equipment / system

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- there are other 'intangible' costs and benefits which cannot be quantified, it
could just be expressed in the feasibility report as text. E.g. are
- cost:
- staff dissatisfaction
- learning time
- benefits
- customer satisfaction
- better decision making ability
- the following can be done with the intangible costs and benefits
- ignore them altogether
- assign quantitative values based on educated assumptions
- present them separately alongwith the financials

Contents of a Business Case Report


- Terms of Reference (TOR) or introduction
- outline of current position, highlighting the problem areas
- relevant objectives
- gap analysis
- analysis of different options available (including cost benefit analysis)
- conclusion and recommendation as to the preferred option

BUSINESS ANALYSIS

Introduction
- Business analysis: refers to the analysis of business processes, relationships and
performances (although there is no specific definition of business analysis)
- difference between business analysis (BA) and system analysis (SA)
- SA has a narrow focus than a BA
- SA focus on operations of the system and BA focuses on the surrounding
business issues
- BA reviews information system in light of the Organizations overall strategy
and position and SA on the users needs

Information Audit
- Aims to determine the info need of users and decide how these needs could me met
- 3 stages:
- info need analysis
- info analysis (existing info available)
- gap analysis

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SWOT Analysis
- Strength, Weakness, Opportunities, Threat analysis
- strength and weakness relates to internal environment
- opportunities and threats relates to external environment
- while carrying out SWOT analysis, the following aspects should be kept in mind:
- economic aspects
- industrial aspects
- stakeholders (customers, suppliers, government, etc.)
- employees
- e.g. of a SWOT analysis of a new computerized accounting system:
Strength Weakness
£ 1 million allotted limited staff experience
willing staff expectation of 'system will do everything'

Opportunities Threats
competitive edge vendor dependency
compatible with other systems system failure will be costly
e-commerce possible later on

SWOT and IS STRATEGY GRID


McLaughlin approach to IS Strategy
Protect
Explore (to
SITUATION T maintain position)
(from
competetor)
(external)
O Attack Beware
S W
IS CAPABILITY (internal)

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Sensitivity analysis
- business case development involves future uncertainties
- sensitivity analysis deals with uncertainties, based on 'what-if' approach
- key variables are identified and then they are amended by a x% to see the impact
on the bottomline
- this highlights those variables which are most likely to have a significant effect
on the bottomline (I.e. those which variable which are sensitive)
- after the sensitive variables are highlighted, the management can:
- try to obtain the best possible future estimates on them
- apply strict controls on them
- alter the plan to eliminate the sensitive variables altogether

Current Situation Analysis (CSA)


- also known as 'resource' analysis
- this analysis is in light of the Organization's overall strategy and position
- a CSA for IS/IT project covers all related aspects, including:
- hardware
- softwares
- communication devices
- network topologies
- SDLC
- maintenance procedures
- contingency plans
- Earl's System Audit Grid, Strategic Grid, BCG Growth Share Matrix, Application
Portfolio are some

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Earl's System Audit Grid
Current systems are plotted

Renew / invest maintain /


BUSINESS High
further enhance
VALUE
Low divest / dispose re-assess
Low High
TECHNICAL QUALITY

Strategic Grid (McFarlan / McKenny)


Org's level of dependence on IT is plotted

TURNAROUND: STRATEGIC:
Str. Importance High expect in future to give comp edge
of PLANNED IS SUPPORT:
Low FACTORY
no str value
Low High
Str. Importance
of CURRENT IS

BCG Growth Share Matrix


Potential cash inflow / outflow of products are plotted

Market Growth QUESTION


High STARS
MARKS

Low DOGS CASH COWS

Low High
Market Share
- STARS:
- initial investment high but future return also high
- in IT, possible source for comp edge
- strategy: BUILD
- CASH COWS:
- stars will become cows gradually
- returns used to finance new stars
- strategy: HOLD

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- DOGS:
- ex cows
- IS/IT not strategically important
- strategy: DIVEST
- QUESTION MARKS:
- justifications to invest
- strategy: BUILD / HARVEST

Applications Portfolio (Peppard Strategic Grid))


Impact of individual systems in an Org is plotted

high potential strategic


High
Strategic applications applications
Importance Support key operational
Low
in future applications application

Comp environment Low High


Strategic importance in
current comp environment

GAP ANALYSIS

Introduction
- Gap analysis involves comparison of the desired positions with the actual
position and identification of ways to fill the gap
- Simple gap: the gap between current position and current expectation
- Continuous gap: the gap between predicted position and predicted expectation
- extrapolation: statistical technique to determine projections, based on historic trends

Gap analysis in IS/IT


- determines whether systems meets the current (or predicted) informational
requirements of the Organization
- see graph on pg. 133 para 3.8
- it is not possible to fill the simple gap, as time does not stand still
- efforts should be focused on filling the continuous gap

Methods for closing IS/IT continuous gap


- adoption of new hardware
- adoption of new software
- adoption of new technology (internet)
- outsource the function
- adoption of GroupWare's and knowledge management principles

Selecting strategies to close the IS/IT continuous gap

Portfolio Analysis Grid


Risk and benefits of planned systems are plotted

idnetify & cautiously


High
POTENTIAL develop examine
routine
BENEFITS
Low Avoid

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Low Avoid
applications
Low High
PROJECTED RISK

Scoring Models
- allots scores to the relevant objectives of various available options
- see example 3.19 on pg. 130

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3.4 BUSINESS INFORMATION MANAGEMENT
CHP 6 - INFORMATION SYSTEMS & COMPETITIVE POSITION
BY: Ashraf Rehman

INTEGRATING IS/IT WITH BUSINESS OBJECTIVES


Successful IS/IT strategies
Successful IS/IT strategies are those which:
- are in line with the overall corporate strategies
- satisfies user needs
- evolutionary instead of revolunationary

IS/IT Evolution Stages - Richard Nolan's Theory


- also known as Richard Nolan's Stage Hypothesis or Nolan's Six Stage Growth Model
- 6 stages:
- Initiation / Clerical usage - automation of clerical operations and initial use of
technology (e.g. spreadsheets, word processors, application softwares, etc.)
- Contagion - involves rapid growth in use of IT as users become more familiar
and sees the benefits (e.g. more application softwares, etc.), leading to unplanned
and haphazard growth
- Control awareness - involves introduction of tighter management controls over IT
development and use, in order to control the overspending and inefficiencies
- Integration - IT seen as an integral part of business operations and hence
applications are integrated to be used across the organization (e.g. shared database)
- Data administration - focus shifts from information processing to
informational requirements. Info now seen as a business resource
- Maturity - IS/IT strategy seen as part of business planning
- problems with the Theory:
- developed in early computarization days (1970s)
- linearity (sequence may not be followed)
- size and cost (currently, it may not apply to small sized PC based companies)

Integration process
- CSF is the link between the business strategy and the IS/IT strategy
- integration process is s follows:
- define business objectives (e.g. raise earnings per share)
- identify CSF (e.g. new customers, products)
- develop the IS/IT to support the CSF (e.g. customer database)
- IS strategy involves three components / architectures
- data architecture (logical layout-database structure)
- software architecture (application softwares)
- hardware architecture (equipment, networking, communications)

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Importance of linking business strategy with IS/IT strategy
- increasing dependency of business on IT
- IT influences business plans, e.g. E-Commerce, Virtual Business, globalization, etc.
- Without close link, both strategy will fail

EFFECT OF IS/IT ON INDUSTRY

Competitive Edge
- a gain or advantage that an organization has over its competitors
- could be in the form of good quality, cheaper price, better image in the eyes of
customers, new up-to-date products, etc.
- IT can contribute in competitive edge if the organization is 'information' intensive,
e.g. banking, airlines, etc. but no in 'less information' sensitive organizations
- As per Porter and Millar, IS/IT can impact industries in three ways
- change the industry structure
- create new business and industries
- create a competitive edge

Change in industry structure


- IS/IT affects the following factors working in the industry
- threats of new entrants (barriers to entries)
(Defensive: economies of scale, high capital costs Offensive: unique innovation)
- bargaining power of suppliers (erode / reduce)
(better communications, EDIs, exploiting competition amongst suppliers)
- bargaining power of customers (lock-them-in)
(better service, accessibility, increases switching costs, better customer analysis)
- threats of substitute products
(IT itself can be a substitute product, new leisure activities e.g. games, music)
- existing competitive rivalry
(give competetive edge, discussed below)
Porter's 5 Forces Model

Creating new business and industries


- new industries have been created due to IS/IT, e.g. ISPs, etc.
- existing industries have changed drastically, e.g. Britannica Encyclopedias now
coming on 1 CD rather than in a set of 37 books

Create a competitive edge


(addressed below)

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IS/IT CREATING COMPETITIVE EDGE - PORTER'S VALUE CHAIN
Porter's competitive strategies
- there are 3 generic strategies for achieving competitive advantages:
- industry-wise cost leadership
by reducing per unit production cost through better utiliztion of resources through IT
- industry-wise differentiation
through the product design and quality, marketing manner, etc.
- focus on certain segments and not entire industry
through customized products, segmental analysis of target customers, etc.

Porter's Value Chain


- a model of value activities of an organization
- value activities are those activities which adds value to the product
- value chain model divides organization's activities into 9 generic activities - 5 primary
and 4 support activities
- primary activity is an activity which involves the making of the product, e.g.
manufacturing process
- support activity is an activity which supports primary activities or other support
activities, e.g. human resource
- see diagrams 4.6 a & b on pgs 156/157
- value chain can be used to design a competitive strategy, by focusing resources
on areas where further values can be added (e.g. automating physical tasks, generating
good reports, etc.).

Activities on the value chain


PRIMARY ACTIVITIES:
Inbound logistics
- activities to receive, store and internally distribute the materials, e.g. purchasing,
warehousing, etc.
- IT system which can be used:
- material planning modules / JITs in ERPs / MRP - bar coding
- inventory system integrated with accounting system
Operations
- activities to produce the product, including packaging and testing
- IT system which can be used:
- computer aided manufacturing systems (CAMs) - robotics
- production planning modules in ERPs - process control moduels

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Outbound logistics
- activities to distribute the product to the customer, including warehouses &
distribution channels
- IT system which can be used:
- sale order processing systems linked with inventory systems
- EPOS
- E-Commerce
- EFT
Marketing & sales
- activities to receive orders from customers + promotions, e.g. advertisement
- IT system which can be used:
- Customer Relationship Management modules (CRMs) (cookies)
- online order booking and tracking systems
- sale order processing systems linked with inventory systems
- E-commerce
Service
- activities to help retain product value, e.g. after sale service, installations, warranties
- IT system which can be used:
- Customer query / complaint tracking systems

SUPPORT ACTIVITIES:
Procurement
purchasing of necessary inputs
e.g.: Procurement Planning Modules, extranet, EDI

Technology Development
development of machines, computers, processes and systems
E.g.: Computer Aided Designs (CAD)

Human resource management


activities to train, develop and remuneration to staff
E.g.: intranet, Personnel Planning Modules, payroll, CBTraining, electronic attendance

Infrastructure
overall management, financing, planning of the organization, e.g. top mgmnt
E.g.: intranet, groupware, MIS, EIS, ES, data mining

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IS/IT adding value to a product
- E.g. of areas where IS/IT can be used to add value to a product
- robotics - CADs
- machine / production / process control systems - EPOS / barcoding
- computer aided manufacturing processes (CAMs) - intranet / extranet
- Enterprise Resource Planning (ERPs) systems - online systems
- procurement / material planning (MRPs and JIT) systems- personnel / HR systems
- customer relationship management (CRM)
- KWS
- EDIs and E-commerce
- integration (shared databases, networking)

IS/IT leading to competitive advantage


- above points related to adding value, PLUS
- establishing entry barriers
- differentiating products
- increasing cost efficiencies
- affecting the cost of switching operations
- decreasing supplies and administrative costs
- enhanced integration with customers and suppliers
- developing new products using KWS

OUTSOURCING

Outsourcing
- Outsourcing is buying any service from outside, rather than employing own staff
and resources
- in IT, outsourcing means that an external Organization is carrying out the IT
functions for your Organization in lieu of a pre-agreed price
- normally done if the Organization does not have the expertise, support staff or time
- the term 'turn-key services' means that the vendor is providing all the services
from start to the end,, I.e. you only have to turn a key
- organizations involved in providing outsourcing services includes facilities management
consultancy companies, software houses, hardware maintenance companies, etc.
- when you outsource, the third party usually takes over the existing staff under
Transfer of Undertakings (Protection of Employment) Regulations, (TUPE).

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Types of outsourcing
Total outsourcing
- entire IT is outsourced to a single supplier
- IT is seen as a support service
- strategic control has to be retained within the organization
- organization can focus more on its core activities
- normally based on long-term contract

Multiple / selective outsourcing


- a range of suppliers are used to decrease dependency on a particular supplier
- could lead to coordination problems amongst the various suppliers
- IT is seen as a support service
- strategic control has to be retained within the organization
- organization can focus more on its core activities
- could be based on short-term contracts

Joint venture outsourcing


- a partnership is drawn with the supplier on a risk and reward sharing basis
- organization normally holds 49% of the supplier's company
- leads to some control of the organization over the supplier

Incremental outsourcing
- starts with outsourcing smaller activities first and then go on increasing
- a cautious approach

Others
- adhoc outsourcing: short period temporary outsourcing (e.g. shortage in staff
during peak
- project outsourcing: entire project is outsourced (e.g. development of software)
- partial outsourcing - some activities are outsourced, e.g. hardware maintenance

Factors to be considered before outsourcing


- is the activity strategic for the organization?
- can the activity carried out in isolation (I.e. the function should have limited
interfaces, e.g. payroll)
- how much time will still be spent on monitoring the outsourced arrangement
- how frequently will our requirements change
- cost benefit analysis

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Advantages of outsourcing
- specialist staff / knowledge is available (particularly for small Organizations)
- organization can concentrate more on 'core' activities
- cheaper (in certain cases due to economies of scale for vendor)
- new skill and technological knowledge becomes available
- fixed price contracts makes budgeting easier
- cost beneficial in case of Legacy Systems

Disadvantages of outsourcing
- dependent on third person to provide you your own information
- confidential information are in hands of a third person
- if IS your strategic weapon, then you may lose your competitive edge

Types (level) of services available in IT outsourcing


- time share vendors: provides online access to external processing capabilities,
usually charged on a time-used basis
- service bureaux: provides specific processing functions at offsite premises
- facilities management: refers to onsite services for e.g. in IT processing,
equipment is at our premises but managed by external staff

The Service Level Contract (SLC) / Agreement (SLA) should include:


- details of services to be provided alongwith timings
- duration, price and other modus-operandi of the arrangement
- employment issues (TUPE Law)
- ownership and legality of softwares (in case of software development)
- arrangement for an exit route (I.e. if contract is to be discontinued)
- dispute resolving procedures

INSOURCING

- means recruiting IS/IT staff from other departments of the Organization, rather
than recruiting a new staff from outside
- develops a high degree of in-house expertise and specialization
- advantages of insourcing:
- reduced recruitment cost
- reduce cost in integrating the IT staff with the corporate culture and business needs
- increase staff retention and motivation
- disadvantage includes:
- business people may not have a through or advanced technical aptitude

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BESPOKE OR OFF THE SHELF SOFTWARE

Bespoke Software
- software is constructed keeping in mind the requirements of a specific
organization (I.e. tailor-made)
- it could be constructed either by the 'in-house' System Department or by a Software
House contracted for this purpose

Advantages of bespoke software


- precisely meets the Organization's needs
- software can be integrated with other software in the Organization
- software can be modified with ease
- having tailor made software might give a competitive edge to the business
- organization owns the software and may sell it to other potential users

Disadvantages of bespoke software


- very costly
- development takes a long time, hence implementation of the new software is quite delayed
- greater probability of bugs (errors) as compared to off-the-shelf software
- small organizations might not find it financially beneficial to have a bespoke software

Off-the-Shelf Software
-'ready to install and use' software available in the market
- sold to a wide range of users and intended to handle the most common requirements
- e.g. Microsoft Office 2000, Peachtree Accounting Software, etc.

Advantages of off the shelf software


- available and implementable almost immediately
- generally cheaper than the bespoke software
- upgrade versions are automatically available in the market
- normally of better quality and standard due to extensive testing and user feedback,
- relatively error free, i.e. no bugs
- well documented and tested user manuals

Disadvantages of off the shelf software


- a standard solution might not suit the organization's need
- hard to reach the supplier for upgradation / problem shooting
- competitors might be using the same package, hence there is no competitive edge
- may be incompatible with the other software currently in use

Customized Version of Off-the-Shelf Software


- standard software can be customized to suit the organization's needs.
- this can be done by purchasing the source code of the software and then having it
modified in-house or by paying the main company for having it tailor made for us

Advantages of customized versions


- advantages are substantially same as bespoke software, PLUS
- development time can be much quicker
- if modification is done in-house, then the organization can acquire in-depth knowledge
of the software, and hence can ensure smooth running

Disadvantages of customized versions

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- it may prove costly in the long run as all new versions will also have to be
customized time and again
- customization may introduce bugs that do not exist in the standard versions
- in-house IT deptt might have to acquire additional skills to handle customized versions

SOFTWARE CONTRACTS AND LICENSES

Software development contract


- generally used for bespoke software developed by an external party
- covers the following aspects:
- cost
- duration of development
- warranty terms
- support available
- arrangements for upgradation
- maintenance arrangements
- ownership, including the source codes (particularly in case of specially written
Programmes)

Software license
- generally used for off-the-shelf software
- covers aspects such as
- number of users
- can it be modified without user's consent
- circumstances under which the license will be terminated
- limitation of liability (in case of fraud or malfunction)
- obligations to correct bugs

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Software piracy
- piracy means unauthorized copying / usage of software
- piracy may lead to a civil suit (case) and the employees / users might have to face
a criminal liability
- the most common piracy is Corporate Overuse, I.e. the software has been
installed in more machines than originally agreed
- installation of a software on a laptop and then using it offsite or at home is
normally not a piracy

LEGACY SYSTEMS

Legacy system
- a system which is now old (normally 10 yrs) and not adequately meeting the needs of the
Organization, but is still being used
- such a system is still being used because huge cost had been incurred on it
- since the systems are quite old and inflexible, they cannot interface with the current
softwares running in the Organization
- the cost of maintaining legacy systems is also high because you have to keep staff
trained for an outdated software
- problems to shift from legacy systems to new systems:
- it is very difficult to re-write the program codes as no system document available
- as it is a mega project in it self, it may not be viable in terms of time, resources
and costs
- many other systems may get effected if the core system is changed

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3.4 BUSINESS INFORMATION MANAGEMENT
CHP 7 - INTERNET AND E-COMMERCE
BY: Ashraf Rehman

INTERNET
Definitions
- internet: global network connecting millions of computer to send and receive information
- www (world wide web): a multi media facility, providing color screen, sounds,
graphics, etc. / system of internet servers that supports special format files (eg html)
- website: points within the internet network, created by individuals / companies
to provide information, entertainment, etc.
- http (hyper text transfer protocol): the language in which the information is retrieved
from the internet
- URL (universal resource locater): a unique address which describes the location of
a website
- browsers: interfacing Programmes used to access internet, e.g. internet explorer, Netscape

Current use of internet


- providing information
- transactions (e-commerce)
- marketing
- relationship enhancement
- entertainment
- communiction

Characteristics of internet
- shifts powers from sellers to buyers as they are now very well informed or the
available choices
- reduces transaction costs
- enhances speed, range and accessibility of information

Advantages of having a corporate website


- additional customers can become aware of the company
- details of forthcoming events / products can be posted on the site
- transactions can be done, e.g. e-commerce
- feedbacks can be received from customers
- having a website gives a good technological impression

Characteristics of effective website


- general appearance should be appealing - maintain customer history
- should be available 24/7 - ability to advertise and promote
- integrated with company systems - security and trust

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Problems with internet
- growing rapidly, without any formal organization / control / law
- exposes the system to various security hazards, e.g. hacking, virus, etc.
- quality / authenticity of the information may be questionable
- consumes too much time as it is tempting and hard to resist
- speed and conectivity issues

Factors influencing use of internet in business


- nature of customer (IT oriented, literate, geographically dispersed, etc.)
- cost - both to organization as well as customer
- frequency of contact with customers
- nature of industry
- value addition (eg speed, accuracy, simplicity)

E.g. of security dangers linked with internet


- viruses can enter the systems
- hacking
- disaffected employees may alter / damage the data by sitting at home
- employees may download inaccurate information or virus-hidden software (e.g. beta
version of a software)
- information being transmitted may be intercepted
- communication links / lines may break down and distort the data

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What can a website do ??
- answers frequently asked questions (FAQs)
- keyword search
- tells you the status of a particular process (say flight details, DHL parcels)
- e-mails
- bulletin boards / e-groups - transactions

Hackers
- hacking is unauthorized access to computer systems
- primary aim is to corrupt the data or make a copy
- hacking softwares could be used which enables rapid guessing using hundreds of
permutations and combinations per minute
- prevention measures includes:
- physical security of equipment
- effective password arrangements
- data encryption
- system logs

Viruses
- a piece of software which infects Programmes and data and possibly damages them
- viruses are generally placed in common software which are frequently used, e.g.:
- free software from internet
- pirated software (because they are cheap)
- games software (wide appeal)
- email attachments
- virus can also spread through common floppies
- the following are e.g. of the types of viruses
- file viruses (will destroy the file to which it is attached)
- trojan viruses (the file to which this virus is attached works normal, but at the
same time the virus is destroying other files)
- boot sector viruses (activates at the time computer is switched on)
- time bombs (activates on a certain date and time)
- logic bombs (activates upon the occurrence of a certain event, e.g. amount of hard
disk reaches certain capacity)
- worms (spreads through the entire computer by reproducing / multiplying itself)
- macros (activates when "macro" features of a S/W are run)

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- anti-viruses are software which detects and destroys viruses (e.g. Norton, mcafee)
- prevention steps against viruses:
- installation of powerful and updated anti virus software
- thoroughly testing external softwares
- usage of tested and marked diskettes
- very limited external floppy / CD drives on PCs and workstations
- thoroughly testing all incoming attachments being downloaded from internet

Safety measures relating to internet


- encryption - involves scrambling the data at one end of the line , transmitting the
scrambled data and unscrambling it at the receivers end (e.g. star TV decoders)
- firewall: a security device that isolates the sensitive parts of the Organization's
systems from those areas which are available to external users
- authentication - a unique identity is attached with the file which is then unkeyed
with a specific algorithms to ensure authentication
- dial back security - the person requiring access to the system will dial into it and identify
himself and then the system will dial back to him after verifying his identity
- automated shutdowns - all unsuccessful attempts should be logged and investigated and
the system should shutdown after 3 consecutive unsuccessful logon attempts
- system logs - records of all users logging in and logging out are kept by the system

E-COMMERCE
Electronic Data Interchange (EDI)
- a form of computer to computer data transfer (mails, invoices, information)
- advantages:
- reduces transmitting delays
- avoids re-keying
- reduces costs
- facilitates shorter lead times
- provides opportunities to improve customer services
- disadvantages:
- compatibility problems - junk emails
- security risks (hacking, viruses, etc.) - decreases physical interaction
E-commerce
- E-commerce: conducting business electronically via communication links, I.e. the
process of trading on internet
- E-commerce facilitates the sales and distribution aspects of an Organization, as follows:
- reduced sale, marketing and distribution staff
- electronic marketing
- collecting information about customers (eg registration forms)
- click streams - keeping a track of which properties a user is clicking while he
is on the website

Advantages of Internet and E-commerce (as well as advantages differences with


traditional business style)
- small companies can move into the global stream
- new dimensions of availability of information
- speed
- new business partnerships (e.g. amazon .com - book seller)
- promotes transparent pricing

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- provides sophisticated market segmentation opportunities
- decreased transaction cost
- decreased use of cash

Setting up an E-business
- telecommunication infrastructure
- hardware
- software
- linking back office operations with web operations (e.g. linking of TPS)
- mechanism for order fulfillment (virtual supply chain)
- customer registration arrangements
- e-marketing

Risks attached with e-commerce (from customers point of view)


- confidentiality of private information (say, credit card number)
- lack of paper-based audit trails for transactions
- possibility of misuse of customer credit card number by the trader
- fake orders

Disadvantages of e-commerce
- involves an unusual mix of persons (web designers and administrators, IT staff,
marketing staff, etc.)
- high development and interfacing costs
- slow payback period, I.e. profits will be realized after some time
- due to globalization, legal requirements of all countries have to be considered
- lack of trust of customers on e-business
- security issues related to internet

Customer services aspects


- rapid response time - security and trust
- response quality - fulfillment
- navigability - uptodate
- download times - availability of the site

Virtual Supply Chain


- supply chain is the entire chain of obtaining the raw materials and delivering
the goods to the customer
- traditional practices were paper-based, e.g. a purchase order sent to the supplier
or invoice sent to the customer
- uses advanced technologies to coordinate the activities within the SC (e.g. web based tech)
- virtual supply chain is based on communication links (internet / extranet) through which
the supplier as well as the customers are online with the Organizations systems
- also, separate companies can join together for a joint project, without the teams
physically meeting each other

Virtual Company
- organization that uses IT to link people, assets, ideas
- global collaboration without meeting face to face
- no physical structure, hence organization can respond to changing global req quickly
- extensive uses of internet, intranet and extranet

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DEVELOPING STRATEGY FOR INTERNET AND E-COMMERCE

Development methodology
- strategy for internet and e-commerce should be developed considering the following:
- organizational culture
- systems and processes
- infrastructure and support requirements
- training of staff
- customers

- following is the broad roadmap for developing a strategy


- understand customer segment
- upgrade customer interaction
- understand service processes
- decide technology
- deal with tidal wave (the initial switch to the e-commerce)
- e-marketing
- implementation aspects and timeframes

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GLOBALIZATION

- Globalization: the trend of standardization of


- products
- qualities
- pricing
- policies and procedures
on a world wide basis

Advantages of globalization:
- access to global customers
- financial implications
- take advantage of global economic and fiscal differences (cheap labour, low taxes)

Disadvantages of globalization:
- legal complications
- dynamic global environment leads to rapid changes in strategies

Country wise factors to keep in mind before globalization


- share of the particular country in the global activity of the Organization
- language and culture - tax regimes
- infrastructure - wage levels
- skill levels of employees
- government control regulations such as tariffs, quotas, bans, etc.

Global Business Strategy


- Domestic exporter: all activities are done at one place and then exported across
the globe
- Franchise or licensing: product designs and specifications are controlled centrally
but countries have their own production and distribution facilities
- Multinational: strategic activities are centralized but core activities are managed
within individual countries, eg corporate strategy at centre and dept strategy local
- transnational entities: all activities are managed globally, with 'branches' within
individual countries

- factors which are kept in mind to decide upon above are:


- customer demands
- purchasing requirements
- competition
- industry specification and size
- government regulations

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Global Information Strategy
- Centralized: all system development and operations is performed at one place (in
case of domestic exporter strategy)

- Duplicated: all system development is performed at one place but


each country implements and maintains its own systems (in case of franchise /
licensing strategy)

- Decentralized: each country develops and operates its own systems (in case of
multinational strategy)

- Networked: system development and operations is performed in many locations (in


case of transnational entity strategy). Some or all systems may be implemented
worldwide

Domestic Multinational Franchise Transnational


exporter

Centralized XX

Duplicated XX X

Decentralized XX X

Networked X XX

Other implications of globalization


- global business drivers: assessment and decision making based on global operations
- organizational structure: management and control aspects
- global projects and work groups
- global market

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3.4 BUSINESS INFORMATION MANAGEMENT
CHP 8 - IMPLEMENTING CHANGE
BY: Ashraf Rehman

PLANNING AND IMPLEMENTING CHANGE

Possible reactions to change


- acceptance
- indifferent (unbothered)
- passive resistance (refuse to accept)
- active resistance (deliberate spoiling or deliberate errors)

Steps relating to planning and implementing a change


- determine need for the change
- prepare tentative plan with some alternatives (preferably based on brainstorming
with affectees)
- analyze probable reactions
- make a final decision amongst the alternatives
- establish timetables for the change
- firm communication of the plan to the concerned parties
- implement the change
- post review the implemented change

Kurt Lewin's Change Process


- UNFREEZE: most difficult stage; show why change is required and motivate
- MOVE: put change into affect
- REFREEZE: consolidate or reinforcement the change (e.g. reward or punishment)

Champion of Change Model


- the Champion of Change Model recognizes the importance of change being led by a
'change agent', who may be an individual or a group
- the following are the steps identified in this Model:
1 - senior management decide on a broad term what is to be done, and then they have to:
- support the change
- review and monitor the progress
- endorse and approve the change after it has been implemented
2 - a change agent is appointed
3 - change agent has to win the support of the functional and operational managers
4 - change agent uses the functional and operational managers to bring the
change and give them the necessary support

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3Cs: Commitment, Coordination and Communication
- Commitment: this has to be from all stakeholders, but particularly from top
management, as they have to allocate resources to achieve the changes
- Coordination: ensuring that all involved are working in an efficient and effective
manner towards the common objectives. Requires planning and control
- Communication: right persons must communicate the right things at the right time in
the right way. Important in all phases, i.e. start, execution and end

PROJECTS

Project life cycle?


- is the major time periods through which any project passes
- The following are the stages of a project
- Defining (whether the project should begin & then objective setting)
- Planning (devising a workable scheme to achieve overall project goal, including
feasibility, fact finding and option analysis)
- Implementing (coordinating people & resources to carry out the plan and then
implementing the project)
- Controlling (ensuring project objectives are met by monitoring & measuring
performance)
- Completing (formalizing acceptance & bringing it to an orderly end)

Project Initiation Document


- project initiation document (PID) should be drawn out to document the following:
- business objectives
- project goals
- scope
- resources and constraints
- risk analysis
- ultimate users

Project management tools


- project budget
- work breakdown structure
- Gantt chart
- critical oath analysis / PERT
- resource histograms

Advantages of project management tools


- improved project monitoring
- more effective planning
- focusing on critical / problem areas
- improved resource allocations
- easier visualization of relationships

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Document used in project management
- project plan
- progress report
- completion report
- post-completion report

What to do if the project is behind schedule?


- do nothing
- add more resources
- work smarter
- replan or reschedule
- introduce incentives to work faster
- change specifications

Change control procedures


- major reasons for changing the project plan could be:
- you are behind schedule
- new technology is now available
- change in personnel
- change in business environment
- the earlier the change, the less expensive and easy to incorporate
- the following should be addressed when considering a change:
- consequences of not implementing the change
- impact of the change on the time, quality and cost of the project
- the risks associated with the change
- change procedures includes:
- need and feasibility of the required change
- appropriate approvals
- document all changes in the plan
- implement the changes practically

CHANGES IN INFORMATION SYSTEMS

Major causes for IS failure


- inadequate involvement of users in development and testing stages
- System Analyst (or IS Project Manager) may be a good technician but a bad manager
- poor planning
- inadequate monitoring and control
- poor timetabling, resourcing or unrealistic deadlines
- hard to strike a balance between quality, time and cost
- frequent and uncontrolled changes in the user requirements

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User resistance
- there are three types of user resistance to a change in IS:
People Oriented:
- factors internal to users, for e.g. users may not wish to learn a new program or
amend their working practice
- this can be overcome by:
- user orientation to shoe the benefits of the new systems
- finding the 'internal' reasons and trying to address it
- persuasion or strict orders

System Oriented:
- factors related to the new system, for e.g. a poorly designed user interface will
lead to user resistance
- this can be overcome by:
- user involvement in the design stage
- user training of the system
- finding the reasons and trying to address it in the software

Interaction:
- caused by interaction of the users and the system, for e.g. user may fear that it
may take away some of their power or influence on the Organization, I.e. resistance is
cultural or political rather than system inefficiencies
- this can be overcome by:
- reorganize the organization structure before the implementing the system
- restructure incentive schemes which might be eliminated due to systems (e.g.
users will be afraid that overtime will finish due to systems)

Ways to control inherent risks


- the following are the ways through which the inherent risks of a system changeover
can be reduced:
- Organization Impact Analysis: study of how the systems will affect the structure,
staff attitude, operations, etc.
- Ergonomics: study of work and work environment in order to improve peoples
efficiency e.g. Human Computer Interface (HCI)
- external integration tools: involve users throughout the process
- internal integration tools: involve the best experts and suitable technical personnel
- formal planning and control tools: e.g. critical path analysis, Gantt chart, PERT

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SYSTEMS DEVELOPMENT LIFECYCLES

System development lifecycles ??


- the stages through which a system moves through from inception until the time it
is discarded or replaced
- when a project lifecycle ends, it is unlikely that ongoing maintenance will be part
of the project scope but in system development lifecycle, the ongoing maintenance
is also included the scope

A disciplined approach to system development


- feasibility study - identification of alternatives in line with the business
objectives and carrying out technical, operational, social & economic feasibility
- system investigation - fact finding exercise of the existing systems, e.g. volume
of transactions, response time, etc.
- system analysis - the above facts are analyzed in light with the various proposed
alternatives
- system design - technical phase addressing detailed specifications, e.g. input,
outputs, program design, file design and security
- programme coding - system design is converted into a software
- system implementation - steps to put software into operation
- review & maintenance - ensures that the system is meeting the objectives set out
in the feasibility study and is running smoothly

What can go wrong ??


Investigation & Analysis stage
- problem not understood fully
- insufficient resources for investigation
- lack of user input

Design stage
- lack of user input
- inflexible / incompatible design
- future needs cot considered
- no or insufficient Organization Impact Analysis (I.e. how the change will effect
the Organization's structure, operations, attitude, decision making and control)

Programming stage
- programmers supplied with inadequate / incomplete specifications
- insufficient time and resources allotted to programming stage
- program codes not documented

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Testing stage
- insufficient time and resources allotted to testing stage
- unorganized testing
- insufficient user involvement

Implementation stage
- lack of user training
- 'urgent' implementation

System development techniques / concepts / tools


- SSADM
- Waterfall method
- Spiral method
- Case tools
- 4 GLs
- prototyping
- JAD
- RAD

STRUCTURED SYSTEM DESIGN AND ANALYSIS METHODS (SSADM)

SSADM ?
- there are over 1,000 recommended methods through which systems can be developed,
such as waterfall method, spiral method, etc.
- SSADM refers to a structured approach to develop a system
- SSADM includes procedures, techniques, tools and documentation methods
- the following aspects are covered:
- functions - through Data Flow Diagrams
- data relationships - through Entity Relationship Models
- behavior characteristics - through Entity Life History Models

Advantages of using SSADM


- documentation is produced
- ensures standardization of the process
- standard methods can be used at much lower costs
- systems developed through a methodology are much easier to maintain and improve
- emphasis on diagrammatic presentations facilitates faster understanding

Disadvantages of using SSADM


- encourages too much documentation and bureaucracy
- difficult to use for static nature information systems as the information is
normally collected on an adhoc basis

THE WATERFALL MODEL

Waterfall Approach ??
- breaks the entire process into distinct sequential stages
- the output (results) of each stage is first validated & verified and then is used as
input of the next stage
- the term 'validation' is normally used for plans, I.e. whether the plan is in
accordance with the business objectives?

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- the term 'verification' is normally used when we check that the system
specifications have been met
- the term 'waterfall approach' is used to describe any approach which breakdowns
the entire process into distinct stages, regardless of the name given to the stages
- see diagram in 2.1 BPP Para 4.2 page 121 for 'waterfall approach'

Advantages of Waterfall Approach


- provides clear and easy sequence of activities
- validation and verification is done at each individual stage
- eliminates incomplete work, as one cannot proceed unless the previous stage is
fully completed

Disadvantages of Waterfall Approach


- only usable if the entire system could be broken down into clear and distinct
stages
- users are involved in few stages only, I.e. not involved continuously
- normally results in delays due to the sequential nature (i.e. output input nature),
any hold-up in one stage will delay the entire process

THE SPIRAL MODEL

Spiral model ??
- used for complex SDLC, where you cannot break down the process into distinct stages
- adopts an 'evolutionary' approach, I.e. carrying out the same activities over a
number of cycles in order to clarify requirements and solutions
- see diagram on 2.1 BPP page 123 for spiral model
- development process starts at the center, where the requirements are not that well defined
- system requirements are refined with each rotation around the spiral

4 Parts of spiral model


1-TOP LEFT: Determine objectives, alternatives and constraints
2-TOP RIGHT: Evaluate alternatives and constraints (through risk analysis & prototyping)
3-BOTTOM RIGHT: Develop the product and determine the requirements of the next stage
4-BOTTOM LEFT: Plan the next stage

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Advantages over Waterfall method
- enables objective setting and risk management at each development stage
- involves users throughout all phases of development

SYSTEM DEVELOPMENT PROCESS SOFTWARE

COMPUTER AIDED SOFTWARE ENGINEERING (CASE) TOOLS


- aims to automate some of the more routine and tedious tasks in system development
and programming process

- major CASE tools include:


1- System analyst workbenches
2- Programmers workbenches

- E.g. of tasks which a system analyst workbench can perform :


- creating quick design diagrams on the screen (CPM, DFD, ERM, ELH, etc.)
- some design and development standards are built-in
- determines and confirms logical and consistent relationships between tasks
- specimen input and output documents can be produced
- data dictionaries can be created

- E.g. of tasks which a programmer workbench can perform :


- code generators are available to facilitate the production of codes
- diagnostic tests are available to test the codes independently from other
Programs
- library of routine / repeated procedures can be maintained

- advantages of CASE
- drawing and redrawing of diagrams is much easier and faster
- accuracy and logical relationship of diagrams is improved
- prototyping is made easier
- blocks of codes can be saved and reused (code libraries)
- provides documentation of various development and programming aspects
- introduces accurate, complete and consistent development techniques

- Examples of CASE
- Teamwork (for UNIX based operating software)
- SSADM (Windows based)

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FOURTH GENERATION LANGUAGES (4GL)
- computer only understands MACHINE LANGUAGE, which is in binary form (I.e. 0 or 1)
- a program is converted in machine code through the programming code
- previously, the language of the programming code was quite difficult
- over the passage of time, the language of the programming code is being made easier and
user friendly
- different generations refer to the passage through which the programming code is being
made easier and user friendly
- the following diagram shows the programming code refinement since inception

1st Generation: Programs were written in Machine code (using binary language (0, 1) )
2nd Generation: Programs were written in Assembly language (uses symbolic code,
e.g. ADD, SUB, MULT)
THE ABOVE TWO LANGUAGES ARE COLLECTIVELY REFERRED TO AS
LOW LEVEL LANGUAGES

- To overcome the difficulties of low level language, high level languages were developed,
which are 3rd and 4th generation languages

3rd Generation: Programming language which uses extensive english vocabulary . E.g.
COBOL, PASCAL, C, C++, JAVA
4th Generation: - Much easier than 3rd generation languages due to icons, help
facilities, pull-down menus and templates
- Accessible to people without formal programming skills. E.g. are
Informix and Powerhouse

Features of 4GL
- Graphical User Interface (GUI)
- easy to learn
- availability of online help facilities for users
- debugging facilities available (I.e. problem shooting can be done easily)
- best used for simple and common programming features

Advantages of 4GL
- users can develop Programs themselves, hence saving IT staff time
- creativity can be promoted

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Disadvantages of 4GL
- due to the ease and charm, IT deptt may get overburden in fulfilling training needs
of the interested users
- as programs are developed by the users, it might not be compatible with the
organizations overall IT setup, I.e. it might slow down the processing speeds of
other computers / Programs

PROTOTYPING

Prototyping?
- it is difficult for the users to specify in advance what they want from the system or they
may find it hard to visualize or determine if the system will solve their problem
- a model built to show the users early in the design process, how the system will look
- used to give users an 'early feel' of the outlook of the proposed software
- a prototype can be used for a small part of the system as well as for the full system
- 4GL has contributed to the popularity and awareness of prototyping
- e.g. = a prototyped screen layout of a programme, its color combinations, etc.

Advantages of prototyping
- a model is presented and discussed before substantial time and money is spent
- facilitates tailor made softwares
- does not necessarily have to be written in the same language as the main program
is planned to be executed

Disadvantages of prototyping
- may not really give a comprehensive model of the main programme, which
can be much more complex and sophisticated
- prototyping encourages users to try new and new models, which might consume
unnecessary time

USER INVOLVEMENT
Structured walk through
- system analysts introduce and explain the system design to the users
- structured walk through are done in shape of a formal meeting with the users,
in which the documentation produced during development process is reviewed
and checked by the users.
- users are used because their knowledge of the desired and existing system is
greater than the knowledge of the development personnel
- structured walk through are also known as USER VALIDATION

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Sign Offs
- at the end of each stage of development, the resulting output is presented to the
users for their approval
- there must be a formal sign-off at each completed stage of development
- this minimizes 'rework', as only the immediately preceding task has to be
reperformed and leaves very little room for later disputes

Advantages of User involvement


- identifies errors / misunderstanding at an earlier stage
- developers try to prepare the system with additional attention as it has to be
checked by the users at each stage
- users become involved in the system analysis process
- avoids disputes and reworks at later stages
- quality and user satisfaction is focused upon from the start

Joint Application Development (JAD)


- describes the partnership between users and system developers
- creates a 'pool of expertise' comprising of interested parties from all relevant
functions
- emphasis on 'user ownership' and 'user needs'
- following are the risk of JAD
- users might be inexperience
- there is a danger of lack of coordination

Rapid Application Development (RAD)


- describes a quick way of building a software by using 4 GLs
- users are heavily involved in the development process
- more frequently used in fast paced companies to maintain competitive edge
- might lead to lack of control, as anybody can quickly develop a system as and when
required

CHANGEOVER

Direct changeover
- old system completely replaced in one move
- normally done where there is significant difference b/w the old and the new system
- normally done at slack business hours, e.g. over weekend

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- advantages:
- quick changeover method
- less costly as compared to parallel running
- minimizes work load on staff
- disadvantage:
- high risk method
- methods to reduce the risk attached with direct changeover method:
- thorough system and user acceptance testing before the software is implemented
- well defined contingency plans and backup supports
- effective and timely training of users

Parallel running
- old and new system are runned together with the current data and the result /
output is matched
- following aspects are covered:
- for how long should the Parallel running be done
- how much data should be cross-checked (e.g. 100% or a sample size)
- advantages:
- safe and cautious approach, as the old system is still live
- testing on real data possible
- disadvantages:
- might be costly
- extra workload on staff
- difficult to identify if errors relate to the old system, new system or human tiredness

Pilot operation
- this method is between direct changeover and parallel running in terms of time and risk
- two types of pilot operations
- retrospective: old data is runned on the new system instead of current data
being runned parallerly
- restricted data running: instead of the 100% date being runned, sample data
group could be runned

Phased implementation
- means the changeover to the new system is made in distinct planned phases
- normally done for very large and complex projects
- the risk in this method is that any alteration made in ht later phases should be
eventually compatible with the overall system

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EVALUATION / PERFORMANCE REVIEWS
Evaluation ?
- a system should be periodically reviewed to ensure that it is achieving its desired results
- post implementation evaluation has similar aspects as that of feasibility study:
- technical review
- operational review
- social review
- economic review (including cost benefit review)
- all the above reviews are based on actual data and results as against predicted
data in a feasibility study

Efficiency and effectiveness review


- efficiency and effectiveness reviews should be performed regularly
- efficiency is a measure of how well the resources are employed (talks about
resources, speed, productivity, costs, accuracy, etc)
- effectiveness is a measure of how well the organization has achieved its goal (talks
about goal, strategy, objectives, expectations, etc.)
- efficacy: talks about constraints, deadlines, bottlenecks, etc.

Measuring systems success


- following are main methods through which the degree of success of a new system
is established:
- direct performance measures - Metrics
- user satisfaction levels
- high degree of usage of the systems
- achievement of system objectives

Direct performance measures - Metrics


- metrics are quantified measurements used to measure system performance
- e.g. of metrics are
- response time
- number of transactions processed per minute
- error rates
- number of bugs per 1000 program lines
- number of system crashes / errors reported per month
- metrics should be carefully and objectively designed in line with the existing
system in use and should measure significant aspects of the system

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Indirect Performance measures
- apart for direct performance measures such as metrics, there are other indirect
ways to review the performance of a system, as follows:
- are reports getting circulated in less number of days
- users are willing to pay for the use of the systems (in a charged mechanism)
- user surveys relating to their satisfaction on system performance

COMPUTER SYSTEM EFFICIENCY AUDITS

Computer system efficiency audit


- this audit is concerned with
- improving output from the system and their usage
- reducing the cost of inputs

Improving output
- more value added output is obtained by the same input resources, e.g.
- more informative reports / analysis
- report available to more people
- output with little value can be eliminated, e.g.
- decrease frequency of the reports
- decrease wide distribution
- decrease the size of the report by eliminating unnecessary info
- improve timing of the reports e.g. immediate access to info

Improving inputs
- same amount of output can be achieved by fewer inputs
- networking will eliminate duplications and will enable 'input by one , used by many'

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3.4 BUSINESS INFORMATION MANAGEMENT
CHP 9 - THE IMPACT OF IT
BY: Ashraf Rehman

IMPACT OF IT ON ORGANIZATION

- vertical differentiation denotes how the employees are related to each other in the
organizational hierarchy (e.g. tall or flat structures)

- horizontal differentiation denotes how the various departments are linked with each other

- IT has led to flattening of organizational hierarchies and widening of span of control

Span of Control / Span of Management


- refers to the number of subordinates reporting to the person ( which should be
restricted / limited)
- Important because there is a physical & mental limitation to a manager's ability to
control activities
- Appropriate span of control depends on the:
- ability of the manager
- ability to the team
- nature of the task
- geographical dispersal

Tall Management structure


- An organization with small or narrow span of control will have more levels in its
Management hierarchy
- advantage
- reflects tighter supervision & control
- disadvantage
- lengthy chain of commands and communication

Flat Management structure


- Represents a wide span of control
- wide range of skills required by all people
- team members must be flexible in order to respond quickly
- advantage
- leads to flexibility
- effective use of staff
- disadvantage
- team has to be given relatively high powers / freedom

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Other impacts of IT
- routine processing (bigger volume, greater speed, greater accuracy)
- digital information and record keeping
- high degree of reliance on IT
- new methods of communication
- improved customer services / satisfaction

IMPACT OF IT ON TECHNOLOGIES

Impact of IT on production technologies


- reduction in product life cycles (new products are coming in at a fast rate)
- increased automation of work
- increase in economies of scale
- increase reliability / accuracy

IT AND EMPLOYER / EMPLOYEE RELATIONSHIPS

Impact of IT on employer / employee relationships


- reduced need to follow-up (e.g. due to enhanced communication links)
- higher and faster coordination
- change in the traditional nature of work
- close business relationships regardless of geographical location
- more flexible working arrangements (e.g. increase in part time staff)
- greater monitoring and control
- information overload (see below)

Information overload
- IS/IT has led to capturing, analysis and transmission of over-whelming amount of
information, however only some relevant information is useful
- some of the ways to limiting the information overload on managers are:
- delegate some information to sub-ordinates
- eliminate sources of information through which duplicate information is being received
- use intelligent agent (IA) programs
- IA programs perform tasks such as retrieving and delivering information
and automating the repetitive tasks (suitable for internet / intranet activities)
- IA collates and manipulates information to meet the parameters set by the users
- subscribe to newsclipping service (finds information of interest on our behalf
and sends it to us, instead of we surfing the internet
- filtering e-mails (based on subject/content, sender, intended recipients, priority)

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Remote working or home working
- some organizations encourage home working based on the concept of 'free lance workers'
- home working is sometimes known as telecommuting
- advantages to employer:
- cost savings on office accommodation
- larger potential pool of employees
- flexibility (I.e. work only when required)
- disadvantages to employer:
- increased coordination requirements, particularly where close supervision is
required or there is a lack of trust on the employee
- advantages to employees:
- no time wasted in commuting (traveling to and from the office)
- work can be organized around other commitments
- may lead to less distractions than an office environment
- disadvantages to employees:
- no physical interaction with collegues
- low motivation and innovation levels
- no sense of organizational unity
- lack of goal congruence

Communication on e-mail
- advantages:
- speed of transition of messages
- people replies promptly
- forward and attachment options to a large group of people
- economical
- more secure than letters / courier
- disadvantages:
- may lead to unnecessary / over emailing
- decreases physical interaction amongst employees, which in some cases is desirable
- not appropriate for:
- interviews / confidential meetings
- interactive group discussions
- training sessions

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Sociotechnical design
- attempts to produce an information system that are technically efficient but also
takes into account organizational and staff needs
- sociotechnical design takes into account three sub-systems of an organization
- the formal structure
- technological systems (work to be done, machines, etc.)
- social systems (the way people think or interact with each other)
- sociotechnical design gives weightage to the human aspects of the organization as well
- human aspects includes:
- the required skills to use the system
- task variety (I.e. minimize or spread around the monotonous tasks)
- ergonomics, I.e HCI and user interface designs

OTHER IMPACTS

Consumer privacy
- privacy of consumers' information such as those gathered by marketing companies,
financing companies, insurance companies, etc.
- problems includes:
- leakage of the private data to an unauthorized person
- inaccurate or unupdated information

Employee privacy
- deals with the personal information of the employee alongwith with his work habits
and his performance / productivity

Ethical issues
- ethic is concerned with judgements whether human choices / behavior which are
morally right or wrong
- ethical aspects in IS/IT covers:
- rights, responsibility, accountability and liability of information
- privacy and personal information (Data Protection Act 1998)
- technological secrets
- copyrights and patents
- steps to be taken in case of an ethical situation
- identify the facts
- define the problem / dilemma
- identify the stake holders / affectees
- identify the options available
- identify the consequences of the options
- decide upon an option

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3.4 BUSINESS INFORMATION MANAGEMENT
SUMMARY / EXTRA THEORIES
BY: Ashraf Rehman

Importance of forming an IM strategy - EARL's Theory


Page 7
achievement of mission, comp edge, fast changing tech, costly, mgt / dept dependent

Checkland's Soft System Methodology (SSM)


Page 24 (Q4 DEC05 / Q4 DEC04 / Q4 JUN04 / Q4 DEC 02)
problem situation analyzed, expressed (RTP), root definition (CATWOE), conceptual model,
comparison of CM with RTP, debate on changes, implement changes

Zuboff's Automate, Informate & Transformate


Page 29 (Q5A JUN03 / Q6 DEC02)

SWOT and Is Strategy Grid


Page 32
Talks about McLaughin's approach to IS strategy. Compares IS capability vs Situation

Earl's Grid
Page 34 (Q6 DEC05)
Talks about plotting current systems. Compares business value vs tech quality

Strategic Grid (McFarlan / McKenny)


Page 34
Talks about plotting Org's level of dependence on IT. Compares strategic importance of
CURRENT IS vs strategic importance of PLANNED IS

BCG Growth Share Matrix


Page 34
Talks about plotting potential cash inflow / outflow of products. Compares market share
vs market growth

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Applications Portfolio (Peppard Strategic Grid)
Page 34.1 (Q6 DEC03)
Talks about plotting impact of individual systems in an Org. Compares strategic importance
in current comp environment vs strategic importance in future comp environment

Portfolio Analysis Grid


Page 34.2
Talks about plotting risk and benefits of planned systems. Compares potential risk vs
potential benefit

IS/IT Evolution Stages - Richard Nolan's Theory


Page 35 (Q6B DEC04)
clerical, contagion, control, integration, DB administration, maturity

Porter's 5 Forces Model


Page 36 (Q5 JUN04)
threats of new entrants, bargaining power of suppliers, bargaining power of customers,
threats of substitute products, existing competetive rivalry

Porter's Value Chain


Page 37 (Q1 DEC05)
- 5 primary value activities: I/B logistic, OPR, O/B logistic, M&S, after sale service
- 4 support value activities: procurement, tech devlp, HR, firm infrastructure

Champion of Change Model


Page 52

Page 88 of 91
Parson's 6 Generic IS Strategies
(Q6A DEC04)

1 Centrally planned
- IS strategy is developed keeping in mind the business strategy
- business and IS strategy are seen as closely linked

2 Leading edge
- IS strategy is developed keeping in mind that innovative technology can create
competitive advantage
- investment in unproven / new IT initiatives is justified

3 Free market
- IS strategy is developed keeping in mind the industry (market) norms and
competitors IS/IT standards
- IS viewed as a competitive business unit which should earn a return on investment

4 Monopoly
- IS strategy is developed keeping in mind that information is an asset of the
organization and has t be effectively controlled, just like any other resource
- strong focus on satisfying user requirements promptly
- directly opposite to free market strategy

5 Scarce resource
- IS strategy is developed keeping in mind the budgetary control
- as finance is limited, all new IT initiatives should be clearly justified (e.g. strict
Cost Benefit Analysis)

6 Necessary evil
- IS strategy is developed keeping in mind that IT is only required to operate in the
modern world
- believes that information is not a significant factor for achieving business objectives

- problems with the Theory:


- developed in early computarization days (1970s)
- an organization can use a mix of strategies and not restrict to any one strategy

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Development of IS Strategies - Earl's 3 Legs
(Q3 DEC02)

- Earl has devised a method for developing IS strategies, based on 3 legs


- the 3 legs are not mutually exclusive, i.e. organization cannot restrict itself to only one leg
- 3 legs are:
1 Business led (top down)
- the overall objectives of the organization are identified first
- then IS strategy are designed to ensure that these objectives are met
- information needs are identified
- mostly involves senior management

2 Infrastructure led (bottom up)


- focus is on transaction processing systems to provide basic operational
information for doing business
- mostly involves users and system specialists

3 Mixed
- uses both the above approaches
- focuses on exploiting the current IT infrastructure (e.g. innovation using
existing resources) in order to achieve the business objectives

5 Moral Dimensions of Information Society


(Q5 DEC05)

- Ethics refers to principles of right and wrong that can be used to guide behavior
- the following 5 moral dimensions of information society raises ethical issues:
1 Information rights and obligations
- refers to the rights and responsibilities Organizations (and individuals) have
with respect to information they hold
- focuses on the 'privacy' of the information, which is increasingly getting endangered
- Code of practice should include:
- policies relating to security of information
- policies relating to privacy of information

2 Property rights
- how can intellectual property rights be protected (e.g. pirated software / songs)
in a digital society in which reproduction is so easy
- deals with licenses, copyrights, patents, etc.
- Code of practice should include:
- policies relating to software licenses
- policies relating to ownership of own source codes, e.g. copyright

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3 Accountability and control
- who will be held accountable for any harm done to any individual, organization's
information or property rights
- for e.g. who would be responsible if someone prepares a bomb based on
instructions available on website
- Code of practice should include:
- policies relating to use of passwords (logical access controls)
- policies relating to clear areas of responsibilities within the organization

4 System quality
- what should be the 'ideal' quality of systems - subjective issue
- a quality system 5 years ago may today be obsolete!
- difficult to strike a balance between time, quality and money
- Code of practice should include:
- policies relating to adoption of SSADMs for system developments
- policies relating acceptable hardware and software characteristics

5 Quality of life
- technology has improved quality of life, e.g. e-commerce, faster info thru internet
- technology has also deteriorated quality of life for some people, e.g. unemployment
- access to unethical materials through internet
- Code of practice should include:
- policies relating to staff lay-offs due to automation
- policies relating to staff training
- policies relating to restrictions on visiting unethical sites

Page 91 of 91