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Computer-based information systems

A. Cornford
2790037

2001 Undergraduate study in Economics, Management, Finance and the Social Sciences

This guide was prepared for the University of London External Programme by: A. Cornford, BSc (Econ), MSc, PhD, MBCS, C Eng, Senior Lecturer in Information Systems, London School of Economics, University of London. www.is.lse.ac.uk/staff/cornford This is one of a series of subject guides published by the University. We regret that due to pressure of work the authors are unable to enter into any correspondence relating to, or arising from, the guide. If you have any comments on this subject guide, favourable or unfavourable, please use the form at the back of this guide.

This subject guide is for the use of University of London External students registered for programmes in the fields of Economics, Management, Finance and the Social Sciences (as applicable). The programmes currently available in these subject areas are: Access route Diploma in Economics BSc Accounting and Finance BSc Accounting with Law/Law with Accounting BSc Banking and Finance BSc Business BSc Development and Economics BSc Economics BSc Economics and Management BSc Information Systems and Management BSc Management BSc Management with Law/Law with Management BSc Politics and International Relations BSc Sociology.

The External Programme Publications Office University of London Stewart House 32 Russell Square London WC1B 5DN United Kingdom. Web site: www.londonexternal.ac.uk

Published by: University of London Press University of London 2001, reprinted 2003, October 2005 (E7173) Printed by: Central Printing Service, University of London, England

Contents

Contents
Introduction................................................................................................................1 Learning objectives ..............................................................................................2 Readings ................................................................................................................3 Using the recommended text ................................................................................5 Using the Internet..................................................................................................7 Using this subject guide........................................................................................7 Experience with computers ..................................................................................8 Glossary of key terms and acronyms ................................................................10 Chapter 1: Approaching information systems ......................................................11 Essential reading ................................................................................................11 Further reading ....................................................................................................11 Introduction ........................................................................................................11 Information and information systems ................................................................12 Systems................................................................................................................13 Information systems in business ........................................................................14 Models of information system types ..................................................................15 Strategy and information systems ......................................................................17 Learning outcomes..............................................................................................19 Chapter 2: Information systems in use ............................................................21 Essential reading ................................................................................................21 Further reading ....................................................................................................21 Introduction ........................................................................................................21 Information systems within organisations..........................................................21 Managers and management information systems..............................................23 Society living with information systems............................................................25 Learning outcomes..............................................................................................28 Chapter 3: Information and communications technology ............................29 Essential reading ................................................................................................29 Further reading ....................................................................................................29 Introduction ........................................................................................................29 The history of computers ....................................................................................29 Modern taxonomy of computers ........................................................................34 Computer data ....................................................................................................35 Computer software..............................................................................................36 Communications technologies and distributed systems ....................................40 Learning outcomes..............................................................................................41 Chapter 4: Data and information around the world ......................................43 Essential reading ................................................................................................43 Further reading ....................................................................................................43 Introduction ........................................................................................................43 Data and databases..............................................................................................43 The Internet and electronic commerce ..............................................................46 Learning outcomes..............................................................................................49

Computer-based information systems

Chapter 5: Developing information systems ..................................................51 Essential reading ................................................................................................51 Further reading ....................................................................................................51 Introduction ........................................................................................................51 Organisational change and information systems ..............................................51 Systems development..........................................................................................52 Other models ......................................................................................................55 Outsourcing ........................................................................................................57 Successful applications ......................................................................................57 Professional roles in systems development........................................................57 Structured development methodologies ............................................................58 Techniques used in structured systems analysis ................................................58 Data analysis and data modelling ......................................................................59 Changeover to a new system ..............................................................................64 Learning outcomes..............................................................................................65 Chapter 6: Knowledge management and decision-making ..........................67 Essential reading ................................................................................................67 Further reading ....................................................................................................67 Introduction ........................................................................................................67 Knowledge management ....................................................................................67 Decision support..................................................................................................68 Learning outcomes..............................................................................................69 Chapter 7: Information systems management ................................................71 Essential reading ................................................................................................71 Further reading ....................................................................................................71 Introduction ........................................................................................................71 Shared responsibility ..........................................................................................72 Security and control ............................................................................................73 Learning outcomes..............................................................................................74 Chapter 8: Exploring information systems ....................................................75 Further reading ....................................................................................................75 Introduction ........................................................................................................75 Learning outcomes..............................................................................................77 Appendix 1: Examinations ................................................................................79 Appendix 2: Sample examination paper 1 ......................................................81 Section A ............................................................................................................81 Section B ............................................................................................................82 Appendix 3: Sample examination paper 2 ......................................................85 Section A ............................................................................................................85 Section B ............................................................................................................86

ii

Introduction

Introduction
The signicance and role of technology in the economy and in society is widely appreciated and debated across the world. Some people, organisations and governments enthusiastically embrace all that technology has to offer, whereas others are more cautious or even positively resistant. With the benet of a historical perspective, and building on our experience of earlier and highly signicant constellations of technologies, such as those around steam power, electricity or organic chemistry, people often suggest today that a small number of key technologies are shaping and changing our society and our lives. These technologies are identied and described in various terms; there are the technologies of bio-engineering and genetics, which have a potential to redene our existence as living organisms; the nuclear technologies providing both destructive weapons and innovative medicine, and of course there are the technologies of information and communication. In this subject, we are concerned with these information and communication technologies (often abbreviated using the acronym ICT) with a strong focus on how they are understood, applied and used within organisational settings, in particular in business organisations. Thus the title of this unit, Computer-based information systems, must be interpreted broadly. Computers themselves are but one part of a constellation of technologies that we will consider, and to which we must certainly add communications and network technologies. These technologies are important and interesting to study, but we should appreciate at the outset that this unit is not just (or even mainly) about these technologies in an isolated sense, but about what we do with them, why we become involved with them, how we proceed, and all the management problems and issues this raises. The phrase, information systems, used in the title, is intended to express this concern with the uses we nd for technology and the consequences of its adoption, rather than technology itself. That is, we build our technologies into organisational information systems, and these technologies support various ways of handling, communicating, consolidating and processing information, and in this way allow organisations (and even societies) to change the ways in which they operate. To achieve this, available ICTs can be adopted to capture, store, manipulate and distribute information. When we see a collection of these technologies (or technical things computers, networks, databases), linked together and working within an organisational setting, probably alongside and involving people, and providing some service or value to somebody, we can see an information system. We focus in particular on how organisations of all types seek to use technologies to develop their own information activities for their own purposes. Exercise
Read through these paragraphs again and note the different elements discussed: technologies, linked together, embedded in an organisational setting and involving people, producing some output or result that is of some use to somebody. All these elements are important and will be discussed in this unit. As a rst exercise, consider some everyday information systems. an information system to provide information on ights or trains to passengers at an airport or railway station

Computer-based information systems

a university database to hold examination marks a banks system to manage customer accounts.

In each case identify examples of each of the elements. Try to express in a sentence or two the purpose and consequences of each system. When you do so, think about whose point of view you are representing a manager, a passenger, a student, a clerk, a customer?

Learning objectives
By a learning objective we mean an area of the subject in which you have gained knowledge and skills, and are able to present relevant information and alternative analyses, and hence to present reasoned arguments and exercise your own judgement. By the end of studying this unit, you should be able to: Critically assess alternative approaches to understanding concepts of knowledge information, data and information systems. Differentiate between various classes and types of information system developed and used in organisations, seen within a historical context. Describe contemporary information and communications technologies, including computer hardware, software and networking. Present arguments for a strategic role for information systems within organisations, and alternative models to support this role and to establish such strategies. Describe and evaluate changes in contemporary approaches to the management of the information systems function within organisations, the organisational structures used and the key issues for managers to address. Explain how information and communication technologies change organisations and industrial structures, using appropriate models. Provide an ethical perspective on information use and evaluate various means of controlling abuses. Critically assess the place of people within organisational information systems, and the human interests such systems serve, including automation of tasks, support for processes of management and decision-making. Demonstrate some practical experience with computers, software packages and the Internet sufcient to be able to reect on signicant problems of taking up and using unfamiliar technologies, as well as the opportunities they offer. Differentiate between and evaluate alternative approaches to developing information systems based on, for example, in-house projects, end-user development, purchase of packaged software or outsourcing of services. Use basic tools for specifying a new information system including data models and data ow diagrams. Describe the essential tasks needed to develop a new system and to set it to work in an organisational setting, and the professional roles for people who undertake these tasks. Assess new technologies and approaches for managing knowledge within organisational contexts and for supporting decision-making. Discuss relevant information systems issues with managers involved with IS, and evaluate (some of) the study materials against a view from the front line.

Introduction

This set of learning objectives is provided here as a high-level overview of the positive outcomes of your study. As you tackle this subject you should return to this list from time to time and note down those that you feel you have made progress with, and those that you need to work on more. You must also remember that the overall aim of the subject is to develop a critical and reective appreciation of computer-based information systems. Remember, there are few issues within this syllabus that do not allow for debate and distinctive and different perspectives.

Readings
This subject guide is written to accompany the set book. You should purchase a copy of this book and be familiar with most of its contents. This guide is a complement to this text, not a substitute.
Laudon, Kenneth C. and Jane P. Laudon Management Information Systems: Organization and Technology in the Networked Enterprise. (New Jersey: Prentice Hall, 2000) sixth edition [ISBN 013-015682-5].

When buying this book do be careful to obtain the right text since Kenneth and Jane Laudon and their publishers have produced a number of introductory textbooks with similar sounding names. This book also has a web site at www.prenhall.com/laudon with tests, suggested essay questions and further web links. This text provides the closest t to the syllabus. This subject guide is written to accompany this text, emphasising particular elements and adding extra material. Three other texts within which most topics can be found and from which much useful contrasting treatment for topics are found are:
Alter, Steven Information Systems: A Management Perspective. (Reading Mass: Addison-Wesley, 1999) third edition [ISBN 0-201-52108-3]. Bocij, Paul, Dave Chaffey, A. Greasley and S. Hickie Business Information Systems: Technology, Development and Management. (London: Financial Times Pitman, 1999) [ISBN 0-273-63849-1]. Curtis, Graham Business Information Systems: Analysis, Design and Practice. (London: Addison Wesley, 1998) third edition [ISBN 0-201-33136-5].

You should certainly look for these books in your library, and for some topics they provide the primary source. As a reference work, and another source of useful and contrasting material in an encyclopaedic format, you will nd it useful to refer to:
Davis, Gordon B. Encyclopaedic Dictionary of Management Information Systems. (Oxford: Blackwell, 1999) [ISBN 0-631-21484-4].

None of the books listed above is on its own sufcient for a solid coverage of the whole unit. Indeed, as part of a university degree course, there is the clear assumption that you will study your subject via multiple sources and base your understanding on as wide a reading as possible. You may also nd the following books helpful as references or as back-up for particular topics. I will make occasional reference to these books in this subject guide.
Avgerou, Chrisanthi and Tony Cornford Developing Information Systems: Concepts, Issues and Practice. (London: Macmillan, 1998) second edition [ISBN 0-333-73231-6].

Computer-based information systems

Avison, David and Guy Fitzgerald Information Systems Development: Methodologies, Techniques and Tools. (London: McGraw-Hill, 1995) second edition [ISBN 0-07-709233-3]. Cornford, Tony and Steve Smithson Project Research in Information Systems. (London: Macmillan, 1996) [ISBN 0-333-64421-2]. Kendall, Kenneth and Julie Kendall Systems Analysis and Design. (New Jersey: Prentice Hall, 1998) fourth edition [ISBN 0-13-646621-4]. Scott-Morton, M. The corporation of the 1990s: information technology and organizational transformation. (New York: OUP, 1991) [ISBN 0-19-506806-8]. Targett, David, David Grimsham and Philip Powell IT in Business: A Managers Casebook. (London: Butterworth, 1999) [ISBN 0-7506-3951-2].

It is always preferable that you have access to the latest editions of books. The world of information systems and information technology moves on very rapidly, as does our understanding of what is important and relevant in developing information systems. If, during the period that this subject guide is in print, a new edition of any of these texts is produced, you should assume that the new edition is the valid edition for study. You should also make a habit of regularly consulting weekly and monthly journals and newspapers and in this way keeping up with trends in the area. You must remember that new ideas, new technologies and new applications of technology are usually rst reported in newspapers and magazines, sometimes years before they nd their way into textbooks. Reading such contemporary accounts will also help you to develop your sense of judgement about all sorts of information systems issues, bearing in mind that you should not believe everything you read. Indeed, you should be rather sceptical when people in the IT industry promote their own products. Most quality or business newspapers, such as the Financial Times, or the Wall Street Journal, have regular technology and information systems articles. In recent years the Financial Times has published a regular series of supplements on mastering management, and these series have all included much relevant material on information systems. In addition most countries of the world have some local publications devoted to computers and information systems, and these can also provide very useful materials for study. This will include news of the local and global information technology industries, examples or case studies of systems in use, and discussion of systems development and management practices. Among the bestknown publications that may be found in libraries are the following:
The Economist, UK. Although this is not a computer magazine it does contain regular articles on aspects of the computer industry, national policies relating to computers and telecommunications and issues of organisational use of technology. Byte Magazine, USA and international editions. The oldest, best known and most widely read magazine on all aspects of microcomputers. Datamation, USA. This magazine reports on many issues of effective use of information technology in organisations. There is also a web site for the magazine at www.datamation.com. You will also see that the recommended text for this unit makes much use of Datamation for the case studies it contains.

These three magazines are representative of three distinct types of reading that you may nd. First there are business newspapers and current affairs magazines that cover issues of information systems from time to time (e.g. the Economist); then there are technology-focused publications (e.g. Byte), though many of these are more geared to personal computers and home users rather than providing organisational perspectives.

Introduction

Finally there are magazines devoted to business information systems (e.g. Datamation). In your reading, and for developing your wider perspectives on this subject, you should try to read regularly from all three types of publication. It is a very good practice to keep a le of cuttings, photocopies and articles collected throughout your period of study. When you come to the end of the unit such a resource can be very valuable as a revision aid and as a panorama of contemporary IS issues and debates.

Using the recommended text


When you rst look at the recommended text, Laudon and Laudon, Management Information Systems: Organization and Technology in the Networked Enterprise, sixth edition, you may be surprised at the quantity of information it contains and the complex layout of material. Because this book is quite large and complex it is worthwhile as you start to study for this subject to take some time to explore the structure of the book and its approach to the subject. First, you should look at page vii, the brief contents, and note that the book is organised into ve main parts. These are titled as follows: I. Organisational Foundations of Information Systems II. Technical Foundations of Information Systems III. Building Information Systems: Contemporary Approaches IV. Management and Organisational Support Systems V. Managing Contemporary Information Systems. These titles match quite closely the broad structure of the syllabus for this unit, although the syllabus is organised in terms of four main sections and is presented in a slightly different order. Exercise
Try to match the main sections of the syllabus to the parts of the Laudon and Laudon or Alter books. Draw up a list showing clearly where each section of the syllabus can be found in either book.

These titles for the books main parts include the three key words that are used throughout the text to structure the material and to shape the debate. These words are technology, organisation and management. Thus the book attempts to balance an approach that explores innovative and new technologies and their capabilities, and matches them to the needs and desires of organisations (and the people who work in them). To achieve this the book considers the characteristics of organisations as hosts for information systems. Information systems are often put in place to help people do their jobs, and for many people this means to help them to manage. For example, a computer-based information system may be used to help the day-to-day work of nurses admitting patients onto a hospital ward by helping them estimate how long the patients will be in the hospital and what services they will need. A system could equally help the chief executive ofcer (CEO) of a global multinational chemical company to develop long-range strategy, perhaps by allowing for the projection of demand for a particular product in the East Asian market over a 20-year period. In each case, from the day-to-day operational decision-making of a nurse, to the strategic planning of a CEO, a computer-based information system might support and improve the ability of the person to manage a situation and to make appropriate decisions. To get this benet from such an information system it will need to be designed and developed and then put to use in the organisational setting, and this too

Computer-based information systems

Note that here we have introduced two slightly different emphases on management: on the one hand, information to support managers in doing their jobs, and on the other the management of information systems themselves. As you continue to study it will often be useful to reect on both these aspects of management as they apply to various topics.

requires a particular type of management skill, information systems management.1 Thus the third key idea is that of management, and information systems to support managers hence management information systems (MIS). Exercise
Review section 1 in Chapter 1 of Laudon and Laudon that discusses the three themes. For each theme develop a brief statement that expresses the benets of taking such a perspective for a senior manager responsible for information systems in an organisation.

Now, take time to review any chosen chapter. Here we will plunge into the book and look at Chapter 14 as our example, but when you read this you should choose some other chapter from the main body of the book. The title of Chapter 14 is Managing Knowledge. The chapter starts out with learning objectives: ve things you should be able to do after reading and studying the chapter. Each of these is stated as a positive active outcome explain, describe, evaluate and demonstrate. Throughout your study you need to keep in mind these desired outcomes. The point of studying, and the key to examination success, is to be able to use the information, understanding and skills you acquire to do something or make a reasoned judgement, not just to remember something and be able to repeat it like a mental photocopier. This subject guide also has learning outcomes for each chapter, at the end in this case, and they are intended to serve the same purpose, as a reminder of what the nal goal is when you study and an important resource against which to monitor your progress. The introduction to Chapter 14 contains a breakdown into sections and subsections, and a brief introductory case study, in this case of how the oil company Shell developed a knowledge management system. Such a case study starts each chapter to help you to understand the key theme in the chapter. Reading it should give you a good initial idea as to what broad topic the chapter covers and how it approaches it. This overview perspective is continued in the commentary on the next page, headed Management Challenges. This section of a chapter tells you some of the problems, issues or challenges that managers have to think about as they try to harness benets from information systems. Chapter 14 continues with four main sections, in this case covering knowledge management, knowledge work, articial intelligence and other relevant techniques. Included in Chapter 14 are two one-page displays titled as Window on Management and Window on Organizations. These provide short case studies of managing knowledge, based on published material, and offer at the end a brief To Think About section. Other chapters include a third type of Window, a Window on Technology. These short case studies are quite similar to the ones used in the examination papers for this unit, and the To Think About section offers similar questions to those found in Section A of the examination paper. Exercise
Now take a look at the sample examination papers at the end of this guide, and the questions in the rst sections.

Note also that throughout the text of the chapter there are brief denitions of key terms printed in the margins. These too are important and provide a useful starting point for a type of answer looked for in some of the examination questions, both in

Introduction

Section A and in Write brief notes on type questions in Section B. A summary of the terms introduced along the way is also printed at the end of each chapter as key terms. The chapters of the book also contain many pictures, screen shots, tables, gures and diagrams. These are intended to be read along with the text and to help a reader to understand and absorb key ideas. They are not a substitute for reading and thinking about the text. It should be obvious to you that there are too many such gures to ever memorise them all, so do not try! The books chapters nish with a number of sections to help you absorb and reect on the material presented. These include a management wrap-up, briey relating the material to the themes of management, organisation and technology; a summary of about a page in length structured around the learning objectives with which the chapter started; and review questions, group projects and interactive learning suggestions. Taken all together, these three pages provide a brief but challenging synopsis of the chapter and plenty of things to do or issues to reect on. Considering that this book has 18 chapters, and a chapter summary section is less than three pages, it is possible to condense the whole book into less than 60 pages, but this condensed version would only really make sense if you had read the whole book. In other words, these sections are there to help you summarise and structure what you have learned, they are not intended as a substitute for reading, discussion and study. Finally, at the very end of the chapter is a longer case study, again taken from a published source, with more questions for you to consider.

Using the Internet


As noted above, the set text has a web site at www.prenhall.com/laudon and you should take a look at the site and what it offers. The Alter book also has an extensive web site at www.prenhall.com/alter/. You should note that the various books contain relatively few other web addresses. This is very sensible, since web addresses and resources change rapidly, and it does not make much sense to publish them in a book when they can be published from within the web itself. Thus the books web sites contain links to other sites that relate to individual chapters. The same problems relate to placing web addresses in this guide they may well change but there are a few included here that you may nd useful.
www.datamation.com/ The web site of the magazine Datamation. foldoc.doc.ic.ac.uk/ The free online dictionary of computing maintained at Imperial College, University of London. This is mostly about computer technology, but it has a useful coverage of some information systems topics. www.britannica.com/ The web site of the Encyclopaedia Britannica. A good source for material on the history of communications and the computer, as well as quite a lot of other things. isworld.org/isworld.html This is the main web site for the academic information systems community in universities around the world. It has links to many other sites.

Using this subject guide


You will nd that this subject guide is quite clearly structured, with elements that recur throughout. Each chapter starts with a full reading list for the topic(s) covered in that chapter. It is divided into essential and further reading. The list of essential reading sets out what you need to read as a minimum in order to cover the topics included in the

Computer-based information systems

chapter. You must do this reading as a minimum for each chapter. Once you have nished a chapter, check that you have covered all the essential reading. (You will note that some of the sidenotes in the chapter direct you to specic reading; dont forget to check these as you review the reading. Other sidenotes give you denitions for concepts.) The further reading list includes a number of books and articles that will enhance your knowledge and understanding of the subject. You should try to read as much of this as you are able, to help you prepare for the examination more thoroughly. Each chapter has an introduction at the beginning, which sets out what the chapter discusses. At the end of each chapter, you will nd a list of learning outcomes. Learning outcomes tell you what you should have learned from that chapter of the subject guide and the relevant reading. You should pay close attention to the learning outcomes and use them to check that you have fully understood the topic(s). Each main section starts with a scene-setting exercise, inviting you to read a chapter of the recommended text and to reect on its contents. Throughout the chapters, you will nd a series of exercises, designed to get you to apply your reading and engage with the ideas contained there. You should try to answer the questions I have set and full the tasks outlined, as it is important that you ground your knowledge in practical work. You will be able to draw on this knowledge in the course of the exam, and it will show the examiners that not only have you read what is required, but that you have moved beyond that to understanding the concepts we are introducing you to. You will nd an appendix to this guide, containing two sample examination papers, along with guidance on the structure of the paper. You should note that these are included for guidance only, as the University may change the form, style or requirements of its examination papers, without necessarily giving you formal notice. Where we can, we will give you advance warning of changes to the paper, and you will nd this information in the most recent edition of the examination papers and reports. You should always check this booklet in preparing for your revision.

Experience with computers


You are not expected to undertake any particular work with computers as part of the syllabus of this unit. There are no specic requirements, for example, to be able to use a word processor, build a spreadsheet, surf the Net or develop a database. However, to the extent that it is possible, you should make some practical use of computers and reect on what you do. It is very hard to write convincingly about information systems if you do not have at least some experience with using computers. Note that exam questions may ask you to reect on your own computer usage or experience with packages or the Internet. As a starting point, here are eight activities that you might usefully undertake to brush up your knowledge of using computers and to get you thinking. Attempt as many as you can, but those of you with limited access to computers need not feel too constrained you will have more time for other forms of study! 1. Learn how to prepare and use a mail-merge feature of a word processor to prepare a personalised mail shot. Once you have gured out how to do this, try to write some instructions for a less computer-literate friend to explain how to do this. How easy is this what does it tell you about the problems of introducing a new system to people in a work situation? 2. Visit the web site of an online bookstore and discover how easy (or not) it is to buy recommended textbooks for UoL units. How do the online prices compare to those in your local bookshops? How do you explain the difference in price?
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Introduction

3. Visit the main web site of your government and nd a recent government policy statement or proposal for: a. computers in schools b. computers in health care c. the promotion of e-commerce. In the UK the place to start such a search is at www.open.gov.uk; in each case, what benets are the government seeking from this technology? 4. Try to use email to do something useful beyond your own circle of friends, college staff or work place. For example, can you use email to communicate with your bank, a government ofce, the local library, University of London? What are the advantages and disadvantages of this form of communication for you? What would you imagine are the advantages and disadvantages for large business organisations? 5. Look at the web sites of three airlines that operate from your country. Evaluate the quality of these sites by using them to gather information and prices for a trip to, say, London. What broad criteria will you use for your evaluation? 6. Use a spreadsheet to develop a simple decision support system (DSS) to work out the best deal available on home computers, based on advertisements in your local newspapers. 7. Use a word processor or graphics program to prepare a poster for a college or work event. Try to include some pictures downloaded from the web, scanned in or taken with a digital camera. Do the same activity, but as a web page. To do this you can use software that comes free with your web browser for example Microsoft Front Page Express or Netscape Composer. 8. Using a spreadsheet, develop an application that helps you in some other area of study associated with your degree programme: for example in statistics, economics, sociology, management science or accounting.

Exercises
1. Compare and contrast the benets of a printed user guide or an online help system for the users of a software product. Which would be most use to: a. a novice user b. an occasional user with limited experience c. an expert and frequent user? 2. Identify four key characteristics of successful sales-oriented web sites, based on your web browsing experience. Justify each characteristic and give related examples of good and bad practices you have seen on the web. 3. Describe the basic functionality provided by one of the following: a. a web browser b. a database package c. a spreadsheet program. Explain, using examples from your own experience of using one of these types of software, how a user might format and prepare output for inclusion in a wordprocessed report.

Computer-based information systems

4. Prepare a report describing the differences between three well-known Internet search engines, for example Yahoo, Excite, Ask Jeeves or AltaVista. Suggest situations in which you would recommend each of the search engines you have studied.

Glossary of key terms and acronyms


As you can imagine, the world of computers is a mass of jargon, acronyms and other bewildering terms. I have compiled the following list to help you become familiar with the ones I use in this guide. 3GL 4GL BPR CAD CD CPU third-generation language fourth-generation language business process re-engineering computer-aided design compact disc central processing unit

DASD direct access storage device DBMS database management system DFD DSS DVD EIS ERP ESS GUI ICT IRR IS ISDN ISP kb LAN mb MICR NPV RAID RAM TCP/IP VLSI WIMP data-ow diagram decision support system digital-versatile disk executive information system enterprise resource planning executive support system graphical user interface information and communication technology internal rate of return information system integrated services digital network Internet service provider kilobyte local area network megabyte magnetic ink character recognition net present value redundant arrays of inexpensive disks random access memory Transmission Control Protocol/Internet Protocol very large-scale integrated circuits window, icon, mouse, pull-down menu

GDSS group decision support system HTML HyperText Markup Language

SSADM Structured Systems Analysis and Design Method

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Chapter 1: Approaching information systems

Chapter 1

Approaching information systems


Essential reading
Laudon, Kenneth C. and Jane P. Laudon Management Information Systems: Organization and Technology in the Networked Enterprise. (New Jersey: Prentice Hall, 2000) sixth edition [ISBN 013-015682-5] Chapters 1 and 2. Porter, M. How Information can Help You Compete, Harvard Business Review (AugustSeptember 1985).

Further reading
Alter, Steven Information Systems: A Management Perspective. (Reading Mass: Addison-Wesley, 1999) third edition [ISBN 0-201-52108-3] Chapters 1 and 2. Avgerou, Chrisanthi and Tony Cornford Developing Information Systems: Concepts, Issues and Practice. (London: Macmillan, 1998) second edition [ISBN 0-333-73231-6] Chapter 1. Bocij, Paul, Dave Chaffey, A. Greasley and S. Hickie Business Information Systems: Technology, Development and Management. (London: Financial Times Pitman, 1999) [ISBN 0-273-63849-1] Chapters 1 and 2. Curtis, Graham Business Information Systems: Analysis, Design and Practice. (London: Addison Wesley, 1998) third edition [ISBN 0-201-33136-5] Chapter 1. Venkatraman, Chapter 5 in Scott-Morton, M. The corporation of the 1990s: information technology and organizational transformation. (New York: OUP, 1991) [ISBN 0-19-506806-8].

Introduction
In this chapter we explore the principal concepts that underlie the description of the use of information and communications technologies (ICT) in terms of information systems. This requires an understanding of the notion of information and data, as well as of what the word system implies. You should be aware that considering the use of ICT through the concept of an information system is in some contrast to an approach that looks simply at computers as technical devices, or as direct routes to solving individual and isolated information handling requirements. Seeing information systems as a part of an organisations infrastructure brings us on to discussing issues of information systems as support for jobs, tasks and work processes, and nally to their strategic role in helping an organisation survive and thrive in its environment. In Laudon and Laudon, Chapter 1, they introduce the sociotechnical approach as one of a contrasting set of approaches to information systems including a purely technical approach drawing on computer science, and a behavioural approach drawing on sociology and psychology and focusing on cognitive processes.1 In contrast, the sociotechnical approach seeks to balance a concern with technology and with the people who work with it. If we understand an information system as a combination of some technical apparatus and involved people all working together to some goals, then a sociotechnical approach is very appropriate.2

In the Alter book the sociotechnical approach is not mentioned as such, but the whole book is built around a Work Centred Analysis (WCA) model that is essentially drawing on the same theme.

For further reading on the sociotechnical approach in information systems see Avison and Fitzgerald.

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Computer-based information systems

Information and information systems


Scene-setting exercise
First read Chapter 1 of Laudon with the following question in mind. How many reasons can you list to sustain the argument that information systems are transforming: organisations economic structures management practices our lives as citizens?

Try to list your reasons under each of the headings, and give three illustrative examples.

It is often suggested today that we live in an information age and for both business and public sector organisations the use that they make of information is critical to their success. This sentence was easy to write, but of course, as a student, the correct response by you to anything which is often suggested is to ask for some more solid evidence or theoretical justication. So, why is information a key element of our age? We might suggest reasons such as the following: Information is produced and used for decision-making in modern organisations. Information is more and more traded as a commodity. The ability to use information resources has a profound impact on the shape and structure of organisations and industries, and their ability to compete and thrive. Information is now widely held by governments and companies and is central to our ability as citizens to participate in society.

These may be the start of good answers, but we nonetheless do not have a single universally accepted theory of information that explains the essence of the concept. Hence we can offer no single denition or overarching theory. Certainly many disciplines have studied information, and various theories have been proposed. Linguists study the way in which meaning (information) is conveyed to people by the use of language. Communications engineers study how information is transmitted: for example in designing a telephone network to carry a certain volume of calls. Logicians have an interest in information in the sense that information is truth. Statisticians are interested in exploring and extracting meaning out of quantities of observations of events, and they too are seeking to provide insight into the activities they study information. Economists too study information, because individuals make economic decisions on the basis of what they know or believe to be true again information.

It would be possible to expend a great deal of effort and words in investigating the concept of information as it is used in a variety of disciplines. For the purposes of this unit however a fairly simple underpinning for the concept can be used at least at the start; information is knowledge about the world that is sought by people in order to satisfy their psychological needs and on the basis of which to take action or make decisions.

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Chapter 1: Approaching information systems

Exercise
Contrast this denition with that given in Laudon and Laudon Chapter 1, and other textbooks. Try asking people (not students of this course) to provide their own denition of the term information.

There are a number of important themes in the candidate denition above:


The aspect of information that is generally stressed in consideration of information systems in a business context is support for decision-making, but as we will see there is a bit more to it than that.
3

It suggests that information is valued by people, since they actively seek it. It suggests that information tells us something about the world; that is, it communicates to us some state of affairs. It also suggests that people seek information because they will use it. This may be a direct use (to watch a video or read a novel) or a use in making decisions (to follow a cooking recipe).3

The information we use in our daily lives is both paid for and free. We expect to pay for some information, and organisations expend considerable resources on developing strategies to ensure that they have information that supports their business objectives, that suitable information resources and information systems are developed and that information resources are secured and protected. This focus on information activities leads us to emphasise the kinds of jobs and roles that rely increasingly on using information what Laudon and Laudon refer to as knowledge workers. Each of the three themes above tells us something about the nature of the jobs of such knowledge workers. Other authors will offer other denitions and explanations of information. You should certainly be motivated to seek out information on information, collect other peoples denitions, and ponder the decision as to which denitions or explanations are preferable. If information is seen as having value then that value may be based on a number of characteristics: The information is reliable and accurate. The information is accessible. The information is up-to date or timely. The information is conveniently presented. The information is at an appropriate level of detail. The information reduces uncertainty. The information is exclusive. The information pleases. The information enables some other valued task.

You will nd a brief introduction to systems in Laudon and Laudon Chapter 1, section 1.1; Bocij Chapter 10 has a fuller treatment; also Curtis Chapter 1; Alter, Chapter 2. Further reading: Avgerou and Cornford Chapter 6.

Systems4
We describe our topic as information systems, and we have considered the issue of information, so the next question might be, What is a system? A common denition is to say that a system is a collection of components that interact together and can be seen as collectively undertaking a common purpose. Systems can either be closed or open. If they are closed, then this means they have no relationship with the world beyond their boundaries. This means they have no effect or consequences for that world and are not affected by events in the world. At times it may be sensible to think of a computer as a closed system, and to concentrate on simply the internal elements and their interaction, ignoring any inputs and outputs from beyond the boundary for example when designing some internal elements of

13

Computer-based information systems

software. However, for our purposes and with our concern with information systems within business and administrative structures, we will usually think of systems as open systems that interact with their environment. These are systems which do exchange within their environment (an exchange based on data and information), and which can affect the world beyond their boundary. Exercise
Would you consider the economic system of your country as being an open system or a closed system?

Information systems will almost always be open systems, though specifying the boundary and the signicant characteristics of the environment can be quite tricky. The principal interaction that an information system has with its environment is the receipt of signs or signals from the environment (inputs). It stores them in an organised manner as data, processes or manipulates them, and then passes signs and signals back into the environment (outputs). These outputs will often be mediated through people, as when a computer provides some information to a person, who then acts on it. Outputs will be in response to some input, for example the arrival of an order for a product. Within a systems perspective this process will be overseen by some form of control mechanism, to see it operates correctly. Control can be based on feedback, either positive or negative. Within the computer component of an information system this control activity is one of the tasks of software. Nevertheless, it must be remembered that information systems are much more than computers, and control activity will also be undertaken by people, for example an auditor checking the accounting system.5 This point is important and gives us another opportunity to say that an information system is more than computers and their programs which is just a computer system. Information systems include people as components, and when information systems are studied or designed, people, the organisations they belong to and the jobs they do must be included too. Commercial businesses and other forms of organisation where we nd information systems, such as government ministries, hospitals or sports clubs, are made up of and are operated by people, so it is vital to remember from the outset that people are a part of an information system. One way to say this is that information systems are social systems supported by technology.

Control issues are discussed in some detail in Curtis, Chapter 8, in Alter, Chapter 13. See also Chapter 8 of this guide.

Information systems in business


Scene-setting exercise
First review Laudon and Laudon Chapter 2 with this question in mind. What is the essential character of a strategic information system when compared to any other use of a computer or network?

All the textbooks referenced in this guide start out by suggesting what role information systems play for organisations and in a business environment. This is usually presented in a historical manner, noting how the use of ICTs and the systems they are built into has expanded and changed over the past 40 years. In the past, it is argued, information systems were narrowly focused on particular functions that required data processing: for example, accounting, order processing or a company payroll. The goal was to do these tasks efciently for themselves. However, once such a system is established, and it starts to develop resources of data, then often other uses of this data are found. Hence we come to management information systems, which make data available to managers in diverse ways to help them do their jobs. In more recent times, as technologies have developed further, our ability to support

14

Chapter 1: Approaching information systems

organisational activities and business processes has expanded, and so computer-based information systems have expanded their role. Many people see the key change as being found in the development of the personal computer (desktop or portable) and the availability of networks to link machines (and people) together. For example, now information systems often operate as communication systems between individuals and groups, as much as functional data processing systems. Todays information systems also extend beyond any one business or organisation to what are generally described as inter-organisational systems. By use of technologies such as email, the Internet, web pages, portable computers, mobile phones, video conferencing, people and organisations can work together, share information, debate and discuss. One consequence that is much studied is the effect of all this on organisations themselves. Chapter 1 of Laudon and Laudon suggests a number of such consequences: attening the structure of organisations separating work from location reorganising work ow and business processes increasing exibility of organisations and their responsiveness changing management processes redening organisational boundaries.

Exercise
Try to develop a similar list of consequences of new network technologies (including the Internet) for individual citizens.

The key technology that is driving these changes today, most people would agree, is the Internet and the Worldwide Web (WWW). The arrival of the Internet as a massuse system for communications, information sharing and supporting business processes is a fairly recent phenomenon. These changes are based on new and powerful networking capabilities, available to a large proportion of the citizens of developed countries and to their business community. The Internet spans countries around the world and operates through various types of software, including the browsers on our PCs (and now on mobile telephones too), as well as the server software that provides the back-end data and information management power for all manner of web applications. The ability to link people and computers across the world, and almost at will, has had and will continue to have a profound impact on business, society and our individual lives. Throughout your study of this unit you should keep asking, on almost any topic covered, Yes, but what is the impact of the Internet on this? This leads to a need to develop a good understanding of the emerging topics of debate, e-commerce and e-business, globalisation, the ethical and security issues raised, and the shape of the emerging business and social environments.

Models of information system types


Information systems can be found in a great variety of environments including almost all types of organisations and areas such as government, education, the military, massentertainment, as well as diverse industry sectors including manufacturing, distribution, nance and banking, and retailing. One of the contexts in which information systems are most prominent (and have been studied extensively), is in business organisations. It is usual to identify information systems as serving various needs in terms of a hierarchy of the organisation, from the strategic at the top, to the operational at the bottom. In Laudon and Laudon, Figure 2.1, this is shown as a fourlayer pyramid with four classes of system serving four types of person within the

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Computer-based information systems

organisation. Other textbooks, such as Bocij Figure 2.3, offer slightly different versions of this model. It is a useful exercise to read contrasting versions of this basic pyramidal model of the organisation and its information systems. Within this broad classication it is usual to delineate a number of separate and distinct classes of information systems within business organisations. You should be familiar with the following broad classication and be aware of how they relate and compare. However, these classications are not denitive. The pyramid structure of organisations is itself open to many challenges, and many systems in organisations may transcend the boundaries of any one class in such frameworks. This is what Alter (Chapter 5) refers to as hybrid information systems.
6

For each of these system types look at the entry in Davis.

Transaction processing systems6 These are the systems that undertake standard, regular and high-volume, informationhandling activities. Standard examples would be payroll, invoicing, order processing, sales ledgers, cheque clearing, and many other accounting functions. Most organisations started out using computers principally for these purposes, and of course still do. However, in the networked world, these systems often extend beyond the organisations boundary (known as inter-organisational systems). For example, an order-taking system of a bookseller linked to the web, or an airlines database of ights, fares, available seats accessible by travel agents or individual customers. Management information systems As the name suggests, management information systems are designed to provide information to managers about business operations, on the basis of which they can make better informed decisions. Management information systems are generally based upon the resources of data that transaction systems supply (their databases). Management information systems might be further divided into those that support operational control, checking that the work has been done, and those that provide support for tactical management and planning. Often, in practice, the same information may be required in each case. Decision support systems Decision support systems (DSS) are a particular development of management information systems. Whereas a management information system essentially provides access to data, decision support systems will offer an enhanced ability to perform manipulations on that data or to apply models (in the management science sense) to it so as to explore the consequences of different actions or decisions. Knowledge work and ofce automation systems It is not just senior or middle managers who have access to a computer but potentially any ofce worker. Ofce automation has been the name given to the use of computers to provide general support for people working in ofces. Such systems can become very sophisticated, based on providing general facilities for supporting work tasks (e.g. word processors, databases, desktop publishing and spreadsheets) and for supporting communications (e.g. electronic mail, video conferencing, online group discussion forums), and in part providing access to functionally oriented applications (e.g. an accounting system, an order entry system, a customer service system). Long ago, ofce automation just meant providing word processors to secretaries and typists; today it means providing appropriate technologies, tools and systems to all kinds of worker in the ofce, in the factory and on the road. In recent times we have added another category of information system, the knowledge work system to support knowledge workers. Examples might include:

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Chapter 1: Approaching information systems

intranet applications providing access to company data; procedures and reports a work-ow system that enables a sales consultant to monitor a customers order as it progresses through the company (and thus linked to transaction processing system) a design workstation (Computer Aided Design: CAD) used by an engineer (or a fashion designer) to prepare a new design for manufacture.

This topic leads us to discussion of expert systems. As fallout from articial intelligence research, there has been considerable interest over many years in building practical computer applications that can exhibit some element of intelligence or special expertise, or support people who provide such services. In the past such systems have been described as expert systems, but knowledge work systems is perhaps a better term to describe them. Examples of domains often seen as suitable for such support from technology would be: medical diagnosis credit risk assessment in a bank conguring computers.

See also Laudon and Laudon Chapter 14.

Technically this can be achieved on the basis of providing some knowledge about a subject within a system (some rules or a knowledge base), together with a software system that is capable of making inferences based on this knowledge. In addition we need a user interface (screens, menus, graphs, etc.) that allows the user (knowledge worker) to pose problems for the expert system to solve and presents the expert judgement including the reasons (rules) for that judgement. Thus a medical expert system might receive a patients symptoms as input, perhaps through check boxes on a screen (runny nose, coughing, slight temperature), and then deliver a diagnosis (the common cold) and justify this with reference to some rule.7 Executive information systems The executive information system (EIS) is yet another general classication that has crept into the language in the past decade. In Laudon and Laudon this is termed an executive support system (ESS). An EIS or ESS is a system that provides information to senior managers and directors. Their needs, in contrast to middle managers or knowledge workers, are for a broad mix of information from within the organisation and from beyond it. The emphasis of EIS is on timely presentation of a wide range of information across organisational functions and hierarchies at the appropriate level required to support decision-making at a senior executive level.

8 The theme of strategy is introduced here, but returned to in other chapters of this guide. In many ways the theme of strategy permeates the whole subject. See also Alter, Chapter 6.

Strategy and information systems8


Having a model of information system types, as above, is useful and starts to suggest how varied the information systems found in organisations can be, but it does not provide a deeper account of the motives to build such systems. Why, for example, might a company develop an expert system to help its designers? Should it better spend its money on an efcient and reliable transaction processing system (and perhaps link it up to the web so customers can place orders, check their deliveries and make payments)? Is an intranet a central requirement of a modern knowledge-based organisation, or is it a dangerous waste of effort quite at odds with an organisations hierarchical style of management? To answer such questions we need some model of what information systems do for an organisation, and which are most important that is, a strategic perspective that lets us identify strategic information systems and relate them to overall business strategy.

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Computer-based information systems

Since the early 1980s this strategic role of information systems has been hotly debated. For some people it is obvious that computer technology and information systems are the new core of businesses, and almost all information systems are strategic. Others are more sceptical, saying that computers are rarely a panacea, and the opportunity for waste, failure and lost directions is very real. One of the key ideas developed to identify the strategic system is that of sustainable competitive advantage. The goal (not easy to achieve) is to develop information systems that make organisations more competitive in their marketplace and in a way that they are able to keep this advantage over the years. If an information system is simply based on the latest technology, then competitors can probably buy themselves the same equipment, so sustainable competitive advantage needs technology integrated with new ways of working, new management approaches and new business relationships.
9

Bocij has a good review of the main models.

10 Bocji provides a review of Porters model in the last part of Chapter 2, dealing with concepts of competitive strategies supported by information systems, and in Chapter 14. You should read Porters 1985 Harvard Business Review paper, How Information Can Help You Compete. See also Chapter 6 of Targett. 11

Various models have been developed to explore the strategic potential for information systems for any given organisation.9 Perhaps the best-known is Porters competitive forces and value chain model. This emphasises the position of an organisation within an industry structure, in terms of how it relates to customers and suppliers, and competes with actual and potential rivals.10 It sees that information systems can offer an opportunity to support key activities of the organisation in such a way as to address the threats from outside, be it ckle customers, efcient rivals or substitute products. Porters approach suggests three generic strategies for organisations that can be supported or enabled with information systems, namely: product differentiation lower costs new markets.11

As you read case studies in the textbooks it is a useful exercise to attempt to classify them in these terms. Most successful strategic systems are essentially of one type or the other.

Two other themes for identifying strategic information systems (discussed in Laudon and Laudon Chapter 2) are a focus on supply chain management, including such ideas as just-in-time supply and stockless inventory. This builds quite directly on Porters ideas. The other, and rather different, idea is that of identifying and enhancing core competencies through information systems. Firms cannot be good at everything, but they can strive to be good at a limited range of things, and it is this that will bring them success in the market. Ideas of enhancing core competencies, in so far as these competencies are in the people a rm employs, are obviously linked to the idea of developing knowledge work systems and supporting knowledge workers. In the Targett book a number of the chapters use another model for exploring strategic issues, based on work at MIT in a study known as Managing in the 1990s.12 This model proposes a ladder of business benet derived from information systems:

12

Venkatraman, N. IT-induced business reconguration. In Scott-Morton.

The degree of business transformation

5. 4. 3. 2. 1.

Business scope redenition (e.g. changing the business model).

Business network redesign (e.g. who business is done with).

Business process redesign (e.g. how business is done)

Internal integration (e.g. across business units of the same company).

Localised exploitation (e.g. in a business unit)

Range of potential benets

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Chapter 1: Approaching information systems

The logic of this model is that organisations have to progress up the ladder one step at a time, starting from localised exploitation and moving onwards. The dashed line in the gure represents the shift from what Venkatraman calls evolutionary levels, to revolutionary levels when the nature of the business itself is changed. This is an interesting approach, since it suggests that where we can go is very much dependent on where we are now. No radical departures, just steady progress to integrate IS into a business. However, the success of some new e-business start-up companies or case studies of radical transformation initiatives successfully undertaken suggest that it may be possible to parachute in at a higher level: that is, to go directly to a use of information systems which is radically different and strategically signicant, without moving patiently through the intermediate steps on the ladder. Finally we need to understand that developing some ideas for strategic systems on paper is (relatively) easy, and the models and ideas discussed here can be used to frame many innovative and interesting applications. However, to go from an idea to an actual strategic system in use is not easy, particularly if it is innovative, new and changes the structure or culture of an existing organisation. So, once again we see the need for active management of information systems within the sociotechnical framework. Exercises
1. The director of a medical supply organisation was in the warehouse with his employees celebrating the movement of 1m of stock through the warehouse in one week (a record gure). He congratulated the staff and then told them that his intention was to reduce this stock movement to zero as fast as he could, using online information systems to link customers placing orders to suppliers who would despatch goods directly. Why would the director want to bypass his own warehouse? How would you explain this to the warehouse staff? How would you keep them committed to their work? 2. What arguments could you put forward for and against the idea of sustainable competitive advantage for an individual company through information systems? 3. Does the availability of network-based inter-organisational systems change the economic factors that may encourage one company to co-operate with another? 4. In January 2000 the Ford motor company announced that they would give a computer and Internet access to every employee of the company worldwide for a nominal sum for their own personal use. The cost was estimated as $300m. Why would they wish to do this, and what benets could they expect? 5. Give two examples of possible systems projects in a motor car manufacturer that fall under each of the rungs of Venkatramans benets ladder.

Learning outcomes
By the end of this chapter and having undertaken the relevant readings and exercises you should be able to: give a reasoned explanation of the concept of information and why we describe information-handling activities in terms of systems contrast the aims of various generic types of information system found in organisations, how they support the organisation and how they link together analyse information systems in terms of a strategic case for their development based on appropriate models.

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Computer-based information systems

Notes

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Chapter 2: Information systems in use

Chapter 2

Information systems in use


Essential reading
Laudon, Kenneth C. and Jane P. Laudon Management Information Systems: Organization and Technology in the Networked Enterprise. (New Jersey: Prentice Hall, 2000) sixth edition [ISBN 013-015682-5] Chapters 3, 4 and 5.

Further reading
Alter, Steven Information Systems: A Management Perspective. (Reading Mass: Addison-Wesley, 1999) third edition [ISBN 0-201-52108-3] Chapters 3 and 7. Bocij, Paul, Dave Chaffey, A. Greasley and S. Hickie Business Information Systems: Technology, Development and Management. (London: Financial Times Pitman, 1999) [ISBN 0-273-63849-1] Chapters 1, 6 and 18. Curtis, Graham Business Information Systems: Analysis, Design and Practice. (London: Addison Wesley, 1998) third edition [ISBN 0-201-33136-5] Chapters 6 and 8.

Introduction
In this chapter we undertake a broad review of information systems within an organisational, managerial and societal context. Many of the issues or ideas that are introduced here are developed further later in this guide, but here these topics are introduced together and alongside each other, rather than taken individually and in isolation. The rst issue we consider is the nature of organisations and how information systems t into them or change them. The second is how individual people, or a class of people we understand as managers, make use of information systems in doing their jobs, and how these types of job (and the organisations they exist within) may change with new information systems. The third main theme considered here is how, as a society, we face the power and potential of our new information systems, and develop means to control and shape their consequences.

Information systems within organisations


Scene-setting exercise
First read Laudon and Laudon Chapter 3 with the following question in mind. Is the main role of information systems to make the internal operations of an organisation more efcient? Can you think of other signicant roles?

The information systems we study are generally seen as organisational phenomena. It is in organisations that you nd such systems, and it is organisations that need such systems. It therefore makes sense to develop some understanding of what an organisation is and how we might study them. In part this is a question that calls for sociological insight. Organisations are social phenomena involving people within hierarchical and power-based relationships. Organisations have their own cultures, norms and values, and organisations (as open systems) shift and change in response to environmental stimului. Organisations are also often described as bureaucracies in Webers terms; structures of formal relations

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Computer-based information systems

and rules rational, predictable and regular with standard operating procedures. What better an image of an organisation to use when we introduce computers that are themselves rational (logical), predictable and regular in their operation rule followers without emotion or class interests? Equally, we might try to draw on economic ideas to understand organisations. Their place at the heart of the economy suggests that their existence is driven by some economic rationale. Laudon and Laudon, in Chapter 3, provide a number of economic arguments for organisations to exist. Perhaps the most interesting are those that treat agency and transaction cost issues. Agency approaches look at the cost of management as an issue of control of hired managers with interests that differ from the owners of a business. Transaction cost approaches suggest that the costs of transactions in the market place are as signicant to rms as the costs of production. If a single organisation buys the factors that it needs in the market, then it incurs transaction costs as it nds willing sellers and establishes prices, negotiates, monitors contracts, etc. In response to these costs, organisations do more work in-house and thereby grow larger and more diverse you could say trading off agency costs against transaction costs.

Outsourcing is the term used to describe a situation where one company contracts with another for a service. The implication in the phrase is that this is contracting out things that were once done in-house. Laudon and Laudon discuss this in terms of an information systems management issue in Chapter 12. See also the relevant entry in Davis and Chapter 14 of Bocij.

This theoretical perspective is particularly interesting to information systems researchers because, if information systems in general, and the Internet in particular, reduce the costs of transactions, then there may be a tendency for organisations to shrink in size and focus more on their core competencies, as they do more business in the market place and less internally. Equally, if technology reduces agency costs and makes the supervision of staff easier, then it may have a reverse effect. For example, many large organisations have decided to outsource1 some or all of their information systems development and operation, just as they have always done with, for example, their ofce cleaning or catering, and this could be explained as being driven by lower transaction costs.2 These ideas lead on to the notion of networks of collaborating organisations, each specialising in some aspect of work, and collaborating through efcient informational transactions. The availability of networks (the Internet, intranets, extranets) certainly makes this a plausible argument. Another way to see this type of change is in the establishment of a new kind of virtual organisation, dedicated to some task, but made up of many independent suborganisations. Bocij, in Chapter 5, gives an example of such a virtual organisation see also the discussion in Chapter 19. Exercises
1. Enumerate the transaction costs that you would envisage a motor manufacturer would have incurred in the 1970s when purchasing fabric for seat covers, before the advent of wide-scale networked computing. For each cost you identify suggest how a modern extranet-based system might provide some alleviation. Is it more or less likely that todays manufacturer will produce their own seat covers in an on-site factory? 2. In the past, when computers were expensive, large and required a dedicated body of experts to manage them, it was common to argue that computerisation encouraged hierarchical and centralised information processing. Today the situation is reversed, computers are cheap and easy to use, networks can span

The interesting question is does this mean that information systems are only as important as cleaning and catering? Worth discussing, but remember other services are often outsourced too, including legal advice, marketing, advertising and even product development.

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Chapter 2: Information systems in use

distances, and computer-based information systems can be a force for reshaping organisations making them atter and less hierarchical. Do you agree? How do you see these forces operating on organisational structures and shapes? 3. Based on the transaction cost approach, what would you predict as the consequences for industrial organizations, government bureaucracies and nancial services companies that come from cheaper and more powerful information and communication technologies?

Managers and management information systems


Scene-setting exercise
Read Laudon and Laudon Chapter 4 with the following question in mind. In how many ways might you describe a useful role for information systems in supporting decision-making activities of managers?

3 Look at the entry for Management Information Systems in Davis.

For many years, starting in the 1970s, this subject was usually known by the name management information systems, or MIS. Indeed, the Laudon and Laudon book 3 still uses that phrase in the title. Since those days, 30 years ago, we have come to appreciate that information systems serve many other interests, not just those of managers. For example, a web-based system selling books to people in their home has to be critically focused on the customers themselves, not just or mainly on the managers in the company, and knowledge work systems are usually about getting a task done rather than managing somebody else. Nonetheless, managers are a signicant user community, and understanding what managers do and what management consists of is important. When you read Chapter 4 of Laudon and Laudon you are given a very quick rundown on the history of management thinking in the twentieth century. Some of you may have studied these topics in more depth in other units, but if you have not, do take the time to reect on the discussion. Critical for understanding information systems in an organisational context is the distinction between a technicalrational approach to management (scientic management in the term coined by Fredrick Taylor), with its planning, organising and controlling and a behavioural approach (often identied as the Human Relations School), with its emphasis on motivation and understanding peoples behaviour in work situations.4 Laudon and Laudon introduce a third school with a cognitive perspective, but as they acknowledge, this is a recent phenomenon with rather less history behind it. Nevertheless, many modern ideas of information systems, such as knowledge-based organisations, learning organisations or virtual organisations are essentially cognitive ideas. So too is the idea of knowledge management, a very topical subject for researchers and managers. The distinctions between alternative approaches to management and the job of being a manager reect the sociotechnical discussion we introduced earlier, and the implicit compromise between being driven by technologys capabilities, or by people and organisational concerns. Technicalrational management tends to appreciate the computer in terms of its ability to follow rules, enforce standards of performance and promote a machine-like efciency in work activities (an automation perspective). The computer can also support control activities, monitoring work (a form of surveillance) and reporting any deviations from the plan. In contrast, behavioural approaches are sensitive to peoples behaviour with and around technology. It appreciates that people do not like change and require some autonomy in their work: for example, to determine the pace and sequence of work. The technology can then

A summary of these two sets of ideas is given in Table 4.9 at the end of the chapter. The balance of entries will suggest to you the current emphasis in the eld (or the bias of the authors?).

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Computer-based information systems

equally be seen as providing more scope for individual initiative, judgement and autonomy at work. This behavioural view can also be seen in modern ideas of strategic (higher level) management as moulding an organisation to its environment, sensing what is found there, and making appropriate responses. But what are appropriate responses? As the discussion in Chapter 4 shows, managers (and in particular senior managers) do many things. They act as gureheads in the outside world, they act as conduits of information into and out of the organisation and within, and they make decisions. This decision-making role, as described, is complex and even problematic. Many studies have shown that managers spend really very little time making decisions, and often make many more small ones than large. Nevertheless, for the rest of this section, we will consider decision-making in a fairly formal manner. It is usual to describe decision-making in organisations in terms of three or four levels: from the senior managers making strategic decisions, through middle managers making management control decisions, to lower level staff making operational decisions on a day-to-day basis. This is a simple (too simple?) image of organisations as a neat hierarchy of people (pyramid shaped), each with their own type of decisions to make. Laudon and Laudon add another layer in their discussion, the knowledge level to cover people involved in creative, evaluative and appreciative (or sense-making) activities the knowledge workers in modern organisations.
5

By programming we do not just mean able to be programmed on a computer, but rather that we can write down the rules for making the decision, and potentially train anybody to do it.

Decision support systems should be understood as there to help people to make decisions but they do not make decisions themselves.

Another way to describe management decisions is in terms of how programmable5 the decision is (from unstructured requiring judgement, evaluation and insight, through semi-structured to structured repetitive, routine and understood). Thus we might expect a senior manager to face more unstructured decisions, whereas a supervisor in the ofce may tend to face more structured decisions. With this basic set of ideas on decision-making contexts, it is then possible to explore what information systems might do to provide some appropriate support in terms of functionality. Most simply, a structured decision can be made by the machine itself automated perhaps in a transaction processing system. Many semi-structured decisions can be supported by information generated from transaction processing systems, and perhaps made available through an online MIS (or a corporate intranet). Other types of decision lend themselves to explicit support from a decision support system or DSS,6 particularly if they need a mixture of formal modelling of data and intuition and judgement. When we consider information systems as supporting decision-making, we need to appreciate a little what it takes to make a decision. Chapter 4 of Laudon and Laudon introduces the classic form, developed by Simon, in which decision-making is a sequence of intelligence, design, choice and implementation (a technical/rational model at heart). You will note, however, that this is qualied to some degree in the discussion that follows. The concepts of bounded rationality, satiscing and muddling through are introduced.7 Although muddling through may not sound very plausible as a way of managing, if we reconsider it as incremental decision-making and slow adaptation as we learn over time, then it becomes a more interesting and plausible approach. The chapter also discusses some recent discussion on cognitive styles of decision-makers. The end of the chapter introduces another aspect to be considered as we try to support managers in their decision-making. This is that decisions are not made by isolated individuals, whatever their supporting technology. Rather we might see decisions as an organisational, group or team effort as an outcome of bureaucratic structures of committees and working groups, as a political process of bargaining, inuence and power relations, or even as a messy, unpredictable impenetrable process in the garbage can model.

See also Alter, Chapter 5 for a discussion of decision-making.

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Chapter 2: Information systems in use

As you will see from the textbooks and your wider reading, the debate on management and management structures today places emphasis on more exible, responsive management styles, empowering more people in a atter organisation to make (appropriate) decisions using their knowledge, judgement and experience. A large part of this, as we will see in later chapters of this guide and in the textbooks, might be achieved by building carefully tailored information systems that can help in decision-making activities and support work activities at the individual and group level. Exercises
1. For what purposes do managers seek information in their daily activities? 2. The rst rule of information systems in business organisations is If you can automate it, then do so. Do you agree? 3. Suggest three key arguments in favour of the technicalrational approach to management and three arguments against. Illustrate your answer with relevant examples of useful business information systems.

Society living with information systems


Scene-setting exercise
First read Laudon and Laudon Chapter 5, with the following question in mind. If ethical issues are to be addressed as information systems are developed and used, then who has the responsibility to do this? See also Alter, Chapter 7.

Clark, R. Information technology and Dataveillance, Communications of ACM (May 1988) 35(5): 498512.

The development of information systems of all types, their attendant databases, and the ease of access allowed by modern communications means that a huge amount of information about you and me is potentially available to anybody else in the world. As some authors propose it, we live in a surveillance society; they have even adapted the word to coin the new phrase dataveillance.8 From your earliest school records (and that embarrassing incident at the age of six), through your reading habits as a teenager (library records), your rst girl/boy friends (all those emails and phone calls), your exam performance, your medical records, the things you spend money on, to where you have been, with whom and when. On the other hand, there is of course a lot of benet for us all in having this avalanche of information available. For example, we may get better health care through full and instantly available medical records, we get convenience from using credit cards in place of cash, and we or our employer get security from personal identity cards with a magnetic stripe. In almost all developed societies people have debated the issues of how much personal information should be captured and made available, and under what rules and laws. In some ways this debate is centuries old and predates our current technologies. Questions about the position of the individual citizen as against the state, and the states rights to require information (and other actions) from the individual is as old as notions of government. Equally, ideas of privacy as a right to be left alone and to get on with your own business are ancient. However, the network world in which we now nd ourselves accentuates a number of these issues and gives them a very real and immediate importance, not least as part of national policy for the development of civil society and economic activity. Here are some recent real examples: Some governments have been concerned that people havent embraced e-commerce due to a fear that their credit or debit card details will be stolen.

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Computer-based information systems

Some countries havent allowed companies to export information about people (customers or employees) because they believe that the information will not be protected from abuse through appropriate laws. This is a requirement for all European countries under current laws. Doctors in the UK have resisted online patient records or medical networks because they believe that they threaten the interests of patients, for example by making it too easy for patient information to be obtained by insurance companies or made available to employers.

Such concerns are not just for armchair philosophers or academics; governments and businesses are interested in these issues and so, for example, on many commercial web sites you will nd a link to a statement of privacy or similar policy. For example, Microsoft at www.microsoft.com has a statement about how they will collect and use personal information about their customers based on ve principles: 1. Notice: You will be asked to give personal information and it will be used for your benet. 2. Consent: A customer can opt out of giving information or limit its use or onward transmission. 3. Access: A customer can access personal information about themselves and edit or update it. 4. Security: Microsoft will make strong efforts to protect personal information from loss, misuse, etc. 5. Enforcement: If these principles are breached the company will do its best to correct the problem. Microsoft also includes a special section addressed to parents encouraging them to talk to your children about safe and responsible use of their personal information when using the Internet. Exercise
Collect a few similar statements from big and small organisations in different countries, and nd common themes. Before you read on, explore the ve principles that Microsoft use in its privacy statement, in terms of the ve moral dimensions of the Information Age given in Laudon and Laudon Chapter 5, or the PAPA framework in Alter.

In Chapter 5 of Laudon and Laudon a broad overview of some of these issues is given in terms of ve moral dimensions of the Information Age, as well as a number of examples of how new technologies pose new and critical issues of an ethical nature. They suggest four key ethical ideas for use in an information society, drawing on a rather American and legal analysis. These are: taking responsibility for actions having mechanisms of accountability to other people for actions recognising liability for damages done by actions (and means to enforce them in law). doing all of this within a legal framework of due process in which laws and obligations and means of redress are known and available to all.

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Chapter 2: Information systems in use

The chapter also provides a review of alternative ethical principles that might be applied to judge such matters, and you should note the distinctions between them for example, between a utilitarian approach (actions judged on the basis of the greatest good for the greatest number) and one that recognises absolute right and wrong. Exercise
What rules, if any, would you suggest should be used to regulate the access that a police ofcer could have to computer-based medical information when investigating a crime. Would your answers differ if the crime was minor (a parking offence), major (a bank fraud) or violent (a sequence of murders)? Would your answer be different if it concerned access to past email messages?

For a discussion of this act see Boi, Chapter 8 or Curtis Chapter 8 where the principles on which the act is based are described as well as the processes of registration and enforcement. Further information on the UK can be obtained from the web site of the Data Protection Registrar at www.dataprotection.gov.uk/dprh ome.htm
10

One manifestation of these ethical concerns is in the various forms of privacy legislation that countries have passed over the past few decades, often as a direct response to perceived threats from computers. The United States (as reected in Laudon and Laudon Chapter 5) has seen a profusion of laws addressing this, ranging from the Freedom of Information Act in 1968 to the more focused laws of the 1970s and 1980s covering, for example, educational records, medical records and nancial records. In Europe the approach has tended to be rather different, with attempts at comprehensive legislation to cover information privacy, most recently in the form of the European Directive on Data Protection (1998) from the European Union. Individual countries in Europe then implement this Directive in their own national law.9 In Britain this has taken the form of the Data Protection Act 1998, which sets out the rights of organisations and individuals in terms of how personal information is gathered, stored, processed and disclosed. Another area of concern that has developed very rapidly in the past decade is that of intellectual property rights (IPR) in an information economy. Information systems make it easy to reproduce information, software, designs or even ideas, and the person doing so may or may not be entitled to do so. The most obvious example is the ease with which people copy software and give it to their friends (software theft or software piracy) or download music from the Internet, and companies buy far fewer copies of software than they actually use.10 Intellectual property rights are usually divided into issues of copyright, patents and trade secrets. Laudon and Laudon give a good example of trade secrets and the issues they raise in the Window on Management that discusses the case of Reuters monitoring a rival information service. Copyright too has a long and confusing history in terms of the ability of an author (or company) to protect the look and feel of an item of software. Traditionally, copyright has provided protection for the expression of an idea, not an idea itself, but in the world of software the distinction is not very clear. In contrast, a patent provides an exclusive right to exploit an idea, and some software patents have been awarded. The nal issue we will highlight here is that of computer crime illegal or malicious acts that are undertaken with or by computer. Such crimes may include activities such as: hacking: gaining access to someone elses computer system without permission in order to obtain or change information spoong: pretending to be somebody else online, for example setting up a web site that pretends to be that of a bank so as to collect nancial information snifng: eavesdropping electronically to collect information passing on the web (for example credit card details)

Boci Chapter 18 has a good discussion of software piracy.

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Computer-based information systems

preparing and distributing computer viruses.

11

Boci has a discussion of the UKs computer misuse act.

In some countries special laws have been passed aimed directly at such activities: for example, in the United States, the Computer Fraud and Abuse Act of 1986, and in the UK, the Computer Misuse Act of 1990. These set out a number of new offences associated with unauthorised access to information.11 We must also remember that, whereas hacking by individuals external to an organisation may get publicity, it is far more often the case that computer crime is perpetrated by insiders. This links the issue back to everyday practices of information systems design and management. Exercises
1. In Britain there is, at present, no national registration scheme that requires every citizen to be recorded in a government database. There are, as a consequence, no identity cards for British citizens. In many other countries of the world this is standard practice. What arguments would you use if asked to: a. argue for the need for identity cards, or b. defend the right of citizens not to hold or carry such cards? 2. If you were a manager in charge of end-user computing for a large corporation, how would you control the illegal use of pirated software? How would you explain your policy to the rest of the workforce? (See Window on Organizations in Laudon and Laudon Chapter 5.) 3. Research the ethical issues that are addressed as a new medical drug is developed, tested and marketed. Could this approach be applied to new and innovative information systems?

Learning outcomes
By the end of this chapter and having undertaken the relevant readings and exercises, you should be able to: describe roles for information systems within organisations and relate them to basic ideas about the nature of organisations explain alternative models of the impact of information systems on organisational shapes and forms relate information systems to the activities of managers, and in particular to their role in decision-making explain the need for a legal framework for information systems use, and relate this to broader ethical and moral concerns.

28

Chapter 3: Information and communications technology

Chapter 3

Information and communications technology


Essential reading
Laudon, Kenneth C. and Jane P. Laudon Management Information Systems: Organization and Technology in the Networked Enterprise. (New Jersey: Prentice Hall, 2000) sixth edition [ISBN 013-015682-5] Chapters 6, 7 and 9.

Further reading
Alter, Steven Information Systems: A Management Perspective. (Reading Mass: Addison-Wesley, 1999) third edition [ISBN 0-201-52108-3] Chapters 8, 9 and 10. Bocij, Paul, Dave Chaffey, A. Greasley and S. Hickie Business Information Systems: Technology, Development and Management. (London: Financial Times Pitman, 1999) [ISBN 0-273-63849-1] Chapters 3, 4 and 5. Curtis, Graham Business Information Systems: Analysis, Design and Practice. (London: Addison Wesley, 1998) third edition [ISBN 0-201-33136-5] Chapters 3 and 4.

Introduction
In this chapter we consider the technologies available for building information systems. The chapter is structured in terms of hardware, software and networks, but an information system usually requires a mixture of all three working together. Most introductory books provide an adequate coverage of basic technologies, though only texts written since the late 1990s will cover the explosion in interest and signicance of communications and the Internet. My intention in this chapter is to help you achieve a broad logical understanding of how a computer works, the principal component parts of a computer system and the physical characteristics of hardware that constrain its use. Beyond that we need to understand the potential of new technologies and the management challenges they pose. In keeping with the sociotechnical approach, we need to always think of technology in its social context of use.
An excellent brief treatment of the history of computers is found in the Encyclopedia Britannica. Try the web site.
1

The history of computers1


The computer is usually acknowledged to have been invented during the Second World War. Both the ENIAC machine and the Harvard Mark 1 were developed by teams in the United States in order to undertake the intensive computations required for the calibration of artillery. At the same time, in Britain, engineers from the British Post Ofce, using technology that was drawn from telephone exchanges, developed the Colossus machine for deciphering intercepted military communications from the German Enigma machines. Two names stand out from this period: those of the American John von Neumann, who worked on ENIAC and rst wrote about the basic problems of computer design and explored the stored program concept, and the British mathematician, Alan Turing, who in the 1930s had provided a general mathematical model of a computing machine, and subsequently worked on the Colossus machine and other early British computers. Of course, ideas of aiding or automating calculation and information storage are much older than that, and the

29

Computer-based information systems

Internet resource relating to the history of computing include http://ei.cs.vt.edu/~history/

For more on Babbage and his achievements, see www.sciencemuseum.org.uk

abacus (over 4,000 years old) is still in widespread use today.2 Key names in the prehistory of computers include the French mathematician Blaise Pascal, who developed an adding machine in 1642, and Gottfried von Leibnitzs stepped wheel calculator that could do multiplication. The Victorian engineer and mathematician, Charles Babbage, designed two ambitious mechanical calculating machines the analytical engine (1835) and the difference engine (1859). They were never completed in Babbages lifetime, and this is usually attributed not to a awed design as much as to a lack of engineering skills.3 The next development in the history of computing is generally attributed to the American engineer Herman Hollerith who developed tabulating machinery for the United States census of 1890. This was based on punch cards that held data in the form of holes, a technique that had previously been used in controlling patterns and colours in weaving looms. Joseph-Marie Jacquard, a Frenchman, had invented the Jacquard loom in the early 1800s. In Holleriths machines stacks of cards could be run through a machine to count the number of cards with holes in particular positions. The technology that Hollerith pioneered rapidly took off for census applications (counting) and quite soon for more general information handling that included multiplication. The company Hollerith founded went on to become a part of the present-day IBM. By the early twentieth century such machinery was in fairly widespread use, and punch cards or punched paper tape were a primary form of computer input well into the 1970s and is still used in some applications today. Hardware Scene-setting exercise
Read Chapter 6 of Laudon and Laudon with the following question in mind. How should a senior information systems manager evaluate new technologies as they arrive on the market?

The prehistory of the electronic computer is important to consider because it tells us that information handling is not a concept dreamed up in the late twentieth century but has been a part of our world for far longer. In this section we stay with history a bit longer to consider the recent past of computer hardware, usually spoken of in terms of generations of machines and technologies. Five generations of computer hardware 1. The rst generation, from about 1946 to 1955, was experimental and exploratory, as many technologies were developed and tried out. Building data storage devices reliable and fast enough to work alongside the actual processor was a particular problem. Among the technologies used for storage were vacuum tubes, mercury delay lines and magnetic coated drums forerunners of todays disks. 2. In the second generation, from 1956 to 1963, computers were being built in increasing volumes and were based not on vacuum tubes or valves, but on the transistor which had been invented at Bell Laboratories in the United States in 1948. High-speed storage was developed based on magnetic cores threaded by a matrix of wires that permitted accurate, reliable and relatively high speed storage of small amounts of data, as well as magnetic tapes. 3. The third generation is generally understood to have commenced in about 1964 with the advent of the IBM 360 range. This was a mass-produced family of machines using small-scale integrated circuits (that is, more than one transistor per component) and later medium-scale integrated circuits. Main storage was based on

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Chapter 3: Information and communications technology

magnetic cores. The basic secondary storage used was magnetic tapes. Disk storage was increasingly available in the form of expensive disk drives, some of which supported exchangeable disk packs. Exercise
Why was it signicant that disk packs were exchangeable?

4. The fourth generation can be dated as starting from any time between 1975 to 1981. The key technology that distinguishes it is the use of very large-scale integrated (VLSI) circuits (chips) both for building the processor and most importantly for the main memory. At rst, this technology was used in building mainframes and minicomputers, but from the early 1980s, with the development of the single chip microprocessor that could be mass-produced, it provided the basis for the explosive development of microcomputers and PCs. 5. Technology is now developing so fast and in so many directions that a fth generation of computer hardware is hard to delineate. However the phrase fth generation was taken up in the 1980s to describe parallel computer architectures supporting knowledge-based systems. In particular the Japanese government launched a major Fifth Generation project in the early 1980s. Perhaps it is more useful to think of the fth generation as being computers linked to networks, and to date from about 1988. Basic concepts of modern computer hardware Be a computer large or small, an elementary model of a computer can be based on four interconnected elements: input device output device memory (or storage) a central processing unit (CPU).

In a microcomputer the CPU will consist of a single microprocessor fabricated on a silicon chip; in a supercomputer the processor may be hundreds or even thousands of processors working in parallel. Figure 6.1 in Laudon and Laudon illustrates this, but adds a few renements. Memory is split into primary and secondary storage, and they add communications devices as a further element. Thus they arrive at six main elements in this logical computer. Exercise
Locate the similar section in Curtis and one or two other books and compare the basic description of a logical computer they give.

Instructions to the computer as to what it is to do (its program, software), as well as data, are entered via the input device and stored in the memory. From there the instructions can be fetched and executed by the CPU. As a result the data stored in the memory is manipulated in various ways, and the results can be displayed on the output device. This simple model needs to be eshed out a bit in two directions. First the processor can be seen as essentially having to perform two functions. It must follow program instructions, and it must manipulate data items. It must understand when it is being told to add two numbers together, then it must go ahead, nd the two numbers stored in the memory, perform the task and place the result back in memory. Thus the processor can be split into a control unit, which understands program instructions, and an arithmetic and logic unit (ALU), which carries them out. To perform this simple task the control unit will co-ordinate the activities of fetching

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Computer-based information systems

items from memory, performing actions in the ALU and returning a result to memory. More generally the control unit communicates with all the component parts of the computer as it obeys instructions. The speed of the processor (measured in megahertz or millions of cycles per second, abbreviated to mhz) is one of the fundamental limitations on the power of any computer, but only one. The larger task of managing the co-ordination of the component parts is largely left to software: in particular the operating systems (see below). Input and output devices Computers need to be able to receive input and to display the results of their labours. Thus all systems will have some form of input and output devices. You should be able to identify a variety of such devices including keyboards, screens and various types of printer. The machine upon which this is being written has a keyboard and a mouse as input. For output there is a colour VDU screen and a laser printer. Other forms of input device and input media are: barcodes read by a scanner at a supermarket till the magnetic ink character recognition (MICR) system used on bank cheques a scanner used to enter a photograph or drawing into a computer.

Exercise
Conduct a survey of the various types of input and output devices used in local shops and stores. Include the devices used to monitor stock arriving, being put on the shelves, the method used to capture sales of goods, as well as those used to capture the means of payment.

Video cameras can now be hooked up to computers and the images manipulated by the computer. As technology has developed, new input devices have become widely available. For example, we can use voice recognition systems that take human speech as input or handwriting recognition systems. Exercise
If you were designing an information system to be used by foreign exchange dealers as they trade currencies in a busy dealing room, what particular characteristics would you want in input and output devices?

When considering input and output it is useful to recognise that any output from a system may need to be subsequently input. Thus, data may be generated and output by a computer only for it to be read subsequently into another one. For example, barcodes or magnetic ink characters can be printed by one computer, and subsequently read by another, or it may be appropriate at times to think of a oppy disk as an inputoutput medium. Networks too can be a medium for providing the output of one system as the input for another. Secondary storage devices We need to explore the concept of memory a little more. It is essential to the character of a computer that it is a stored program device, and programs are stored in memory. The memory that holds the current program and the current data needs to be able to deliver this to the CPU at great speed. There is in our simple model only one CPU, and it must not be kept waiting! This memory, referred to as RAM (random access memory), main memory or primary storage, is built today out of very large-scale integrated circuits (VLSI), more popularly known as microchips. Such memory is plugged into the body of the computer with direct connection to the CPU. RAM is

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Chapter 3: Information and communications technology

relatively expensive and will be relatively small in terms of the amount of data it can store. When you turn off the computer power, whatever is stored (the data) is lost. Thus it is said to be volatile storage. Main memory is volatile, but data (including programs) needs to be stored permanently, securely and economically. Therefore computers have further forms of non-volatile storage, referred to as secondary storage or backing store. Two classes of secondary storage can be identied direct access devices (DASD) and serial access devices. A direct access device allows individual blocks of data to be selected and read as required. A serial access device allows data to be accessed most efciently in one xed sequence rather than as requested. We can compare them to a CD and a cassette tape. On the tape the sequence of the music is xed and searching for individual items takes time, whereas with a CD it is possible to select tracks at will and in any order with a minimum (but not zero) time penalty. Tapes are described then as serial access devices, whereas disks are described as direct access devices. (Note that this usage leaves random access device as a phrase to describe the main memory of a computer.) The most common form of direct access secondary storage is the magnetic disk, ranging from the exchangeable oppy disk with modest storage capacity (say 1.4 to 2.88 megabytes) to the xed hard disks in microcomputers with perhaps 10 to 40 Gigabytes. In larger systems disks may have capacities of 100s of Gigabytes.4 On a disk, data is stored in concentric tracks, and read or written by a moveable read/write head that shifts between tracks. As the disk spins, the data can be read or written. Large-capacity disks have multiple disks rotating on a single spindle, and a comb like structure of read/write heads that move in and out across the disks. The noise that you hear as the disks operate is these heads being moved and precisely positioned. Since it is a direct access device, data is written and read in xed size chunks, referred to as blocks. Exercise
Find out as much as you can about the size of the ROM, RAM and secondary storage devices of any computer you use. Try to nd out the costs of adding an extra 1 Megabyte of RAM, and 1 Megabyte of various forms of disk space. What is the ratio of cost of 1 byte of primary storage to 1 of secondary storage?

Remember, 1 Gigabyte = 230 bytes a big number.

Magnetic tapes are still used as secondary storage. They have the advantage of having large capacity and being cheap, but a tape in contrast to a disk is only capable of being read in a serial manner, and does not provide the direct access capability of a disk. For that reason tapes are generally seen as suitable only for certain tasks such as backing up data stored on disk or holding data les that will always be processed in a given sequence for example a payroll of employees, each of whom needs to be paid at the end of the month. There are also good standards agreed as to the format of data on tapes, and this makes tape an acceptable medium for interchange between computers. Computer disks have the great advantage of permitting the direct access for a given item of data, without requiring the reading of all items up to and including the items sought. The direct access capability of disks makes them the usual rst choice for secondary storage. To achieve even greater storage capacity assemblies that hold multiple hard disks (tens or more) together are used and called RAIDs (redundant array of inexpensive disks). The most recent technology to be used for secondary storage is the optical disc, which is similar to the compact disc that is used for music recording. The optical disc (CD-ROM or DVD) has problems in that, although it has a large capacity to store data (about four gigabytes in standard DVD formats), it is not as easy or quick to

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Computer-based information systems

write data to such a disk and in some versions data cannot be overwritten. Writing permanently to an optical disc may be very suitable for some situations where it is desirable that data once written cannot be erased (e.g. for security reasons, for backup or for distribution). Indeed, optical discs have been very successfully used in distributing high volumes of information that will only need to be read. Thus dictionaries and other reference books are increasingly distributed in this form, as is computer software. One day even University of London subject guides may be distributed this way.

Modern taxonomy of computers


It is a useful exercise to crosscheck these technical denitions and descriptions with the Free Online Dictionary Of Computing (FOLDOC) web site http://foldoc.doc.ic.ac.uk/foldoc
5

Today it is usual to classify computers into various distinct types, and you should be familiar with this terminology.5 Supercomputers: These are machines designed to undertake high-speed computations. They are usually used for performing engineering and scientic calculations. An example of a supercomputer use would be weather forecasting, mapping human genes or simulating an aircraft in ight (for an engineer, not in a computer game). Mainframes are the largest general-purpose computers. They are the basis for large centralised data processing applications (transaction processing). An example would be the computers of an airline that handles the booking of seats. Both mainframes and supercomputers generally require special buildings with air conditioning and cooling systems to keep the computers running. They are appropriate for high-volume applications with extensive data storage requirements. They are also often used as network servers.6 The resurgence of demand for mainframe computers in the late 1990s can be traced to their new role as network servers within the developing uses of the Internet. Minicomputers. In the 1970s smaller computers were developed that could be installed in ordinary rooms without extensive air conditioning, power supplies, etc. They were of limited power compared to mainframes, but were substantially cheaper. They were typically used to provide interactive computing using terminals. Minicomputers are still used to provide shared computing power in individual locations (a banks branches, a supermarket, a laboratory, etc.) linked by communications facilities. Such minicomputers are often used to perform the types of task that previously were undertaken by mainframes, and the distinction is today blurred. Indeed, for a business organisation that needs a powerful computing facility (for example to service a web site) there is a choice to be made between using a mainframe or a set of networked minicomputers. Microcomputers. These arrived in the late 1970s, based on the VLSI (very largescale integrated circuit) technology that allowed the development of the microprocessor. Today they are far and away the most common type of computer that we encounter, and they allow all kinds of people to have immediate and dedicated access to a computer. Hence their name has changed to the PC personal computer. A PC will generally only let one person use it at a time, though they may be able to run more than one program. Today we see many more types of personal computer than just the desktop machine. For example we have portable computers and laptops, notebook computers and PDAs (personal digital assistants). We are also just starting to see the combination of computers, mobile phones and other electronic devices such as digital cameras. Many people believe that a whole new era of computing is just starting based around mobile devices that will give us ubiquitous computing.

A server is a computer on a network that provides some services to other computers. These services may be, for example, providing email, web pages, data, software or information processing.

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Chapter 3: Information and communications technology

Workstations. A workstation is in one sense just a powerful microcomputer, but they have developed a distinct character as the computers used by scientists, engineers and computer professionals and running the UNIX operating system other than Windows. This is in contrast to the general-purpose minicomputer and PC. Workstations have high-quality graphics screens and pioneered WIMP (this stands for windows, icon, mouse and pull-down menus) interfaces. Today it is hard to be sure of the distinction between a workstation and a powerful microcomputer.

Exercise
Suggest reasons for choosing a single powerful computer for a business web site versus hosting it on a network of minicomputers.

As we have already noted, computers are now usually connected to networks, and thus we can also describe them in terms of their role within a network. It is usual to identify two particular roles that of the client computer that provides the interface to the human user and does local processing, and server computers that provide services across the network. Thus my desktop PC is a client computer, and it connects to a mail server computer across the network when I send or receive email. My incoming mail is held on the server computer until I collect it, and the server computer takes care of forwarding my outgoing email when I click on Send. Clientserver computing, based around networks, is the basis for most contemporary information systems (and the Internet itself) and allows for distributed systems with distributed databases and distributed processing. Exercises
1. What are the main benets of adopting a clientserver approach to providing computer hardware for a medium-sized government ministry with many regional ofces? 2. Try to enumerate as many costs as you can that a company incurs when it places a personal computer on an employees desk. 3. Describe the basic structure of a modern desktop computer in logical terms. Give examples of the technologies used to provide the different functional elements.

Computer data
Everything stored in a computer is data, and that includes programs (from the point of view of the storage devices of a computer it is all the same). Data is stored in a computer in the form of binary patterns, sequences of 1s and 0s. The one and the zero can be stored in terms of an electrical charge or a magnetic polarity. The details of such storage need not concern us. The basic unit of storage is the bit (one binary digit a 0 or a 1), but it is more common to group eight bits together as a byte. Bytes form the basis for measuring storage capacity, as in a kilobyte 1024 bytes or 210; a megabyte 220 bytes (just over 1 million); a gigabyte 230 bytes; and a terabyte 240 bytes. Megabyte and kilobyte are often abbreviated to mb and kb or even M or K. Data in a computer can be thought of as being of different types. There is numeric data, textual data, graphical data (pictures), video and sound data as well as programs (program instructions). Each form of data has its own way of using the storage capability (RAM or secondary storage). Just to look at a pattern of 1s and 0s it is not possible to tell what type of data is being stored, but once the type is known, then the pattern can more easily be decoded. For example the binary pattern 01001011 represents the letter K in the ASCII code for representing text, as well as the decimal number 75 if interpreted as a binary number. It can also represent the machine code
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Computer-based information systems

instruction add. Text is stored in a computer according to standard systems of encoding, usually some version of the ASCII code. Each character is stored in one byte. Thus a name and address of 80 characters will use 80 bytes of storage. All the printing characters that you can generate from your keyboard have an equivalent representation in the ASCII code; in addition there are some non-printing codes, such as end-of-line, backspace, line feed, etc. Each design of processor will have its own machine code (its own instruction set) and specify the particular representations for those instructions in binary patterns. A typical instruction may take one, two or three bytes of storage, remembering that instructions need to say what to do and to which item(s) of data to do it.

Computer software
Scene-setting exercise
Read Chapter 7 of Laudon and Laudon with this question in mind. How can an IS manager keep up with the endless demand for more software to support new information systems?

Now that we have briey considered computer hardware, we need to consider its counterpart namely, software. Computers require programs in order to run; the computer hardware described above can do nothing useful unless it has some instructions to follow: namely, some software. It is useful to distinguish some general classes of software that would be found in a general-purpose computer. It is usual to differentiate between system software, which enables the machine to operate, and application software, which performs some specic task for those using the computer.
7

See Alter, Chapter 8.

Systems software Operating systems7 The operating system is the principal item of systems software. It is described in some detail here, because studying the operating system is a useful way to understand the nature and functions of computer hardware. The operating system manages the hardware resources of the computer and organises the running of programs. It also provides the user with the means of controlling the computer. A user of a computer communicates with the operating system in order to get the computer to undertake some task (e.g. to run a program or print a le). In most of todays operating systems this user interface is based on the WIMP concept (window, mouse, icon, pull-down menu) which combines these features for more effective communication with the user. The Apple Macintosh and Microsoft Windows are examples of operating systems providing a common, consistent and sophisticated graphical user interface (GUI) for application programs to use. All computers require an operating system of some description. One way we can see the main task of an operating system is to allow the initiation and the running of other programs. When a person wishes to run a program, for example a spreadsheet, they tell the operating system the name of the program (or click on an icon) and ask that it be run. In order to do this the operating system has to do the following: Manage memory: The operating system allocates memory to programs that are to be run and while they run. The spreadsheet has to be allocated some main memory in which to locate itself and to locate the data it manipulates. As more data is typed into the spreadsheet more memory may be needed. Manage input and output: The operating system will manage input and output devices to enable programs to obtain input (e.g. from a keyboard) and to direct outputs (e.g. to a screen or printer). The spreadsheet will need input from the

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keyboard. It will ask the operating system for some keyboard input, and wait. When the user types at the keyboard it is the operating system that directly reads the key strokes, and passes them on to the spreadsheet program. The operating system may detect some special keystrokes that it chooses to interpret and act upon, rather than pass on to the spreadsheet. For example, the CAPS LOCK key tells the operating system to pass all characters to the spreadsheet as capital letters. Manage secondary storage: This is done through a le system. The operating system will allocate space on a disk to contain a le, and maintain a directory of le names and locations, so that a le can be subsequently located and read. When the operating system is told to run the spreadsheet, it is in effect told to nd a le of program code, and to load it into memory. Similarly, if in using the spreadsheet we decide to store the work that has been done, this will result in a request to the operating system to nd some space on the disk, to give it a designated le name and to write the contents of our spreadsheet on to the disk. Manage the processor: There is one other main hardware resource that the operating system needs to manage, and that is the processor itself. In the simple model of a computer that we are concerned with we assume that there is just one processor, and that it can do just one thing at a time (we should note however that real computers, even microcomputers have in reality a number of processors dedicated to various specic tasks (e.g. controlling main memory, doing arithmetic or manipulating graphics images). The operating system is just another program, so it needs to use the processor in order to achieve all the tasks described above. In the case of using the spreadsheet, the operating system will undertake the task of loading the program into main memory and then passing control to that program. The processor was being used by the operating system, but is now being used by the spreadsheet. When the spreadsheet wishes to achieve an input or output task, such as printing some information, it passes a request to the operating system. Manage the program: The description given above suggests that the operating system manages one other resource, programs. In the example there is just one processor to manage, but two programs (the operating system and the spreadsheet). In a modern microcomputer operating system there may be more programs all wishing to share the processor. In larger computers, minis or mainframes, this is the standard way of operating, and hundreds of separate programs may be simultaneously running. In such a case the operating system has to ensure that all the programs get an appropriate slice of processor time, using it in rotation, or when they have specic needs. In general the operating system should allow itself to pre-empt any other program and use the processor when it needs to and other programs too can request priority access to the processor. This approach is known as pre-emptive multitasking. When many programs are simultaneously running in a computer it of course complicates the other management tasks too. Memory cannot be shared between two programs, input needs to be directed to the right program and output devices such as printers need careful management. As you will gather from the above description, operating systems are complicated items of software. As hardware gets more powerful the operating software needed to make use of it gets more complex, and today an operating system for a microcomputer is a substantial piece of work. Another area into which operating systems have developed is managing a computers connection to a network. In a local area network, for example, this may involve the operating system being able to retrieve and store les on a
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Computer-based information systems

separate le server computer, which is shared by a number of computers connected to the network. Similarly a network operating system may allow shared use of a print server, or a communications server to give access to wide area networks. More generally, operating systems provide the basic connection to the Internet. Language translators Programs, including operating systems and spreadsheets, need to be written before they can be run. When people write programs they use a programming language. In general, the languages that are chosen to write programs in are chosen because they make it easy for people to express what they wish to achieve. Because they are designed to help people express their needs and desires they are not usually appropriate for computers to understand in the sense of executing them directly. There is therefore the need to translate from the language a program is written in (say C++, COBOL or Visual BASIC), to the language that the computer understands (machine code). Language translator programs, compilers or interpreters undertake this task. compiler translates once and for all, and produces a new version of the program, the object code. An interpreter takes each statement of the source program each time the program is run, and translates and executes it. System development tools Writing programs in third-generation programming languages, such as COBOL, ADA, C++ or Java, provides great exibility in what can be done and supports efciency in the delivered product. However it does not support great productivity in the actual writing of programs. It has therefore become increasingly common for all types of computer application to be written using tools that provide more help to the developer and require less detail to be specied. A good simple example of this are the many database packages on the market. They provide an easy route to setting up storage of data, and also provide tools to allow the design of input screens, output reports and the logic of processing information. A database package will provide some of the exibility of a programming language, but also provide high speed and pre-packaged solutions to standard problems. Examples would be the provision of sorting facilities or report generation. A fourth-generation language is a programming system that provides the user with ready-made facilities for undertaking standard activities. The programmer thus does not need to specify in ne detail all the procedures required, but can express programs in high level chunks. Facilities of a fourth generation language will include: general-purpose le handling and database manipulation interface-building tools a library to store standard functions.

For the web, of course, there are also development tools and languages such as HTML, PERL, Java and XML, but most web development is based on tools to allow a developer to specify what they want, but not do much real coding.

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Utilities There are a large number of programs that you would expect to nd on a computer that are there to help you use the computer. Examples would be a web browser to search the World Wide Web (WWW) or an email client program to send and receive emails. Other utilities may allow users to manage their les, list them, copy them, make back-ups of them or delete them. Modern operating systems provide more and more functionality, incorporating what were previously separate utility programs, but there will always be some extra tasks that a user would like and that a separate utility program can offer. More examples: checking a disk for viruses making and managing back-up copies of secondary storage tracing hardware faults.

Computer magazines are full of advertisements for programs that are designed to make using a computer easier. Application packages If utilities are programs that aid the computer user in using the computer, then application packages are programs that actually perform information handling that is useful in the wider world. Application packages can be bought for many standard business tasks. Payroll programs are a good example. Most payrolls in a given country have to perform the same basic set of calculations in order to compute tax and insurance contributions; most organisations will wish to keep the same type of information on their employees. The result is that there is a lively market in such standard applications, and it makes good sense for most organisations to consider buying these programs rather than developing such systems from scratch. User-written programs It may be possible for even a quite large organisation to perform almost all their information handling requirements using purchased application packages, and it is even more likely that a small business could operate in this way. Using purchased application packages is easier if an organisation is prepared to alter their ways of doing things so that they t in with the packages capabilities. However, in most organisations there are some things that need to be done in a special or particular way, and for which packages are not available, or those available are not suitable. At this point organisations have to begin writing their own programs. Of course this is a signicant commitment, and the extensive process of developing bespoke information systems is the main topic in Chapter 6 of this guide. Exercises
1. Describe the main functions of an operating system and a compiler. In each case do it rst from the machines perspective and then from that of a user. 2. Research and prepare a brief report for an IS manager entitled, The use of software packages: the way ahead. 3. Which is most important in a programming language, getting the best out of the hardware, getting the best out of the programmer or doing the best for the programs user?

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Computer-based information systems

Communications technologies and distributed systems


Scene-setting exercise
Read Chapter 9 of Laudon and Laudon with this question in mind. As networks are more and more central to information systems, what new issues are raised for IS managers? See also Alter Chapter 10.

For information on the history of the Internet try www.isoc.org/internet-history/

Modern information systems rely on the technology of communications as much as they do on the traditional technology of computers and data handling. It is common practice for the information systems of organisations to require that components be in many geographical locations distributed systems. This calls for the communications of data across ofces, cities, oceans and continents. For example, an oil company with ofces and facilities on ve continents would expect today to be able to share information and build common systems to help run the business. This would all be based on a complex set of interlocking networks in buildings, on oil rigs, in reneries and on ships at sea. The benets of being able to use such systems might be more efcient operations, more sharing of information and the use of standard procedures. The use of a distributed approach may extend beyond one organisation, and networks can become a part of the way organisations do business with each other. The Internet has provided an even stronger impetus for using communications in information systems.8 Today this communications capability the net is seen by many as the principal new challenge and opportunity for organisations as they build and use information systems. And the challenges continue to arrive, for example, the marriage of mobile phones with computers and the Internet promise many more interesting and challenging applications in the future. Wide area networks and local area networks The basis of most wide area networking has, in the past, been the telephone system. Simple telephone connections can be used to transmit data, with the aid of a modem. Even so, telephone networks were built to transmit voices in analogue form, not computer data in digital form, and they are not really suitable for high volumes and high-speed data transmission. The result has been the establishment of various special-purpose data communications networks able to provide better performance characteristics, including what we know as the Internet. But even so, most home users and many business users still access the Internet over a phone line and at modest speeds. Projects for the modernisation of the telephone network to allow for efcient trafc of digital signals do allow computer users to share the same basic transmission facilities and achieve better levels of performance. In some countries and cities the cable television network is also being used to expand network coverage and increase speeds for domestic users. The general term to describe the modern digital network that supports voice communications as well as data communications is the integrated services digital network, or ISDN. Many countries have a programme for the establishment of ISDN as a means of communication, at least for business users. Nevertheless, the wholesale upgrading of the telephone system, including the use of optical bre, is a long-term project for many countries, and meanwhile business users may have little choice but to resort to special (and private) data networks based on leased lines. Not all networks are for wide area use or rely on telephone infrastructures. Local area networks (LANs) are used to link computers within a restricted geographical range. Typically a LAN will connect computers in one building or one city block. They use special cabling, often based on bre optics, and can transfer data at speeds

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Chapter 3: Information and communications technology

One hundred megabits per second may be a conservative gure. Whatever we write here is bound to be exceeded before this subject guide is revised again.

in excess of 100 Megabits per second. Microcomputers and workstations are usually linked by LANs and in this way can share resources. For example, a laser printer may be shared or a database. If a dedicated computer is attached to a local area network to provide such services, it is called a server. Thus a college computer system may have 200 PCs connected to one print server and four le servers. The le servers would then allow access to data and programs for a class of students. For information systems managers the rise in signicance of networks has posed some new and challenging issues what Laudon and Laudon discuss under the heading of Enterprise Networking. Networks are not cheap, and they pose particular security and reliability problems. They also are potentially powerful agents for change in how organisations operate and are managed. Exercises
1. A company has a need for a network to link people in ofces in London and New York. Evaluate the three following options to provide this under the headings of cost, speed, security, reliability and ease of use: dial-up telephone connection using a modem using the Internet leasing a private and permanent network connection from a telecommunications company to hook up local area networks in both locations.

2. A report contains 40 pages of 240 words each. How long would it take to transmit this letter over a computer network if the transmission speed was: a. 50K bits per second (a modem connected to a standard telephone line) b. 128K bits per second (a common standard for individual ISDN connections) c. 100 megabits per second (a local area network). Remember that each word is made up of characters (say ve per word on average), and each character in the report is stored as one byte of 8 bits. State any assumptions or limitations of your answer. 3. What options exist in your country for an individual citizen or a small company to link up to the Internet? Is there an ISDN option available, or is there any option via cable television? 4. A page of information on a company intranet should be available to a user eight seconds after being requested. If a typical page is 25K bytes, how fast must the network operate to meet this standard? Answer in bits per second and state any assumptions.

Learning outcomes
By the end of this chapter and after undertaking the appropriate reading, you should be able to: outline the history of the development of computers describe how a modern computer works and its main component parts including storage and input/output devices describe the main types of software found on contemporary systems including the operating system classify various types of telecommunications network and evaluate their characteristics. 41

Computer-based information systems

Notes

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Chapter 4: Data and information around the world

Chapter 4

Data and information around the world


Essential reading
Laudon, Kenneth C. and Jane P. Laudon Management Information Systems: Organization and Technology in the Networked Enterprise. (New Jersey: Prentice Hall, 2000) sixth edition [ISBN 013-015682-5] Chapters 8 and 10.

Further reading
Alter, Steven Information Systems: A Management Perspective. (Reading Mass: Addison-Wesley, 1999) third edition [ISBN 0-201-52108-3] Chapters 4 and 10. Curtis, Graham Business Information Systems: Analysis, Design and Practice. (London: Addison Wesley, 1998) third edition [ISBN 0-201-33136-5] Chapters 5 and 7.

Introduction
In this chapter we consider how data is structured and managed within an information system, and how we can distribute and exploit data in a networked world. As we have seen in the earlier chapters, timely, accurate and appropriate information is the basis for most information systems. This implies a need to capture data at appropriate points in any business process and to store this data. Once a resource of data is developed (in what we might loosely call a database), then we can exploit this in a variety of ways. When we come to consider data in a computer it is useful to make a distinction between viewing the physical details of how data is stored and accessed, and taking a logical view.1 From the perspective of a user or the designer of a business application the logical view is perhaps enough these are the events or objects in the world that I want to store data about; this is how I want to access it. However, it is useful to start our discussion with some consideration of physical storage issues.

See Curtis Section 7.3.

Data and databases


Scene-setting exercise
First read Laudon and Laudon Chapter 8 with the following question in mind. What is it necessary to do if we are to manage data as a resource?

Magnetic disks, and to a far lesser degree magnetic tapes, provide the secondary storage capability for most current computer systems. To think about the way in which data is organised and accessed using such devices, we might think of les. A le is a named unit of data stored within a computer. For example, as I write this subject guide, it is stored in a le on my desktop computer, held as a sequence of characters and control codes. Maintaining this organisation is vital; the characters must be retrieved in the same sequence they were stored; otherwise the document would be lebdanuaer (a random sequence of the letters of the word unreadable)! For data processing applications we tend to think of les slightly differently, as

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Computer-based information systems

structured in terms of records made up of elds. A record relates to an individual entity (a customer, an order, a product), and eld to an individual aspect or attribute of the entity (the age of a customer, the date of an order, the weight of a product). Within an organisational business process, various types of le need to be recognised. Transaction processing applications will often revolve around a master le, which maintains the essential records of the relevant entities. This is then updated by various types of transaction (e.g. orders or payments). Transactions themselves may be stored in transaction les: for example, all the orders received today. For purposes of security and integrity copies should be made of all data stored on a computer. Hence another type of le is a back-up le. Example
The accounts systems of an insurance fund has a master le of customers, a sequence of records, each containing various types of data on individual customers and the policies they hold. Among the elds that occur within each record are: account number date of opening name address telephone number policies held claims.

These records may need to be accessed in any order, simply depending on which customer walks into the ofce and requests a service. The customer account number eld has a special status as the key eld. That is, given a customer account number, the right record can be uniquely identied and retrieved. If the le is stored on tape the only way to nd account 00014356H is to read through the tape until that record is found not a good idea. If the le is stored on disk, however, we can go (more or less) directly to read the record if we know where on the disk it is stored.

Exercise
A 2,400 foot magnetic tape in the old half-inch format common 20 years ago could store 6,250 bytes in each inch. Assuming that only 80% of the tape can be effectively used to store data, how much data can the tape hold? (Note: the effective use is less than 100 per cent because the computer has to leave spaces between blocks of data on the tape. This allows the tape to slow down and pause between reading individual blocks.) How does this compare with modern storage devices such as DVD?

There are different ways to organise a le on a direct access device such that, given a value of the key eld, the right record can be retrieved. The three fundamental methods are:
2

Laudon and Laudon refer to this as using a transform algorithm.

exhaustive search equivalent to using a disk as a tape using some form of index to record the location of records computing the location of a record from the value of the key referred to as algorithmic.2

Perhaps we should say was, not is, since most ordinary data handling applications are today handled by database software, with le organisation details hidden from the application developer or user.

The most common way to organise les is3 to use the second type, the index sequential access method (ISAM). In this case the records are stored on a disk in key number sequence, and an index (or indexes) maintained so that the location of a given

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Chapter 4: Data and information around the world

record can always be established. Since index sequential les are in key sequence it is possible to efciently process the whole le in key sequence if need be. It is equally possible to process individual records in random sequence but less efciently. Maintaining the indexes is an overhead, and les that grow and change rapidly that is, if records are added and deleted a lot may make the method inefcient over time.
4

See Curtis Section 7.5.

Curtis gives a good discussion of the database approach, its advantages and disadvantages.

Databases In a traditional le-based approach4 each application has its own separate les to store relevant data. This may make it easier to develop each individual application, but it may cause longer-term problems. It is probable that the same data is needed for many applications, and storing it many times will be wasteful and lead to inconsistencies. It has therefore become common to approach data storage using a database approach. The principle behind this approach is the storage of data in an integrated and coordinated manner so that many users or application programs can share it. Items of data should be stored once only. This will allow improved control of information, avoid inconsistencies and allow security to be carefully managed. On the negative side, a database approach requires careful design, and may allow any data errors to propagate among every application using the database. Database software can also be slower and less efcient than optimised le-based processing.5 A database approach is achieved by using special software, a database management system (DBMS). This takes care of the details of physical storage of data and provides the user and application programs with a simple interface through which they can request and update existing items of data and create new ones. Such interfaces are provided for programs to use as they run, as well as for individual users who wish to extract some information from a database on an ad hoc basis.6 One result of using a database approach is that the storage of data (the logical view) has to be carefully designed so as to take into account the needs of all the various users and the various requirements they may have.7 This also leads to the need for a new organisational role, that of the database administrator to exercise control over data resources. There are various logical models used to express structures for data in a database, including the object model, network model, and the hierarchical model. For this unit only the relational model is considered in any detail, and a more detailed description of its use in designing a database is given under the heading Data analysis and Data modelling in Chapter 5 of this guide on developing information systems. A logical view of a database tends to see it as a single pool of data that can be accessed by many users as they wish. However in modern information systems, it is common for a database to be physically distributed: that is, split across different computers spread around the world. In this way data can be stored locally for its usual users, but be accessible to others across a network. A distributed database may be based on partitioning of data between sites, or it may be based on duplication of data at different sites. Distributed databases are a current technology, and are being exploited by many organisations in their new information systems. Other innovations in databases include object-oriented and multimedia databases. Perhaps the most signicant new idea is the concept of a data warehouse, a comprehensive site to store all organisational data from the past as well as the present, internally generated as well as externally. (Remember that most transaction processing systems essentially store data on todays situation, and do not hold data on the past for example, stock levels a

Ad hoc enquiries to a database are an essential part of an MIS, and managers need some form of query language to express their enquiries. For example, show me all the customers who have ordered in the last year more than twice and have spent over $1 million? The most common query language in use today is SQL Structured Query Language.
7

Now review the advantages of the database approach given in Laudon and Laudon, section 8.2 and Curtis, section 7.5.

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Computer-based information systems

year ago, orders in May 1996, etc.). With such a comprehensive data pool many new analyses and trends can be explored, and serve to support managers in making sense of the world. Finally, in todays world, databases are being linked to the web. This is not just a technical issue of how to provide easy query access through a web page. It goes far further if organisations make databases openly available to all in the organisation, and assume that people will search for relevant information (browse for, we might say). This is the basis of many intranet projects as discussed below. Exercises
1. A database is to store information on a factorys products. There are 2,000 products and an average of 250 characters of data are to be stored on each one. How much disk space will be required to store the database? Express the answer as megabytes and as kilobytes. State any assumptions or limitations in your answer. 2. What do you understand by the phrase the database approach? What benets should an organisation get from adopting such an approach? What problems do you foresee if a database approach is combined with a distributed approach (for example, a distributed database)? 3. What tasks does a database administrator undertake? Write out a job description for such a person outlining the skills they are expected to have. 4. Which distributed database approach (partitioning or duplication) would you suggest for these distributed database applications: ight despatch information for an airline across many airports a parts catalogue for an engineering company used in many factories accounts information in a bank.

To answer you need to think about how local the use of data is, and how problems of inconsistencies would be handled.

The Internet and electronic commerce


Scene-setting exercise
First read Laudon and Laudon Chapter 10 with the following question in mind. What are the principal positive and negative aspects of the development of e-commerce?

The External Programme, for example, publishes information at www.londonexternal.ac.uk and the London School of Economics at www.lse.ac.uk.

The Internet The Internet was developed through military and academic projects in the 1960s and 1970s. In the 1990s it mushroomed as the great network of networks, spanning the globe and providing services to the largest multinational corporations, medium-sized business, government and public administration, as well as small businesses and the individual. The Internet is used to communicate, as in email or chat programs, to move data and les around as well as to advertise and to publish information to a potential worldwide community.8 Access to the Internet is usually made via an Internet Service Provider (ISP), often a part of a telecommunications or media company. The Internet manages to operate around the world through the adoption of standard rules or protocols for addressing and passing messages. The principal such standard is known as TCP/IP (Transmission Control Protocol/Internet Protocol). The Internet is essentially a huge clientserver network, with the client systems on the desktop, and servers providing web pages, email, etc. From a users point of view the main technologies that they see are the use of an email client, to prepare, send and

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Chapter 4: Data and information around the world

receive messages, and the use of a browser program to navigate through the Worldwide Web. Other technologies may include streaming video to view real-time video clips, or streaming audio for example to listen to Internet radio, and each will have its own client software. Chat rooms are common too, for groups to exchange messages and discussion, as are listservers to distribute information via email to interested people. Finding information usually requires using some kind of search engine to provide a list of relevant sites, based on some key words. If and when a user wishes to trust the Internet with sensitive information, for example to send a credit card number to a company, then a user may need to become aware of the various means of securing information, for example through encryption. Finally, when we come to publish our own information (our home page), we may need to master the simple language used to prepare web pages, HTML (HyperText Markup Language). The existence of the Internet has given rise to new areas of business. These include ISPs and web design companies, but also many other companies, both new and old, now do business over the Internet, so called e-commerce. A well-known example is the American book selling company Amazon.com, which has pioneered selling books over the Internet. Equally, many airlines sell tickets over the net, and many banks offer online banking services. As other examples, recruitment and advertising of jobs, and the music industry, are elds in which the Internet is changing profoundly the way business is done. Section 10.2 of Laudon and Laudon gives a review of the business models applied in these new areas (Table 10.3) and introduces the word disintermediation to express the idea of the Internet offering a more direct link from customer to seller, with fewer intermediaries.9 This, it is proposed, will reduce costs of such business transactions.10 Exercise
Find out how many different types of business offer their products or services in your country over the Internet. Which are most successful? Why do you think that is?

See also Alter, Chapter 6 for a discussion on business models and examples. 10 You should be able to link the ideas to transaction cost economics.

11

The UK governments main presence on the web is www.open.gov.uk.

B2B sector A new area that is exciting much interest is the business to business sector (B2B, in the jargon). This represents the use of the Internet to support business between companies rather than to retail customers (B2C). Large corporations, including airlines, vehicle manufacturers and governments in Asia, America and Europe, have committed to transferring a major percentage of their purchasing to such electronic marketplaces. Electronic commerce is of course not only for the big companies. It also allows small companies to reach out to a worldwide (or extended) market. For example, a specialist bookshop, dealing in (lets say) old books on horse riding, can deal with customers around the world at very low cost. It is also worth noting that businesses are not alone in taking up the Internet. Many governments, charities, professional organisations, political parties and non-governmental organisations (NGOs) also publish their material on the web. In this way it is more accessible and available to a population and to people around the world (provided they have access to Internet connections).11 Intranets For some companies the example of publishing information, using browsers to nd what is needed and generally sharing information through the web, has led them to use the same model (and the same technologies) for their internal networks. These are known as intranets (intra meaning inside). Intranets are then seen as having a major role in supporting knowledge workers and providing the new generation of ofce information systems combined with MIS.

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Computer-based information systems

Extranets A company may also wish to share data and information with partner organisations through an extranet (extra meaning outside). Such a system can link partners together to support a supply chain (for example, to enable just-in-time delivery), or to allow sharing of knowledge and insights about a common project, for example the multiple actors who participate in a construction project, from architect to landscape gardener by way of electricians. In this way, intranets and extranets provide a form of groupware systems that allow a team or group to work together, communicate and share information. Both intranets and extranets may require careful security procedures to be in place to limit read or write access to those who are authorised, with specialised software to protect such a system such as a rewall program. A rewall is the name given to software and hardware that controls access into and out of a particular organisations network. Consequences of the Internet We should recognise that the Internet has also had consequences in breaking down national boundaries and jurisdictions. Put bluntly, information of all kinds can ow into and out of countries with almost no effective control. A business may be registered in Country A, operate from Country B and sell goods to consumers in Country C, and avoid any tax or legal liability in any of the countries. What exactly governments and international organisations can do about this is a current topic of debate. The Internet has also had profound consequences beyond business, and the issues that are discussed are not just limited to issues of how to control (and tax) electronic commerce. For example, many non-governmental organisations (NGOs) concerned with international issues use the Internet to promote their causes and to disseminate information. This can be a powerful resource for such groups and help them to mobilise large numbers of people. As one recent example, the launch of the World Trade Organization has been marked by much protest and concern around the world, largely co-ordinated by use of the Internet. This may be seen in positive terms, if it allows a substantial global debate on key development issues and indeed the President of the World Bank welcomed a recent protest at a meeting in Prague as signifying the centrality of their mission and the importance of their work but not everybody will be so pleased. For some, such a use of the Internet may be seen as illegitimate or destabilising. More generally, the Internet presents governments with a challenge as to the extent to which they seek to control what it contains and what is available to citizens within their own country. Almost all countries seek to impose some regulation, be it of pornography, racial hatred, political campaigners or international news sites. We might also suggest that few countries are very successful in such controls, certainly if they at the same time try to promote Internet access for positive economic purposes.

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Chapter 4: Data and information around the world

Exercises
1. What characteristics would you identify as making a particular business sector successful when starting to use the Worldwide Web for selling a product? 2. Describe the main management challenges for established businesses as ecommerce develops. How do you rank the advantages and disadvantages to newcomers as against established companies in new electronic marketplaces? 3. Identify as many means as you can by which an intranet/extranet can support a geographically distributed team of people to undertake a project. Think about this in the context of developing a new information system. For example a development team in San Francisco is working with the Asia sales department in Hong Kong to build a new system to run on a computer centre in Ireland. The main software supplier, a separate company, is in Germany, and various consultants are involved from the USA, Singapore and Australia. Most of the people involved never meet, and some are asleep when others are at work. 4. Are there any controls on information accessed through the web in your country. What is their justication. Are they effective?

Learning outcomes
By the end of this chapter and having undertaken the relevant readings and exercises, you should be able to: compare traditional le-based processing with the database approach, identifying strengths and weaknesses of each evaluate how the database approach contributes to organisational performance describe the Internet, and intranet and extranet in terms of applications, business models and basic technologies assess the impact of e-commerce on businesses and the wider impact of the internet on civil society.

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Computer-based information systems

Notes

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