BIS Chapter 3-5

UNIT THREE - Application of Business Information System in
Organizations
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Levels of management decision making still exist, but their size,

shape, and participants continue to change as today’s fluid
organizational structures evolve
Thus, the levels of managerial decision making that must be
supported by information technology in a successful organization are:
A. Strategic Management
Typically, top executives develop overall organizational goals,
strategies, policies, and objectives as part of a strategic planning
process.
They also monitor the strategic performance of the organization and
its overall direction in the political, economic, and competitive
business environment
Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021
2
The top management makes strategic planning decisions that

are too unstructured and that have wider scope and covers
longer time horizon.
 BIS provides information to reduce the uncertainty of top
management
Strategic planning is the process of deciding on objectives
for the organization, on changes in these objectives, on the
resources to attain these objectives, and on the policies that
are to govern the acquisition, use and disposition of these
resources.

B. Tactical Management
self-directed teams as well as business unit managers

develop short- and medium-range plans, schedules, and
budgets and specify the policies, procedures, and business
objectives for their subunits of the company.
They also allocate resources and monitor the performance of
their organizational subunits, including departments,
divisions, process teams, project teams, and other
Middle level management engages in managerial control
level decisions that are semi-structured, and that have
medium scope and covers medium time horizon.

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 BIS assist middle level management by providing information and in
making structured decisions.
Management control is the process by which managers assure
that resources are obtained and used effectively and efficiently
in the accomplishment of the organization’s objectives.
 It is sometimes called tactics or tactical planning

C. Operational Management.
The members of operating managers develop short-range

plans such as weekly production schedules.
They direct the use of resources and the performance of
tasks according to procedures and within budgets and
schedules they establish for the teams and other workgroups
of the organization.
Lower or supervisory levels management makes too
structured decisions, and that have short-term effect and
covers shorter time horizon.
BIS can make automated structured decisions beyond
provision of information to support decisions.

3.2 Information requirements at different levels
The different levels of managerial activities, which are

operational, middle and top management
The information used at different management levels for
planning, control and decision making are classified into
three tiers:
1. strategic planning,
2. management control and
3. operational control

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I. Information for strategic planning, control and
decision making are based on:
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A. Future uncertainty
Much strategic planning is uncertain
B. External and competitor orientation
Strategic planning and control decisions involve
environmental considerations.
A strategy is pursued in relation to competitors
The important fact, which distinguishes strategic
management information from other management
information, is its external orientation, towards customers
and competitors, suppliers and perhaps other stakeholders
C. Goal congruence (UNIFORMITY)
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Business strategy involves the activities of many different

functions, including marketing, production and human
resource management.
The strategic management information system will require
inputs from many areas of the business.
Goal congruence is achieved when individuals or groups in
an organization take actions which are in their self-interest
and also in the best interest of the organization as a whole.
Goal conflict or dysfunctional decision making is when units
achieve their own objective contradicting with the overall
objective of the organization
II. Information for management control
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Management control is at the level below strategic planning and is concerned

with decisions about the efficient and effective use of resources to achieve
objectives.
The following are features of management control information
(a) Primarily generated internally (but may have a limited external
component)
(b) Embraces the entire organization
(c) Summarized at a relatively low level
(d) Routinely collected and disseminated
(e) Relevant to the short and medium terms
(f) Often quantitative (labor hours, volumes of sales and production)
(g) Collected in a standard manner
(h)Prepared
Commonly expressed in money terms
By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021
III. Information for operational control
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 Operational control is concerned with assuring that specific

tasks are carried out effectively and efficiently.
 Just as 'management control' plans are set within the
guidelines of strategic plans, so too are 'operational control'
plans set within the guidelines of both strategic planning and
management control.
 Operational control decisions are therefore much more
narrowly focused and have a shorter time frame than tactical
or strategic decisions.

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The following are features of operational control information

(a) Operational information is information which is needed for the conduct
of day-to-day implementation of plans.
(b) It will include much 'transaction data' such as data about customer
orders, purchase orders, cash receipts and payments
(c) be consolidated into totals in management reports before it can be used
to prepare management control information.
(d) operational information is likely to go into much more detail than
tactical information, which in turn will be more detailed than strategic
information.
(e) Whereas tactical information for management control is often expressed
in money terms, operational information, although quantitative, is more
often
Preparedexpressed in terms@OSU)
By:_Gemme E.(MBA,Lecturer of units, hours, quantities of material and so on.
05/03/2021
3.3 Information requirements at different functional areas of management
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Business functions of a typical organization might include
but not limited to marketing, production, human resource
management and financial management functions
The functions area’s information system required:
A. Human Resource Management Information Systems
At the operational level of the human resource management
function, the personnel record keeping deals with
maintaining personnel data, background, skill, experience,
pay rate changes, hours worked, pay checks, benefits,
termination notices, etc.

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 The personnel database has employee skills inventory system that helps
human resource managers to locate employees with the skill needed for
specific assignments and projects.
Middle level human resource managers need employee
performance reports from operational managers in addition to the
information they require on the type of skill and profession
available in the labour market, the type of education provided by
universities and colleges.
In strategic planning, HRMIS assists human resource managers in
evaluating alternative strategies for recruiting, salary and benefits,
training and development of staff, etc.
The strategic information required includes analyses of changing
patterns of employment, education and wage rates by area of the
country (or world)
B. Financial Management Information Systems
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In general, financial management information system is a

subsystem of MIS that support management in financial
planning, preparing recurrent budget, cash and securities
management, and capital acquisition and capital budgeting
decisions.
The financial management subsystem gathers data and
information from internal sources and external sources that
are relevant to make financial decisions.
The major internal sources of data for financial decision
making are income statements and the balance sheets.
Production plans from the manufacturing information
system, and sales forecast from marketing information
C. Manufacturing Information System
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Production (manufacturing) function includes product

engineering, production planning, and operation of
production facilities, employment and training of production
personnel, and quality control and inspections.
In manufacturing functions, computers have dual purposes.
As a part of physical system, computers serve to transform
physical inputs into finished products.
As a part of conceptual system, computers are used in
scheduling production, in controlling inventory such as raw
material, work in progress and finished goods inventories, in
reporting production quality and cost, in filling job orders
like CAD (Computer Aided Design) assist 05/03/2021
Prepared By:_Gemme E.(MBA,Lecturer @OSU)
Software in
At operational control level, computers assist in preparing
weekly production schedules, detailed reports comparing
actual performance to the production schedule, and
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highlighting areas where bottlenecks occur in a specific
production process
At managerial (tactical) Control level, computers assist
middle level production managers to prepare summary
reports, to compare overall planned and standard
performance of production to actual performance in terms of
material and labour applied.
At Strategic level, modern computers are so powerful to
assist strategic production managers in providing external
information on current model of productions and
technologies.
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In addition, computers can assist production managers when they
make strategic decisions regarding plant location and facility
layout
C. Marketing information System

The marketing information subsystems produce sales analysis
reports, sales forecasts, customer analysis and other managerial
reports related to products, prices, distributions and market
conditions.
The operational control activity of marketing management
produces the day to day scheduling of sales and promotion efforts,
and periodic reports of sales volumes by region, product,
customer, etc.
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 The marketing tactical management group is responsible

to make comparison of marketing overall performance
against the marketing plan of the organisation and produce
sales analysis reports.
 The Strategic Planning & Control activity is mainly
considering how to establish new markets, and new
marketing strategies.
 Information requirement for this group of marketing
management includes customer analyses, competitor’s
analyses, consumer survey information, income projection,
and demographic projection and technology projections.
3.4 Information, Management, and Decision Making
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Managers often are referred to as decision makers

Many manager decisions are strategic
Good decision making is a vital part of good management
because decisions determine how the organization solves its
problems, allocates resources, and accomplishes its goals.
A choice made from available alternatives is decision while
the process of identifying problems and opportunities and
then resolving them is decision making

1.Introduction to Decision Making
A decision is a choice made from available alternatives.
Decision making is the process21of identifying problems and
opportunities and then resolving them.
There are Six Steps in the Managerial Decision-Making

 Types of Decision Rules
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• Maximin decision rule

The maximin decision rule is that a decision maker should
select the alternative that offers the least unattractive worst
outcome. This would mean choosing the alternative that
maximizes the minimum profits.
Suppose a businessman is trying to decide which of three
mutually exclusive projects to undertake. Since they are
mutually exclusive, only one of the projects can be selected.
Each of the projects could lead to varying net profit under
three possible scenarios or outcomes

Scenario/ Outcome Project and Profit
Situation
D E F
1 $100,000 $80,000 $60,000

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2 90,000 120,000 85,000
3 (20,000) 10,000 85,000
The maximin decision rule is to select the option that offers

the best minimum profit – the best ‘worst possible result' that
could happen. In this example, the worst possible is a loss of
$20,000 with Project D, a profit of $10,000 with Project E
and a profit of $60,000 with Project F. The best worst
outcome is 60,000 and project F would therefore be
selected (because this is a better 'worst possible' than either
D or E).
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Criticisms of the maximin rule
(a) It is defensive and conservative, being a safety first
principle of avoiding the worst out comes without taking
into account opportunities for maximising profits.
(b) It ignores the probability of each different outcome
taking place

• Maximax decision rule
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The maximax criterion looks at the best possible results.

Maximax means 'maximise the maximum profit'.
The decision with this rule is to choose the option that
could provide the maximum possible profit.
Criticisms of the maximax rule
 It ignores the probabilities of different outcomes.
 It ignores the outcomes that are less than the best possible.
For some decision options, the worst possible may be more
than the organization can afford. It is a decision rule for the
risk-seeker.
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Using the above example, the maximum profit for Project
D is $100,000; for Project E it is$120,000; and for Project
F it is $85,000.
Project E would be chosen if the maximax rule is followed,
because it offers the prospect of the biggest profit.
Criticisms of the maximax rule
 It ignores the probabilities of different outcomes.
It ignores the outcomes that are less than the best possible.
For some decision options, the worst possible may be more
than the organization can afford. It is a decision rule for
the risk-seeker.
Minimax regret rule
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The minimax regret rule aims to minimise the regret from

making the wrong decision.
Regret is the opportunity lost through making the
wrong decision.
The ‘minimax regret’ decision rule is another possible decision
rule for choosing between different decision options.
It is a bit more complicated than the maximin rule or the
maximax rule.
With this decision rule, for each of the possible outcome
situations, we compare the different values of profit (or cost)
for each of the decision options.
For each outcome situation, we measure the amount of the
‘regret’ for each decision option.
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Regret for the decision option = Profit from the best

decision option, given the outcome circumstances or
situation– Profit from the decision option, given the
outcome circumstances or situation
For the decision option with the best outcome, given the
circumstances or situation, the regret = $0.
For the other decision options, the regret always has a
positive value.
 It is the amount by which the profit is worse than if the
best decision option had been taken, in view of the
outcome circumstances.
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The regret is calculated for all the decision options in

each of the possible outcome circumstances, and these
are recorded in a pay-off table.
The decision rule is to select the decision option that has
the lowest value of regret (= the minimam regret).
The minimax regret decision rule is that the decision
option selected should be the one which minimizes the
maximum potential regret for any of the possible
outcomes

Senario/ Outcome Project and Profit
Situation
D E F
1 0*($100,000-100,000) 20,000 (100,000-$80,000) 40,000 (100,000-$60,000)

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2 30,000 (120,000-90,000) **0(120,000-120,000) 35,000(120,000-85,000)
3 105,000 (85,000-(20,000)) 75,000 (85,000-10,000) ***0(85,000-85,000)
* With outcome situation 1, the best possible result is obtained from Project D, so the regret with
Project Dis $0. The result with Option E would be 20,000 worse and the result from Option F
would be 40,000 worse. So 20,000and 40,000 are the amounts of the regret for Options D and F
respectively.
** With outcome situation 2, the best possible result is obtained from Project E, so the regret with
ProjectE is $0. The result with Option D would be 30,000 worse and the result from Option F
would be 35,000 worse. So30,000 and 35,000 are the amounts of the regret for Options D and F
respectively
*** With outcome situation 3, the best possible result is obtained from Project F, so the
regret withProject F is $0. The result with Option D would be 105,000 worse and the
result from Option E would be 75,000worse. So 105,000 and 75,000 are the amounts of
the regret for Options D and E respectively.
As a result under each project the Maximum regret will be 105,000, 75,000 and 40,000
The lowest of maximum regrets is 40,000 with project Option F so Option F would be
selected,
Preparedif the minimaxregret
By:_Gemme rule is used as the basis for making the decision.
E.(MBA,Lecturer @OSU) 05/03/2021
 Levels of Decision Making
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Management decisions typically fall into one of two categories:

programmed and non programmed
Programmed decisions involve situations that have occurred often
enough to enable decision rules to be developed and applied in the
future.
Programmed decisions are made in response to recurring
organizational problems.
The decision to reorder paper and other office supplies when
inventories drop to a certain level is a programmed decision.
Other programmed decisions concern the types of skills required to
fill certain jobs, the reorder point for manufacturing inventory,
exception reporting for expenditures ten percent or more over
budget, and selection of freight routes for product deliveries.
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Non programmed decisions are made in response to

situations that are unique, are poorly defined and largely
unstructured, and have important consequences.
 Many non programmed decisions involve strategic
planning because uncertainty is great and decisions are
complex.
Decisions to build anew factory, develop a new product
or service, extra new geographical market, or relocate
headquarters to another city are all non programmed
decisions

UNIT FOUR Strategic Advantage of Information
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4.1 Strategic Role of Information Systems

A major role of information systems applications in business is
 to provide effective support of a company’s strategies for gaining competitive
advantage.
 involves using information technology to develop products, services, and
capabilities that give a company major advantages over the competitive forces it
faces in the global marketplace.
 This role is accomplished through strategic information architecture: the
collection of strategic information systems that supports or shapes the competitive
position and strategies of a business enterprise.
 A strategic information system can be any kind of information system (e.g., TPS,
MIS, and DSS) that uses information technology to help an organization gain a
competitive advantage, reduce a competitive disadvantage, or meet other strategic
enterprise objectives.

The figure below illustrates the various competitive forces a
business might encounter, as well as the competitive
strategies that can be adopted34to counteract such forces

4.1.1 Competitive Forces and Strategies
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The figure above illustrates an important conceptual framework

for understanding forces of competition and the various
competitive strategies employed to balance them.
In Michael Porter’s classic model of competition, any business
must effectively develop and implement strategies to counter to
survive and succeed
(1) the rivalry of competitors within its industry,
(2) the threat of new entrants into an industry and its markets,
(3) the threat posed by substitute products that might capture
market share,
(4) the bargaining power of customers, and
(5) the
Prepared bargaining
By:_Gemme power
E.(MBA,Lecturer @OSU) of suppliers. 05/03/2021
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Businesses can counter the threats of competitive forces by implementing one or
more of the five basic competitive strategies.
Cost Leadership Strategy: involve becoming a low-cost producer of products and
services in the industry or finding ways to help suppliers or customers reduce
their costs or increase the costs of competitors.
Differentiation Strategy: differentiate a firm’s products and services from those
of its competitors or reduce the differentiation advantages of competitors. to
focus its products or services to give it an advantage in particular segments
Innovation Strategy: involves finding new ways of doing business and
developing unique products and services or entering unique markets
Growth Strategies: involve significantly expanding a company’s capacity to
produce goods and services, expanding into global markets, diversifying into
new products and services, or integrating into related products
Alliance Strategies: involve establishing new business linkages and alliances with
customers, suppliers, competitors, consultants,
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The role of Information Systems in implementing the five basic
competitive strategies is summarized below:
Basic Strategies in the Business Use of Information Technology
Lower Costs
•.Use IT to substantially reduce the cost of business processes
• Use IT to lower the costs of customers or suppliers.
Differentiate
• Develop new IT features to differentiate products and services.
• Use IT features to reduce the differentiation advantages of
competitors.
• Use IT features to focus products and services at selected market
niches.

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Innovate
• Create new products and services that include IT components.
• Develop unique new markets or market niches with the help of IT.
• Make radical changes to business processes with IT that dramatically cut costs;
improve quality, efficiency, or customer service; or shorten time to market.
Promote Growth
• Use IT to manage regional and global business expansion.
• Use IT to diversify and integrate into other products
Develop Alliances
• Use IT to create virtual organizations of business partners.
• Develop internet enterprise information systems linked by the Internet and
extranets that support strategic business relationships with customers,
suppliers, subcontractors,
4.2 Information Systems and Business Strategy
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several key strategies include locking in customers or suppliers,

building switching costs, raising barriers to entry, and leveraging that
can be implemented with information technology.
Investments in information technology can allow a business to lock in
customers and suppliers (and lock out competitors) by building
valuable new relationships with them
 using information systems technology in r/ships focused on
significantly improving the quality of service to customers and
suppliers in a firm’s distribution, marketing, sales, and service activities
major emphasis in strategic information systems has been to find
ways to create switching, make customers or suppliers dependent
on the continued use of innovative, mutually beneficial inter-
enterprise information systems
4.2.1 The Value Chain and Strategic IS
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The value chain concept, developed by Michael Porter, views a

firm as a series, chain, or network of basic activities that add
value to its products and services and thus add a margin of
value to both the firm and its customers.
In the value chain conceptual framework, some business
activities are primary processes; others are support processes.
Primary processes are those business activities that are directly
related to the manufacture of products or the delivery of
services to the customer.
Support processes are those business activities that help support
the day-to-day operation of the business and that indirectly
contribute to the products or services of the organization.
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4.3 Using Systems for Competitive Advantage: Management Issues
42
Strategic information systems often change the organization as well as its

products, services, and operating procedures, driving the organization into
new behavioral patterns.
 Successfully using information systems to achieve competitive advantage is
challenging and requires precise coordination of technology, organizations,
and management.
Organizations may view and use information technology in many ways.
For example, companies may choose to use information systems
strategically, or they may be content to use IT to support efficient everyday
operations.
 If a company emphasized strategic business uses of information technology,
its management would view IT as a major competitive differentiator.
They would then devise business strategies that use IT to develop products,
services, and capabilities that give the company major advantages in the
markets in which it competes.

4.3.1 Business Process Re-engineering
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One of the most important implementations of

competitive strategies is business process reengineering
(BPR), often simply called reengineering.
Reengineering is a fundamental rethinking and radical
redesign of business processes to achieve dramatic
improvements in cost, quality, speed, and service.
 BPR combines a strategy of promoting business
innovation with a strategy of making major
improvements to business processes so that a company
can become a much stronger and more successful
competitor in the marketplace.

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Information technology plays a major role in

reengineering most business processes.
The speed, information-processing capabilities, and
connectivity of computers and Internet technologies
can substantially increase the efficiency of business
processes, as well as communications and
collaboration among the people responsible for their
operation and management.

4.3.2 Becoming an Agile Company
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The other important implementation of information systems is in creating an agile
company.
An agile company is a company that able to move quickly and with
suppleness, skill, and control.
To be an agile company, a business must use four basic strategies.
First, the business must ensure that customers perceive the products or services of an
agile company as solutions to their individual problems.
Thus, it can price products on the basis of their value as solutions, rather than their cost
to produce.
Second, an agile company cooperates with customers, suppliers, other companies, and
even with its competitors.
This cooperation allows a business to bring products to market as rapidly and cost-
effectively as possible, no matter where resources are located or who owns them.
Third, an agile company organizes so that it thrives on change and uncertainty.
 It uses flexible organizational structures keyed to the requirements of different and
constantly changing customer opportunities.
Fourth, an agile company leverages the impact of its people and the knowledge they
possess.
By nurturing an entrepreneurial spirit, an agile company provides powerful incentives for
employee responsibility, adoptability, and innovation.
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Information technologies enable a company to

partner with its
 suppliers,
 distributors,
 contract manufacturers, and
 others via collaborative portals and other Web-based
supply chain systems that significantly improve its
agility in exploiting innovative business
opportunities.

4.3.3 Creating a Virtual Company
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In today’s dynamic global business environment,

forming a virtual company can be one of the most
important strategic uses of information technology.
A virtual company (also called a virtual
corporation or virtual organization) is an
organization that uses information
technology to link people, organizations,
assets, and ideas.
Virtual companies typically form virtual workgroups
and alliances with business partners that are
interlinked by the Internet, intranets, and extranets.
4.3.4 Building a Knowledge-Creating Company
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In an economy where the only certainty is uncertainty,

the one sure source of lasting competitive advantage is
knowledge.
When markets shift, technologies proliferate, competitors
multiply, and products become obsolete almost overnight,
successful companies are those that consistently :-
 create new knowledge,
 disseminate it widely throughout the organization, and
 quickly embody it in new technologies and products.
These activities define the “knowledge-creating”
company, whose sole business is continuous innovation.
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Knowledge-creating companies exploit two kinds of

knowledge.
One is explicit knowledge, which is the data,
documents, and things written down or stored on
computers.
The other kind is tacit knowledge, or the “how-to” of
knowledge, which resides in workers
This tacit knowledge is not recorded or codified
anywhere because it has evolved in the employee’s
mind through years of experience.

UNIT FIVE - Management of Information Systems
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5.1 Developing Business Information System

Building a new information system is one kind of planned
organizational change
The introduction of a new information system involves much
more than new hardware and software.
It also includes changes in jobs, skills, management, and
organization.
When we design a new information system, we are redesigning
the organization.
Information technology can promote various degrees of
organizational change, ranging from incremental to far-reaching.
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There are four kinds of structural organizational change that are
enabled by information technology:
(1) automation,
(2) Rationalization,
(3) Business process redesign, and
(4) Paradigm shifts.
Each carries different risks and rewards.
The most common form of IT-enabled organizational change is
automation
The first applications of information technology involved
assisting employees with performing their tasks more efficiently
and effectively.
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The most common forms of organizational change are automation and

rationalization.
These relatively slow-moving and slow-changing strategies present modest
returns but little risk.
Faster and more comprehensive change are redesign and paradigm shifts,
which carries high rewards but offers substantial chances of failure.
A deeper form of organizational change one that follows quickly from early
automation is rationalization of procedures.
Automation frequently reveals new bottlenecks in production and makes the
existing arrangement of procedures and structures painfully cumbersome.
Rationalization of procedures is the streamlining of standard operating
procedures
Rationalization of procedures is often found in programs for making a series
of continuous
Prepared quality improvements
By:_Gemme E.(MBA,Lecturer @OSU) in products, services, and operations
05/03/2021
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A more powerful type of organizational change is business process

redesign, in which business processes are analyzed, simplified, and
redesigned.
Business process redesign reorganizes workflows, combining steps to
cut waste and eliminate repetitive, paper-intensive tasks
Rationalizing procedures and redesigning business processes are
limited to specific parts of a business.
New information systems can ultimately affect the design of the entire
organization by transforming how the organization carries out its
business or even the nature of the business is the paradigm shift.
The most radical form of business change is called a paradigm shift.
A paradigm shift involves rethinking the nature of the business and the
nature of the organization
Redesigning the Organization with Information
System
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Is trying to use information technology to improve their
business processes
entail incremental process change, but others require more
far-reaching redesign of business processes
organizations are turning to business process management
Business process management provides a variety of tools
and methodologies to analyze existing processes, design new
processes, and optimize those processes
BPM is never concluded because process improvement
requires continual change.

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Companies practicing business process management go through the
following steps:
1. Identify processes for change:
 Understanding what business processes need improvement
2. Analyze existing processes:
 The process design team identifies redundant steps, paper-
intensive tasks, bottlenecks, and other inefficiencies.
3. Design the new process:
 Once the existing process is mapped and measured in terms of
time and cost, try to improve the process by designing a new one.

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4. Implement the new process

the new process must be translated into a new set of
procedures and work rules
New information systems or enhancements to existing
systems may have to be implemented to support the
redesigned process.
5. Continuous measurement:
 Once a process has been implemented and optimized, it
needs to be continually measured.
 Why? Processes may deteriorate over time as employees
fall back on old methods, or they may lose their
effectiveness if the business experiences other changes.
Systems Development and Organizational Change
57
The activities that go into producing an information system

solution to an organizational problem or opportunity are
called systems development.
Systems development is a structured kind of problem solved
with distinct activities.
There are alternative methodologies for modeling and
designing systems.
A. Structured methodologies and
B. object-oriented development are the most prominent

A. Structured Methodologies
58
Structured methodologies have been used to document,

analyze, and designing formation systems since the 1970s.
Structured refers to the fact that the techniques are step by
step, with each step building on the previous one.
Structured methodologies are top-down, progressing from the
highest, most abstract level to the lowest level of detail from
the general to the specific.
Structured development methods are process-oriented,
focusing primarily on modeling the processes, or actions that
capture, store, manipulate, and distribute data as the data flow
through a system
59
These methods separate data from processes

The primary tool for representing a system’s component
processes and the flow of data between them is the data flow
diagram (DFD)
The data flow diagram offers a logical graphic model of
information flow, partitioning a system into modules that
show manageable levels of detail.
It rigorously specifies the processes or transformations that
occur within each module and the interfaces that exist
between them.
60

61
In structured methodology, software design is modeled using

hierarchical structure charts.
The structure chart is a top-down chart, showing each level of
design, its relationship to other levels, and its place in the
overall design structure.
The design first considers the main function of a program or
system, then breaks this function into sub-functions, and
decomposes each sub-function until the lowest level of detail
has been reached.

B. Object-Oriented Development
62
Structured methods are useful for modeling processes, but do not handle the
modeling of data well.
They also treat data and processes as logically separate entities, whereas in
the real world such separation seems unnatural.
Different modeling conventions are used for analysis (the data flow
diagram) and for design (the structure chart).
Object-oriented development addresses these issues. Object-oriented
development uses the object as the basic unit of systems analysis and
design.
An object combines data and the specific processes that operate on those
data.
Data encapsulate in an object can be accessed and modified only by the
operations, or methods, associated with that object
Object-oriented modeling is based on the concepts of class and inheritance.
63
Objects belonging to a certain class, or general categories of similar objects,
have the features of that class.
Classes of objects in turn can inherit all the structure and behaviors of a more
general class and then add variables and behaviors unique to each object
Object-oriented development is more iterative and incremental than
traditional structured development.
 Interactions between the system and its users are analyzed to identify
objects, which include both data and processes.
 The object-oriented design phase describes how the objects will behave and
how they will interact with one other.
Similar objects are grouped together to form a class, and classes are grouped
into hierarchies in which a sub class inherits the attributes and methods from
its super class.

5.2 Managing Resources
64
Information Systems Resource Management is the application of
information technology to support the major functions and
activities of either a private sector business or public sector
institution
The Information Systems resource management focuses on the
fusion of information systems, technology, and business
management for two purposes:
A. the use of information systems to solve business problems and
B. the management of technology, which includes new product
development and enterprise management
The vast majority of information systems are developed for and
used by people in functional areas (e.g., manufacturing, human
resources, accounting, finance and marketing).
5.2.1 Managing Information Resources
65
During the early 1950s, Information Systems

Department (ISD) managed ALL of the only computing
resource, the mainframe. Today, computing resources
are located through the organization and almost all
employees use computers in their work.This system is
known as end user computing.
The major categories of information resources are
hardware, software, databases, networks, procedures,
security facilities and physical buildings

5.2.2 The Role of the IS Department [ISD]
66
The ISD is responsible for corporate-level and shared

resources and for using IT to solve end users’ business
problems.
End users are responsible for their own computing resources
and departmental resources.
ISD and end users work together as partners to manage the
IT resources.
ISD has changed from a purely technical support role to a
more managerial and strategic one.
Director of ISD has changed from a technical manager to a
senior executive called the chief information officer (CIO).
5.2.3 IS Functions
67
The major IS functions include:

Managing systems development and systems project management &
computer operations, including the computer center, Staffing, training and
developing IS skills;
provide technical services and Infrastructure planning, development and
control, Initiating and designing specific strategic IS, Incorporating the
Internet and e-commerce into the business, managing system integration
including the Internet, intranets and extranets, Educating the non-IS
managers about IT, Educating the IS staff about the business,
Supporting end user computing, partnering with the executives, managing
outsourcing, Proactively using business and technical knowledge to
“seed” innovative ideas about IT, creating business alliances with vendors
and IS departments in other organizations and so forth
68
END OF THE COURSE
THANKS FOR YOUR ATTENTION!!!!!

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UNIT THREE - Application of Business Information System in

Levels of management decision making still exist, but their size,

The top management makes strategic planning decisions that

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

self-directed teams as well as business unit managers

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

The members of operating managers develop short-range

The different levels of managerial activities, which are

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

Business strategy involves the activities of many different

Management control is at the level below strategic planning and is concerned

 Operational control is concerned with assuring that specific

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

The following are features of operational control information

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

In general, financial management information system is a

Production (manufacturing) function includes product

C. Marketing information System

 The marketing tactical management group is responsible

Managers often are referred to as decision makers

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

• Maximin decision rule

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

1 $100,000 $80,000 $60,000

3 (20,000) 10,000 85,000

The maximin decision rule is to select the option that offers

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

The maximax criterion looks at the best possible results.

The minimax regret rule aims to minimise the regret from

Regret for the decision option = Profit from the best

The regret is calculated for all the decision options in

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

1 0*($100,000-100,000) 20,000 (100,000-$80,000) 40,000 (100,000-$60,000)

3 105,000 (85,000-(20,000)) 75,000 (85,000-10,000) ***0(85,000-85,000)

Management decisions typically fall into one of two categories:

Non programmed decisions are made in response to

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

4.1 Strategic Role of Information Systems

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

The figure above illustrates an important conceptual framework

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

several key strategies include locking in customers or suppliers,

The value chain concept, developed by Michael Porter, views a

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

Strategic information systems often change the organization as well as its

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

One of the most important implementations of

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

Information technology plays a major role in

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

Information technologies enable a company to

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

In today’s dynamic global business environment,

In an economy where the only certainty is uncertainty,

Knowledge-creating companies exploit two kinds of

Prepared By:_Gemme E.(MBA,Lecturer @OSU) 05/03/2021

5.1 Developing Business Information System

The most common forms of organizational change are automation and