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What is information system?
IS (information system) is the collection of technical and human resources that provide the
storage, computing, distribution, and communication for the information required by all or
some part of an enterprise . A special form of Information System is a management
information system (MIS), which provides information for managing an enterprise.
It is a organied combination of hardware, software, infrastructure and trained personnel
organied to facilitate planning, control, coordination, and decision ma!ing in an
Information technologies:
"he terms information system and information technologies are two different concepts.
Information technology refers to different hardware components necessary for system to
operate. Information systems could use these hardware components to capture and store its
data. So we will concentrate on computer based information system and their use of
following information technologies#
Computer Hardware technologies including microcomputers, midsie servers, and
large mainframe systems and the input, output and storage devices that support them.
Computer Software technologies including operating system software, web
browsers, software productivity suites and software for business applications li!e
customer relationship management and supply chain management.
Data Resource Management technologies emphasies management of the data
resources of computer$using organiations. It reviews on database management
system software for the development, access and maintenance of the database of an
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Telecommunications and Networks technologies including the
telecommunications media, processors and software needed to provide wire$based
and wireless access and support for the internet and private internet based networ!s
such as intranets and e%tranets.
An information system framework for business professionals
&igure illustrates a useful conceptual framewor! that organies the !nowledge presented in
this te%t and outlines areas of !nowledge you need about information systems. It emphasies
that you should concentrate your efforts in the following five areas of IS !nowledge#
Foundation Concepts. &undamental behavioral, technical, business, and managerial
concepts about the components and roles of information systems. '%amples include
basic information system concepts derived from general systems theory or
competitive strategy concepts used to develop business applications of information
technology for competitive advantage
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Information Technologies. Ma(or concepts, developments, and management issues
in information technology)that is, hardware, software, networ!s, data management,
and many Internet$based technologies.
Business Applications. "he ma(or uses of information systems for the operations,
management, and competitive advantage of a business.
Development Processes. *ow business professionals and information specialists
plan, develop, and implement information systems to meet business opportunities.
"here are three fundamental reasons for all business applications of information technology.
"hey are found in the three vital roles that information systems can perform for a business
Support of business processes and operations.
Support of decision ma!ing by employees and managers.
Support of strategies for competitive advantage.
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Trends in information systems:
+ntil the ,--.s, the role of information systems was simple, transaction processing, record$
!eeping, accounting, and other electronic data processing ('/0) applications. "hen another
role was added, as the concept of management information system (MIS) was conceived.
"his new role focused on providing managerial end users with predefined management
reports that would give managers the information they needed for decision ma!ing purposes.
1y the ,-2.s, it was evident that the pre$specified information products produced by such
management information systems were not adequately meeting many of the (/SS) was born.
"he new role for information systems was to provide managerial end users with ad hoc and
interactive support of their decision$ma!ing processes.
In the ,-3.s, several new roles for information systems appeared. &irst, the rapid
development of microcomputer processing power, application software pac!ages, and
telecommunications networ!s give birth to the phenomenon of end user computing. 4ow,
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end users can use their own computing resources to support their (ob requirements instead of
waiting for the indirect support of corporate information services departments.
Second, it became evident that most top corporate e%ecutives did not directly use either
the reports of information reporting systems or the analytical modeling capabilities of
decision support systems, so the concept of e%ecutive information systems ('IS) was
developed. "hese information systems attempt to give top e%ecutives an easy way to get the
critical information they want, when they want it, tailored to the formats they prefer.
"hird, brea!through s occurred in the development and application of artificial
intelligence (AI) techniques to business information systems. '%pert systems can serve as
consultants to users by providing e%pert advice in limited sub(ect areas.
An important new role for information systems appeared in the ,-3.s and continues into
the ,--.s. "his is the concept of a strategic role for information systems, sometimes called
strategic information systems (SIS). In this concept, information technology becomes an
integral component of business processes, products, and services that help a company gain a
competitive advantage in the global mar!etplace.
&inally, the rapid growth of the Internet, intranets, e%tranets, and other interconnected global
networ!s in the ,--.s is dramatically changing the capabilities of information systems in
business as we move into the ne%t century. Such enterprise and global internetwor!ing is
revolutioniing end user, enterprise, and inter organiational computing, communications,
and collaboration that supports the business operations and management of successful global
"he word data is the plural of datum, though data commonly represents both singular and
plural forms. /ata are raw facts or observations, typically about physical phenomena or
business transactions. &or e%ample, a spacecraft launch or the sale of an automobile would
generate a lot of data describing those events. More specifically, data are ob(ective
measurements of the attributes (the characteristics) of entities (such as people, places, things,
and events).
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A spacecraft launch generates vast amounts of data. 'lectronic transmissions of data
(telemetry) form thousands of sensors are converted to numeric and te%t data by computers.
5oice and image data are also captured through video and radio monitoring of the launch by
mission controllers. 6f course, buying a car or an airline tic!et also produces a lot of data.
7ust thin! of the hundreds of facts needed to describe the characteristics of the car you want
and its financing, or the details for even the simplest airline reservation.
0eoples often use the terms data and information interchangeably. *owever, it is better to
view data as raw material resources that are processed into finished information products.
"hen we can define information as data that have been converted into a meaningful and
useful conte%t for specific end users. "hus, data are usually sub(ected to a value$added
process (we call data processing or information processing) where (,) Its form is aggregated,
manipulated, and organied8 (9) its content is analyed and view information as processed
data placed in a conte%t for human user. So you should view information as processed data
placed in a conte%t that gives it value for specific end users.
4ames, quantities, and dollar amounts recorded on sales forms represent data about sales
transactions. *owever, a sales manager may not regard these as information. 6nly after such
facts are properly organied and manipulated can meaningful sales information be furnished,
specifying, for e%ample, the amount of sales by product type, sales territory, or sales persons.
Three basic components of information system:
Input involves capturing and assembling elements that enter the system to be
processed. &or e%ample, raw materials, energy, data, and human efforts must be
secured and organied for processing.
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Processing involves transformation process that converts input into output.
'%amples are a manufacturing process, the human breathing process, or
mathematical calculations.
It involves transferring elements that have been produced by a transformation
process to their ultimate destination. &or e%ample, finished products, human services,
and management information must be transmitted to their human users.
A manufacturing system accepts raw materials as input and produces finished goods as
output. An information system also is a system that accepts resources (data) as input and
processes them into products (information) as output.
A system with feedbac! and control components is sometimes called a cybernetic system,
that is, a self$monitoring, self$regulating system.
: Feedback is data about the performance of a system. &or e%ample, data about sales
performance is feedbac! to a
: Control involves monitoring and evaluating feedbac! to determine whether a system is
moving toward the achievement of its goal. "he control function then ma!es necessary
ad(ustments to a system;s input and processing components to ensure that it produces proper
output. &or e%ample, a sales manager e%ercises control when he or she reassigns
salespersons to new sales territories after evaluating feedbac! about their sales performance.
&eedbac! is frequently included as part of the concept of the control function because it is
such a necessary part of its
A familiar e%ample of a self$monitoring, self$regulating system is the thermostat controlled
heating system found in many homes8 it automatically monitors and regulates itself to
maintain a desired temperature. Another e%ample is the human body, which can be regarded
as cybernetic system that automatically monitors and ad(usts many of its functions, such as
temperature, heartbeat, and breathing.
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A system does not e%ist in a vacuum8 rather, it e%ists and functions in and environment
containing other systems. If a system is one of the components of a larger system, it is a
subsystem, and the larger system in environment. Also, its environment and its system
boundary separate a system from its environment and other systems.
6rganiations such as businesses and government agencies are good e%amples of the
systems in society, which is their environment. Society contains a multitude of such systems,
including individuals and their social, political, and economic institutions. 6rganiations
themselves consist of many subsystems, such as departments, divisions, process teams, and
other wor!groups. 6rganiations are e%amples of open systems because they interface and
interact with other systems in their environment. &inally, organiations are e%amples of
adaptive systems, since they can modify themselves to meet the demands of a changing
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An information system is a system that accepts data resources as input and processes them
into information products as output. An information system depends on the resources of
people (end users and IS specialists), hardware (machines and media), software
(programs and procedures), data (data and knowledge basis), and networks
(communications media and network support) to perform input, processing, output,
storage, and control activities that convert data resources into information products.
"his information system model highlights the relationships among the components and
activities of information systems. It provides a framewor! that emphasies four ma(or
concepts that can be applied to all types of information systems#
0eople, hardware, software, data, and networ!s are the five basic resources of
information systems.
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A people resource include end users and IS specialists, hardware resources consist of
machines and media, software resources include both programs and procedures, data
resources can include data and !nowledge bases, and networ! resources include
communications media and networ!s.
/ata resources are transformed by information processing activities into a variety of
information products for end users.
Information processing consists of input, processing, output, storage, and control
0eople are required for the operation of all information systems. "his people resource
includes end users and IS specialists.
'nd users (also called users or clients) are people who use an information system or
the information it produces. "hey can be accountants, salespersons, engineers, cler!s,
customers, or managers. Most of us are information system end users.
IS Specialists are people who develop and operate information systems. "hey include
systems analysts, programmers, computer operators, and other managerial technical,
and clerical IS personnel.
1riefly, systems analysts design information systems based on the information
requirements of end users, programmers prepare computer programs based on the
specifications of systems analysts, and computer operators operate large computer
"he concept of *ardware resources includes all physical devices and materials used in
information processing. Specially, it includes not only machines, such as computers and
other equipment, but also all data media, that is, all tangible ob(ects on which data is
recorded, from sheets of paper to magnetic dis!s.
'%ample of hardware in computer$based information systems are#
Computer systems, which consist of central processing units containing
microprocessors, and variety of interconnected peripheral devices.'%amples are
microcomputer systems, midrange computer systems, and large mainframe
computer systems.
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Computer peripherals, which are devices such as a !eyboard or electronic
mouse for input of data and commands, a video screen or printer for output of
information, and magnetic or optical dis!s for storage of data resources.
"he concept of Software <esources includes all sets of information processing
instructions. "his generic concept of software includes not only the sets of
operating instructions called programs, which direct and control computer
hardware, but also the sets of information processing instructions needed by
people called procedures.
It is important to understand that even information systems that don;t use
computers have a software resource component. "his is true even for the
information systems of ancient times, or the manual and machine$supported
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information systems still used in the world today. "hey all require software
resources in the form of information processing instructions and procedures in
order to properly capture, process, and disseminate information to their users.
"he following are the e%amples of software resources#
System Software, such as an operating system program, which con controls and
supports the operations of a computer system.
Application Software, which are programs that direct processing for a particular
use of computers by end users. '%amples are a sales analysis program, a payroll
program, and a word processing program.
Procedures, which are operating instructions for the people who will use an
information system. '%amples are instructions for filling out a paper form or
using a software pac!age.
/ata is more than the raw material of information systems. "he concept of data resources
has been broadened by managers and information systems professionals. "hey realie that
data constitutes a valuable organiation resource. "hus, you should view data as data
resources that must be managed effectively to benefit all end users in an organiation. /ata
can ta!e many forms, including traditional alphanumeric data, composed of numbers and
alphabetical and other characters that describe business transactions and other events and
"e%t data, consisting of sentences and paragraphs used in written communications8 image
data, such as graphic shapes and figures8 and audio data, the human voice and other sounds,
are also important forms of data.
"he data resources of information systems are typically organied into#
/atabase that hold processed and organied data.
=nowledge bases that hold !nowledge in variety of forms such as facts, rules, and
case e%amples about successful business practices.
&or e%ample, data about sales transactions may be accumulated and stored in a sales
database for subsequent processing that yields daily, wee!ly, and monthly sales analysis
reports for management. =nowledge bases are used by !nowledge management systems and
e%pert systems to share !nowledge and give e%pert advice on specific sub(ects.
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"he word data is the plural of datum, though data commonly represents both singular and
plural forms. /ata are raw facts or observations, typically about physical phenomena or
business transactions. &or e%ample, a spacecraft launch or the sale of an automobile would
generate a lot of data describing those events. More specifically, data are ob(ective
measurements of the attributes (the characteristics) of entities (such as people, places, things,
and events).
A spacecraft launch generates vast amounts of data. 'lectronic transmissions of data
(telemetry) form thousands of sensors are converted to numeric and te%t data by computers.
5oice and image data are also captured through video and radio monitoring of the launch by
mission controllers. 6f course, buying a car or an airline tic!et also produces a lot of data.
7ust thin! of the hundreds of facts needed to describe the characteristics of the car you want
and its financing, or the details for even the simplest airline reservation.
0eoples often use the terms data and information interchangeably. *owever, it is better to
view data as raw material resources that are processed into finished information products.
"hen we can define information as data that have been converted into a meaningful and
useful conte%t for specific end users. "hus, data are usually sub(ected to a value$added
process (we call data processing or information processing) where (,) Its form is aggregated,
manipulated, and organied8 (9) its content is analyed and view information as processed
data placed in a conte%t for human user. So you should view information as processed data
placed in a conte%t that gives it value for specific end users.
4ames, quantities, and dollar amounts recorded on sales forms represent data about sales
transactions. *owever, a sales manager may not regard these as information. 6nly after such
facts are properly organied and manipulated can meaningful sales information be furnished,
specifying, for e%ample, the amount of sales by product type, sales territory, or sales persons.
"elecommunications networ!s li!e the Internet, intranets, and e%tranets have become
essential to the successful operations of all types of organiations and their computer$based
information systems. "elecommunications networ!s consist of computers, communications
processors, and other devices interconnected by communications media and controlled by
communications software. "he concept of 4etwor! resources emphasies that
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communications networ!s are a fundamental resource component of all information systems.
4etwor! resources include#
Communication media, '%amples include twisted pair wire, coa%ial cable, fiber$
optic cable, microwave systems, and communication satellite systems.
Network Support, "his generic category includes all of the people, hardware,
software, and data resources that directly support the operation and use of a
communications networ!. '%amples include communications control software such
as networ! operating systems and Internet pac!ages.
>ou should be able to recognie input, processing, output, storage and control activities
ta!ing place in any information system you are studying.
/ata about business transactions and other events must be captured and prepared for
processing by the input activity. Input typically ta!es the form of data entry activities such as
recording and editing. 'nd users typically record data about transactions on some type of
physical medium such as paper form, or enter it directly into a computer system. "his
usually includes a variety of editing activities to ensure that they have recorded data
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correctly. 6nce entered, data may be transferred onto a machine$readable medium such as a
magnetic dis! until needed for processing.
&or e%ample, data about sales transactions can be recorded on source documents such as
paper sales order forms. (A source document is the original formal record of a transaction).
Alternately, salespersons can capture sales data using computer !eyboards or optical
scanning devices8 they are visually prompted to enter data correctly by video displays. "his
provides them with a more convenient and efficient user interface, that is, methods of end
user input and output with a computer system. Methods such as optical scanning and
displays of menus, prompts, and fill$in$the$blan!s formats ma!e it easier for end users to
enter data correctly into an information system.
/ata is typically sub(ected to processing activities such as calculating, comparing, sorting,
classifying, and summariing. "hese activities organie, analye and manipulate data, thus
converting them into information for end users. "he quality of any data stored in an
information system must also be maintained by a continual process of correcting and
updating activities.
&or e%ample, data received about a purchase can be (,) Added to a running total of sales
results, (9) compared to a standard to determine eligibility for a sales discount, (?) sorted in
numerical order based on product identification numbers, (@) classified into product
categories (such as food and nonfood items), (A) summaried to provide a sales manager
with information about various product categories, and finally, (B) used to update sales
Information in various forms is transmitted to end$users and made available to them in the
output activity. "he goal of information systems is the production of appropriate information
products for end users. Common information products messages, reports, forms, and graphic
images, which may be provided by video displays, audio responses, paper products, and
multimedia. &or e%ample, a sales manager may view a video display to chec! on the
performance of a salesperson, accept a computer$produced voice message by telephone, and
receive a printout of monthly sales results.
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Storage is a basic system component of information systems. Storage is the information
system activity in which data and information are retained in an organied manner for later
use. &or e%ample, (ust as written te%t material is organied into words, sentences,
paragraphs, and documents8 stored data is commonly organied into fields, records, files,
and database. "his facilitates its later use in processing or its retrieval as output when needed
by users of a system.
An important information system activity is the control of its performance. An information
system should produce feedbac! about its input, processing, output, and the system is
meeting established performance standards. "hen appropriate system activities must be
ad(usted so that proper information products are produced for end users.
&or e%ample, a manager may discover that subtotals of sales amounts in a sales report do not
add up to total sales. "his might mean that data entry or processing procedures need to be
corrected. "hen changes would have to be made to ensure that all sales transactions would
be properly captured and processed by a sales information system.
"here are many !inds of information systems in the real world. All of them use hardware,
software, networ!, and people resources to transform data resources into information
products. Some are simple manual information systems, where people use simple tools such
as pencils and paper, or even machines such as calculators and typewriters. 6thers are
computer based information systems that rely on a variety of networ!ed computer systems to
accomplish their information processing activities. As business end user, you should be able
to recognie the fundamental components of information systems you encounter in the real
world. "his means that you should be able to identify#
i. "he people, hardware, software, data, and networ! resources they use.
ii. "he type of information products they produce.
iii. "he way they perform input, processing, output, storage and control activities.
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iv. *ow they support the business operations, managerial decision$ma!ing, or
competitive advantage of a business.
"his !ind of understanding will help you be a better user, developer, and manager of
information system.
A system can be defined as the orderly arrangement of set of interrelated and interdependent
elements that operate collectively to accomplish common ob(ective or goal.
"he systems approach to problem solving used a systems orientation to define problems and
opportunities and develop solutions. Studying a problem and formulating a solution involve
the following interrelated activities#
,. <ecognie and define a problem or opportunity using systems thin!ing.
9. /evelop and evaluate alternative system solutions.
?. Select the system solution that best meets your requirements.
@. /esign the selected system solution.
A. Implement and evaluate the success of the designed system.
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1) Defining problems and opportunities
0roblems and opportunities are identified in the first step of the systems approach. A
problem can be defined as a basic condition that is causing undesirable results. An
opportunity is a basic condition that presents the potential for desirable results. Symptoms
must be separated from problems. Symptoms are merely signals of an underlying cause or
Symptom# Sales of a company;s products are declining. 0roblem# Sales persons are losing
orders because they cannot get current information on product prices and availability.
6pportunity# De could increase sales significantly if sales persons could receive instant
responses to requests for price quotations and product availability.
2) Systems thinking
Systems thin!ing is to try to find systems, subsystems, and components of systems in any
situation your are studying. "his viewpoint ensures that important factors and their
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interrelationships are considered. "his is also !nown as using a systems conte%t, or having a
systemic view of a situation. I e%ample, the business organiation or business process in
which a problem or opportunity arises could be viewed as a system of input, processing,
output, feedbac!, and control components. "hen to understand a problem and save it, you
would determine if these basic system functions are being properly performed.
"he sales function of a business can be viewed as a system. >ou could then as!# Is poor sales
performance (output) caused by inadequate selling effort (input), out$of$date sales
procedures (processing), incorrect sales information (feedbac!), or inadequate sales
management (control)E &igure illustrates this concept.
3) Developing alternate solutions
"here are usually several different ways to solve any problem or pursue any opportunity.
7umping immediately from problem definition to a single solution is not a good idea. It
limits your options and robs you of the chance to consider the advantages and disadvantages
of several alternatives. >ou also lose the chance to combine the best points of several
alternative solutions.
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Dhere do alternative solutions come fromF e%perience is good source. "he solutions that
have wor!ed, or at least been considered in the past, should be considered again. Another
good source of solutions is the advice of others, including the recommendations of
consultants and the suggestions of e%pert systems. >ou should also use your intuition and
ingenuity to come up with a number of creative solutions. "hese could include what you
thin! is an ideal solution. "he, more realistic alternatives that recognie the limited financial,
personnel, and other resources of most organiations could be developed. Also, decision
support software pac!ages can be used to develop and manipulate financial, mar!eting, and
other business operations. "his simulation process can help you generate a variety of
alternative solutions. &inally, don;t forget that Gdoing nothingH about a problem or
opportunity is a legitimate solution, with its own advantages and disadvantages.
4) Evaluating alternate solutions
6nce alternative solutions have been developed, they must be evaluated so that the best
solution can be identified. "he goal of evaluation is to determine how well each alternative
solution meets your business and personal requirements. "hese requirements are !ey
characteristics and capabilities that you feed are necessary for your personal or business
If you were the sales manager of a company, you might develop very specific requirements
for solving the sales$related information problems of your salespeople. >ou would probably
insist that any computer$based solution for your sales force be very reliable and easy to use.
>ou might also require that any proposed solution have low start$up costs, or have minimal
operating costs compared to present sales processing methods.
"hen you would develop evaluation criteria and determine how well each alternative
solution meets these criteria. "he criteria you develop will reflect how you previously
defined business and personal requirements. &or e%ample, you will probably develop criteria
for such factors as start$up costs, operating costs, ease of use, and reliability.
Criteria may be ran!ed or weighted, based on their importance in meeting your
5) Selecting the best solution
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6nce all alternative solutions have been evaluated, you can being the process of selecting the
best solution. Alternative solutions can be compared to each other because they have been
evaluated using the same criteria.
Alternatives with a low accuracy evaluation (an accuracy score less than ,.), or a low
overall evaluation (an overall score less than 2.) should be re(ected.
"herefore, alternative 1 for sales data entry is re(ected, and alternative A, the use of laptop
computers by sales reps, is selected.
6) Designing and implementing solution
6nce a solution has been selected, it must be designed and implemented. >ou may have to
depend on other business end users technical staff to help you develop design specifications
and an implementation plan. "ypically, design specifications might describe the detailed
characteristics and capabilities of the people, hardware, software, and data resources and
information system activities needed by a new system. An implementation plan specifies the
resources, activities, and timing needed for proper implementation. &or e%ample, the
following items might be included in the design specifications and implementation plan for a
computer$based sales support system#
"ypes and sources of computer hardware, and software to be acquired for the sales
6perating procedures for the new sales support system.
"raining of sales reps and other personnel.
Conversion procedures and timetable for final implementation.
7) Post implementation review
"he final step of the systems approach recognies that an implemented solution can fail to
solve the problem for which it was developed. "he real world has a way of confounding
even the well$designed solutions. "herefore, the results of implementing a solution should be
monitored and evaluated. "his is called a post$implemented. "he focus of this step is to
determine if the implemented solution has indeed helped the firm and selected subsystems
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meet their system ob(ectives. If not, the systems approach assumes you will cycle bac! to a
previous step and ma!e another attempt to find a wor!able solution.
Step 1: Recognition of Need - What is the Problem?
6ne must !now what the problem is before it can be solved. "he basis for a candidate
system is recognition of a need for improving an information system or a procedure. &or
e%ample, a supervisor may want to investigate the system flow in purchasing. 6r a ban!
president has been getting complaints about the long lines in the drive I in. "his need leads
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to a preliminary survey or an initial investigation to determine whether an alternative system
can solve the problem. It entails loo!ing into the duplication of effort bottlenec!s, inefficient
e%isting procedures, or whether parts of the e%isting system would be candidates for
computeriation. If the problem is serious enough, management may want to have an analyst
loo! at it, such an assignment implies a commitment, especially if the analyst hired from the
outside. In larger environments, where formal procedures are the norm, the analyst;s first
tas! is to prepare a statement specifying the scope and ob(ective of the problem. *eFshe then
reviews it with the user for accuracy at this stage, only a rough Gball parleH estimate of the
development cost of the pro(ect may be reached. *owever, an accurate cost of the ne%t phase
I the feasibility study I can be produced.
Step 2: Feasibility Study
/epending on the results of the initial investigation, the survey is e%panded to a more
detailed feasibility study. As we shall learn, a feasibility study is a test of a system proposal
according to its wor!ability impact on the organiation, ability to meet user needs, and
effective use of resources. It focuses on there ma(or questions#
Dhat are the user;s demonstrable needs and how does a candidate system meet
Dhat resources are available for given candidate systemsE Is the problem worth
Dhat are the li!ely impact of the candidate system on the organiationE *ow will it
fit within the organiation;s master MIS planE
'ach of these questions must be answered carefully. "hey revolve around investigation and
evaluation of the problem, identification and description of candidate systems, specification
of performance and the cost of each system, and final selection of the best system.
"he ob(ective of a feasibility study is not to solve the problem but to acquire a sense of its
scope. /uring the study, the problem definition is crystallied and aspects of the problem to
be included in the system are determined. Consequently, costs and benefits are estimated
with greater accuracy at this stage.
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"he result of the feasibility study is a formal proposal. "his is simply a report I a formal
document detailing the nature and scope of the proposed solution. "he proposal summaries
what is !nown and what is going to be done. It consists of the following.
,. Statement of the 0roblem I a carefully worded statement of the problem that led to
9. Summary of &indings and <ecommendations I a list of the ma(or findings and
recommendations of the study. It is ideal for the user who required quic! access to
the results of the analysis of the system under study. Conclusions are stated, followed
by a list of the recommendations and a (ustification for them.
?. /etails of &indings I An outline of the methods and procedures underta!en by the
e%isting system, followed by coverage of ob(ectives J procedures of the candidate
system. Included are also discussions of output reports, file structures, and costs and
benefits of the candidate system.
@. <ecommendations and Conclusions I special recommendations regarding the
candidate system, including the personal assignments costs, pro(ect schedules, and
target dates.
"hree !ey considerations are involved in the feasibility analysis# economic, technical,
behavioural. Ket;s briefly review each consideration and how it relates to the systems effort.
Economic Feasibility: 'conomic analysis is the most frequently used method for
evaluating the effectiveness of a candidate system. More commonly !nown as
costFbenefit analysis, the procedure is to determine the benefits and savings that are
e%pected from a candidate system and compare them with costs. If benefits outweigh
costs, then the decision is made to design and implement the system. 6therwise,
further (ustification or alterations in the proposed system will have to be made if it is
to have a chance of being approved. "his is an ongoing effort that improves in
accuracy at each phase of the system life cycle.
Technical Feasibility: "echnical feasibility centers around the e%isting computer
system (hardware, software etc.) and to what e%tent it can support the proposed
addition. &or e%ample, if the current computer is operating at 3. per cent capacity I
an arbitrary ceiling I then running another application could overload the system or
24 | P a g e
require additional hardware. "his involves financial considerations to accommodate
technical enhancements. If the budget is a serious constraint, then the pro(ect is
(udged not feasible.
Behavioural Feasibility: 0eople are inherently resistant to change, and computers
have been !nown to facilitate change. An estimate should be made of how strong a
reaction the user staff is li!ely to have towards the development of a computeried
system. It is common !nowledge that computer installations have something to do
with turnover, transfers, retraining, and changes in employee (ob status. "herefore, it
is understandable that the introduction of a candidate system requires special effort to
educate, sell, and train the staff on new ways of conducting business.
After the proposal is viewed by management it becomes a formal agreement that paves the
way for actual design and implementation. "his is a crucial decision point in the life cycle.
Many pro(ects die here, whereas the more promising ones continue through implementation.
Changes in the proposal are made in writing, depending on the comple%ity, sie, and cost of
the pro(ect. It is simply common sense to verify changes before committing the pro(ect to
Step 3: Analysis
It is a detailed study of the various operations performed by the system and their relationship
within and outside of the system. A !ey question is I what must be done to solve the
problemE 6ne aspect of analysis is defining the boundaries of the system and determining
whether or not a candidate system should consider other related systems. /uring analysis,
data are collected on available files, decision points, and transactions handled by the present
system. De shall learn about some logical system models and tools that are used in analysis.
It requires special s!ills and sensitivity to the sub(ects being interviewed. 1ias in data
collection and interpretation can be problem. "raining, e%perience and common sense are
required for collection of the information needed to do the analysis. 6nce analysis is
completed the analyst has a firm understanding of what is to be done. "he ne%t step is to
decide how the problem might be solved. "hus, in the systems design, we move from the
logical to the physical aspects of the life cycle.
Step 4: Design
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"he most creative and challenging phase of the system life cycle is system design. "he term
design describes both a final system and a process by which it is developed. It refers to the
technical specifications (analogous to the engineer;s blueprints) that will be applied in
implementing the candidate system. It also includes the constructions of programs and
programme testing. "he !ey question here is I *ow should the problem be solvedE.
"he first step is to determine how the output is to be produced and in what format. Samples
of the output (and input) are also available. Second, input data and master files (data base)
have to be designed to meet the requirements of the proposed output. "he operational
(processing) phase are handled through programe construction and testing, including a list of
the programmes needed to meet the system;s ob(ectives and complete documentation.
&inally, details related to (ustification of the system and an estimate of the impact of the
candidate system on the user and the organiation are documented and evaluated by
management as a step toward implementation.
"he final report prior to the implementation phase includes procedural flowcharts, record
layouts, report layouts, and a wor!able plan for implementing the candidate system.
Information on personnel, money, hardware, facilities and their estimated cost must also be
available. At this point, pro(ected costs must be close to actual costs of implementation.
In some firms, separate groups of programmer do the programming whereas other firms
employ analyst programmers who do analysis and design as well as code programmes. &or
this discussion, we assume that analysis and programming is carried out by two separate
persons. "here are certain functions, though, that the analyst must perform while programes
are being written operating procedures and documentation must be completed. Security and
auditing procedures must also be developed.
Step 5: Testing
4o system design is ever perfect. Communication problems, programmers negligence or
time constraints create errors that most be eliminated before the system is ready for user
acceptance testing. A system is tested for online response, volume of transactions, stress,
recovery form failure and usability. "hen comes system testing, which verifies that the
whole set of programs hangs together, following system testing is acceptance testing or
running the system with live data by the actual use.
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System testing requires a test plan that consists of several !ey activities and steps for
programs, string, system and user acceptance testing. "he system performance criteria deal
with turnaround time, bac!up, file protection, and the human factor.
Step 6: Implementation
"his phase is less creative than system design. It is primarily concerned with user training,
site preparation, and file conversion. Dhen the candidate system is lin!ed to terminals and
remote sites the telecommunication networ! and tests of the networ! along with the system
are also included under implementation.
/uring the final testing, user acceptance is tested, followed by user training. /epending on
the nature of the system, e%tensive user training may be required, conversion usually ta!es
place at about the same time the user is being trained or later.
In the e%treme, the programmer is falsely viewed as someone who ought to be isolated from
other aspects of system development. 0rogramming is itself design wor!, however. "he
initial parameter of the candidate system should be modified as a result of programming
efforts. 0rogramming provides a Greality testH for the assumptions made by the analyst. It is
therefore a mista!e to e%clude programmers from the initial system design. System testing
chec!s the readiness and accuracy of the system to access, update and retrieve data from new
files. 6nce the programmes become available, test data are read into the computer and
processed against the file(s) provided for testing. If successful, the program(s) is then run
with GliveH data. 6therwise, a diagnostic procedure is used to local and correct errors in the
program. In most programs, a parallel run is conducted where the new system runs
simultaneously with the Lold; systems. "his method, though costly, provides added
assurance against errors in the candidate system and also gives the user$staff an opportunity
to gain e%perience through operation. In some cases, however, parallel processing is not
practical. &or e%ample, it is not plausible to run two parallel online point$to$sale (06S)
systems for a retail chain. In any case, after the candidate system proves itself, the old
system is phased out.
Step 7: Evaluation
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/uring systems testing, the system is used e%perimentally to ensure that the software does
not fail. In other words, we can say that it will run according to its specifications and in the
way users e%pect. Special test data are input for processing, and the results e%amined. A
limited number of users may be allowed to use the system so that analyst can see whether to
use it in unforeseen ways. It is desirable to discover any surprises before the organiation
implements the system and depends on it.
Implementation is the process of having systems personnel chec! out and put new equipment
into use, train users, install the new application and construct any files of data needed to use
it. "his phase is less creative than system design. /epending on the sie of the organisation
that will be involved in using the application and the ris! involved in its use, systems
developers may choose to test the operation in only one area of the &irm with only one or
two persons. Sometimes, they will run both old and new system in parallel way to compare
the results. In still other situations, system developers stop using the old system one day and
start using the new one the ne%t.
'valuation of the system is performed to identify its strengths and wea!nesses. "he actual
evaluation can occur along any one of the following dimensions#
6perational 'valuation# Assessment of the manner in which the system functions,
6rganiational Impact# Identification and measurement of benefits to the
organisation in such areas as financial concerns, operational efficiency and
competitive impact.
+ser Manager Assessment# 'valuation of the attitudes of senior and user manager
within the organisation, as well as end$users.
/evelopment 0erformance# 'valuation of the development process in accordance
with such yardstic!s as overall development time and effort, conformance to budgets
and standards and other pro(ect management criteria.
Step 8: Post - Implementation and Maintenance
Maintenance is necessary to eliminate errors in the wor!ing system during its wor!ing life
and to tune the system to any variations in its wor!ing environment. 6ften small system
28 | P a g e
deficiencies are found as a system is brought into operation and changes are made to remove
them. System planners must always plan for resource availability to carry out these
maintenance functions. "he importance of maintenance is to continue to bring the new
system to standards.
After the installation phase is completed and the user staff is ad(usted to changes created by
the candidate system, evaluation and maintenance being. Ki!e any system there is an ageing
process the requires periodic maintenance of hardware J software. If the new information is
inconsistent with the design specifications, then changes have to be made. *ardware also
requires periodic maintenance to !eep in time with design specification. "he importance of
maintenance is to continue to bring the new system to standards.
<oberts Company is a worldwide leader in financial management and employing A., people
in ?B countries and territories. It is into bro!erage, investment ban!ing, financing, wealth
management, advisory, asset management, insurance, lending, and other related products and
services to private, institutional, and government clients with assets of M,.B trillion. 6ver the
last five years, that I" infrastructure has played a ma(or role in the company;s gains. Ki!e
many financial institutions, <oberts Company has had to modernie its technology
infrastructure in order to remain competitive. In moderniing its technology, <oberts
Company had to ma!e choices regarding its legacy computers and applications. Internet$
based applications that gave customers access to their portfolios and tools to wor! with them
were a !ey to remaining competitive. 1ut these applications did not use mainframe$based
software. <oberts Company had initially tried to avoid the costs by copying the data stored
in its mainframe installation into 6racle, Sybase, or Microsoft SNK Server databases. In
those formats, the data were compatible with server$based applications. *owever, that
technique was not entirely satisfactory. Copying large quantities of data often introduces
errors based on dis! failures and space issues. "he pro(ect team prohibited the new platform
from requiring changes to program code on the mainframe or hindering its operation in any
respect. "he team did not want to alter the mainframe in any way because of its trac! record,
its comple%ity, and the fact that there was li!ely no one on staff who !new the inner
wor!ings of its deep$rooted code.
Case Questions
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,. Dhy did the firm need to update its I" infrastructureE
9. Dhat is the relationship of information technology to <obert Company;s business
Corporate Database
Corporate database is the data related to any enterprise from starting the enterprise to the
wind up off. It contains all the information related to all the activities of any business. It
contains the data about the history of related industry.
All the activities of any firm from the starting to wind up about what the corporate database
is related
1. At the time of initializing: Dhen any business started by entrepreneur then it becomes
very important to get the information related to legal requirements and registration related
formalities. Corporate database collect all the data related to these terms at beginning.
a. Kegal requirement to start a business
b. Mission and 5ision statement
c. Ooal and ob(ectives of the business
d. 0rinciples of the organiation
e. '%pansion and diversification related database
2. At the time of operation: Dhen business comes in operation then all the database is
maintained related to operation. 1usiness is divided into departments for proper control over
activities and database is also maintained according to these departmental activities i.e.
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&inance, Mar!eting, 0roduction, *uman <esource etc. Some information related to these
activities are
a. Accounts of business
b. 'mployee database
c. /epartment;s database
d. Competitor;s database
e. Orowth database
Corporate database helps entrepreneur and managers to ta!e better decisions and for proper
controlling over mar!et related activities.
Data organization
/ata are the principal resources of an organiation. /ata stored in computer systems form a
hierarchy e%tending from a single bit to a database, the ma(or record$!eeping entity of a
firm. 'ach higher rung of this hierarchy is organied from the components below it.
/ata are logically organied into#
,. 1its (characters)
9. &ields
?. <ecords
@. &iles
A. /atabases
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Bit (Character) - a bit is the smallest unit of data representation (value of a bit
may be a . or ,). 'ight bits ma!e a byte which can represent a character or a special
symbol in a character code.
Field - a field consists of a grouping of characters. A data field represents an
attribute (a characteristic or quality) of some entity (ob(ect, person, place, or event).
Record - a record represents a collection of attributes that describe a real$world
entity. A record consists of fields, with each field describing an attribute of the entity.
File - a group of related records. &iles are frequently classified by the application for
which they are primarily used (employee file). A primary key in a file is the field (or
fields) whose value identifies a record among others in a data file.
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Database - is an integrated collection of logically related records or files. A
database consolidates records previously stored in separate files into a common pool
of data records that provides data for many applications. "he data is managed by
systems software called database management systems (/1MS). "he data stored in a
database is independent of the application programs using it and of the types of
secondary storage devices on which it is stored.
File Organization Terms and Concepts
P Entity: Person, place, thing, event about which information is maintained
P Attribute: Description of a particular entity
P Key field: Identifier field used to retrieve, update, sort a record
"here are three principal methods of organiing files, of which only two provide the direct
access necessary in on$line systems.
File Organization
/ata files are organied so as to facilitate access to records and to ensure their efficient
storage. A tradeoff between these two requirements generally e%ists# if rapid access is
required, more storage is required to ma!e it possible.
Access to a record for reading it is the essential operation on data. "here are two types of
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,. Sequential access $ is performed when records are accessed in the order they are stored.
Sequential access is the main access mode only in batch systems, where files are used and
updated at regular intervals.
9. Direct access $ on$line processing requires direct access, whereby a record can be
accessed without accessing the records between it and the beginning of the file. "he primary
!ey serves to identify the needed record.
"here are three methods of file organiation# Q"able B.,R
,. Sequential organiation
9. Inde%ed$sequential organiation
?. /irect organiation
Sequential Organization
In sequential organiation records are physically stored in a specified order according to a
!ey field in each record.
Advantages of sequential access#
,. It is fast and efficient when dealing with large volumes of data that need to be processed
periodically (batch system).
/isadvantages of sequential access#
,. <equires that all new transactions be sorted into the proper sequence for sequential access
9. Kocating, storing, modifying, deleting, or adding records in the file requires rearranging
the file.
?. "his method is too slow to handle applications requiring immediate updating or responses.
Indexed-Sequential Organization
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In the inde%ed$sequential files method, records are physically stored in sequential order on a
magnetic dis! or other direct access storage device based on the !ey field of each record.
'ach file contains an inde% that references one or more !ey fields of each data record to its
storage location address.
Direct Organization
/irect file organiation provides the fastest direct access to records. Dhen using direct
access methods, records do not have to be arranged in any particular sequence on storage
media. Characteristics of the direct access method include#
,. Computers must !eep trac! of the storage location of each record using a variety of direct
organiation methods so that data can be retrieved when needed.
9. 4ew transactionsS data do not have to be sorted.
?. It is a 0rocessing that requires immediate responses or updating is easily performed.
"raditional file based system is basically a file based system, in which we manually or
through computer handle the database such as updating, insertion ,deletion adding new files
to database etc.
&ile processing systems was an early attempt to computerie the manual filing system
that we are all familiar with. A file system is a method for storing and organiing computer
files and the data they contain to ma!e it easy to find and access them. &ile systems may use
a storage device such as a hard dis! or C/$<6M and involve maintaining the physical
location of the files.
In our own home, we probably have some sort of filing system, which contains receipts,
guarantees, invoices, ban! statements, and such li!e. Dhen we need to loo! something up,
we go to the filing system and search through the system starting from the first entry until we
find what we want. Alternatively, we may have an inde%ing system that helps to locate what
we want more quic!ly. &or e%ample we may have divisions in the filing system or separate
folders for different types of item that are in some way logically related.
35 | P a g e
"he manual filing system wor!s well when the number of items to be stored is small. It even
wor!s quite adequately when there are large numbers of items and we have only to store and
retrieve them. *owever, the manual filing system brea!s down when we have to cross$
reference or process the information in the files. &or e%ample, a typical real estate agentSs
office might have a separate file for each property for sale or rent, each potential buyer and
renter, and each member of staff.
Clearly the manual system is inadequate for thisS type of wor!. "he file based system was
developed in response to the needs of industry for more efficient data access. In early
processing systems, an organiationSs information was stored as groups of records in separate
In the traditional approach, we used to store information in flat files which are maintained by
the file system under the operating systemSs control. *ere, flat files are files containing
records having no structured relationship among them. "he file handling which we learn
under CFC TT is the e%ample of file processing system. "he Application programs written in
36 | P a g e
CFC TT li!e programming languages go through the file system to access these flat files as
Characteristics of File Processing System
*ere is the list of some important characteristics of file processing system#
P It is a group of files storing data of an organiation.
P 'ach file is independent from one another.
P 'ach file is called a flat file.
P 'ach file contained and processed information for one specific function, such as accounting
or inventory.
P &iles are designed by using programs written in programming languages such as C616K,
P "he physical implementation and access procedures are written into database application8
therefore, physical changes resulted in intensive rewor! on the part of the programmer.
P As systems became more comple%, file processing systems offered little fle%ibility,
presented many limitations, and were difficult to maintain.
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Limitations of the File Processing System I File-Based Approach
"here are following problems associated with the &ile 1ased Approach#
1. Separated and Isolated Data: "o ma!e a decision, a user might need data from two
separate files. &irst, the files were evaluated by analysts and programmers to determine the
specific data required from each file and the relationships between the data and then
applications could be written in a programming language to process and e%tract the needed
data. Imagine the wor! involved if data from several files was needed.
2. Duplication of data: 6ften the same information is stored in more than one file.
+ncontrolled duplication of data is not required for several reasons, such as#
P /uplication is wasteful. It costs time and money to enter the data more than once
P It ta!es up additional storage space, again with associated costs.
P /uplication can lead to loss of data integrity8 in other words the data is no longer
consistent. &or e%ample, consider the duplication of data between the 0ayroll and 0ersonnel
departments. If a member of staff moves to new house and the change of address is
communicated only to 0ersonnel and not to 0ayroll, the personSs pay slip will be sent to the
wrong address. A more serious problem occurs if an employee is promoted with an
associated increase in salary. Again, the change is notified to 0ersonnel but the change does
not filter through to 0ayroll. 4ow, the employee is receiving the wrong salary. Dhen this
error is detected, it will ta!e time and effort to resolve. 1oth these e%amples, illustrate
inconsistencies that may result from the duplication of data. As there is no automatic way for
0ersonnel to update the data in the 0ayroll files, it is difficult to foresee such inconsistencies
arising. 'ven if 0ayroll is notified of the changes, it is possible that the data will be entered
3. Data Dependence: In file processing systems, files and records were described by
specific physical formats that were coded into the application program by programmers. If
the format of a certain record was changed, the code in each file containing that format must
be updated. &urthermore, instructions for data storage and access were written into the
38 | P a g e
applicationSs code. "herefore, .changes in storage structure or access methods could greatly
affect the processing or results of an application.
In other words, in file based approach application programs are data dependent. It means
that, with the change in the physical representation (how the data is physically represented in
dis!) or access technique (how it is physically accessed) of data, application programs are
also affected and needs modification. In other words application programs are dependent on
the how the data is physically stored and accessed.
If for e%ample, if the physical format of the masterFtransaction file is changed, by ma!ing he
modification in the delimiter of the field or record, it necessitates that the application
programs which depend on it must be modified.
Ket us consider a student file, where information of students is stored in te%t file and each
field is separated by blan! space as shown below#
I <ahat ?A "hapar
4ow, if the delimiter of the field changes from blan! space to semicolon as shown below#
,8 <ahat8 ?A8 "hapar
"hen, the application programs using this file must be modified, because now it will to!en
the field on semicolon8 but earlier it was blan! space.
4. Difficulty in representing data from the user's view: "o create useful applications for
the user, often data from various files must be combined. In file processing it was difficult to
determine relationships between isolated data in order to meet user requirements.
5. Data Inflexibility: 0rogram$data interdependency and data isolation, limited the
fle%ibility of file processing systems in providing users with ad$hoc information requests
6. Incompatible file formats: As the structure of files is embedded in the application
programs, the structures are dependent on the application programming language. &or
e%ample, the structure of a file generated by a C616K program may be different from the
structure of a file generated by a SCS program. "he direct incompatibility of such files ma!es
them difficult to process (ointly.
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7. Data Security. "he security of data is low in file based system because, the data is
maintained in the flat file(s) is easily accessible. &or '%ample# Consider the 1an!ing
System. "he Customer "ransaction file has details about the total available balance of all
customers. A Customer wants information about his account balance. In a file system it is
difficult to give the Customer access to only his data in the: file. "hus enforcing security
constraints for the entire file or for certain data items are difficult.
8. Transactional Problems. "he &ile based system approach does not satisfy transaction
properties li!e Atomicity, Consistency, Isolation and /urability properties commonly !nown
as ACI/ properties.
&or e%ample# Suppose, in a ban!ing system, a transaction that transfers <s. ,... from
account A to account 1 with initial valuesS of A and 1 being <s. A... and <s. ,....
respectively. If a system crash occurred after the withdrawal of <s. ,... from account A,
but before depositing of amount in account 1, it will result an inconsistent state of the
system. It means that the transactions should not e%ecute partially but wholly. "his concept
is !nown as Atomicity of a transaction (either .U or ,..U of transaction). It is difficult to
achieve this property in a file based system.
9. Concurrency problems. Dhen multiple users access the same piece of data at same
interval of time then it is called as concurrency of the system. Dhen two or more users read
the data simultaneously there is ll( problem, but when they li!e to update a file
simultaneously, it may result in a problem.
10. Poor data modeling of real world. "he file based system is not able to represent the
comple% data and interfile relationships, which results poor data modeling properties.
/atabase approach is a computer based storage technology in which related data is shared by
various application programs. It is an improvement of traditionally file$based approach of
storing data or information. It is characteried by a database management system and one or
more databases.
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"he /atabase is a shared collection of logically related data, designed to meet the
information needs of an organiation. A database is a computer based record !eeping system
whose over all purpose is to record and maintains information. "he database is a single, large
repository of data, which can be used simultaneously by many departments and users.
Instead of disconnected files with redundant data, all data items are integrated with a
minimum amount of duplication.
"he database is no longer owned by one department but is a shared corporate resource. "he
database holds not only the organiationSs operational data but also a description of this data.
&or this reason, a database is also defined as a self$describing collection of integrated
records. "he description of the data is !nown as the /ata /ictionary or Meta /ata (the Sdata
about dataS). It is the self$describing nature of a database that provides program$data
41 | P a g e
P Creates and maintains databases
P Eliminates requirement for data definition statements
P Acts as interface between application programs and physical data files
P Separates logical and physical views of data
A database implies separation of physical storage from use of the data by an application
program to achieve programFdata independence. +sing a database system, the user or
programmer or application specialist need not !now the details of how the data are stored
and such details are Vtransparent to the userV. Changes (or updating) can be made to data
without affecting other components of the system. "hese changes include, for e%ample,
change of data format or file structure or relocation from one device to another.
In the /1MS approach, application program written in some programming language li!e
7ava, 5isual 1asic.4et, and /eveloper 9... etc. uses database connectivity to access the
database stored in the dis! with the help of operating systemSs file management system.
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"he file system interface and /1MS interface for the university management system is

Building blocks of a Database
"he following three components form the building bloc!s of a database. "hey store the data
that we want to save in our database.
Columns. Columns are similar to fields, that is, individual items of data that we wish to
store. A StudentS <oll 4umber, 4ame, Address etc. are all e%amples of columns. "hey are
also similar to the columns found in spreadsheets (the A, 1, C etc. along the top).
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Rows. <ows are similar to records as they contain data of multiple columns (li!e the ,, 9, ?
etc. in a spreadsheet). A row can be made up of as many or as few columns as you want.
"his ma!es reading data much more efficient $ you fetch what you want.
Tables. A table is a logical group of columns. &or e%ample, you may have a table that stores
details of customersS names and addresses. Another table would be used to store details of
parts and yet another would be used .for supplierSs names and addresses.
It is the tables that ma!e up the entire database and it is important that we do not duplicate
data at all.

Characteristics of database
"he data in a database should have the following features#
Organized/Related. It should be well organied and related.
Shared. /ata in a database are shared among different users and applications.
Permanent or Persistence. /ata in a database e%ist permanently in the sense the
data can live beyond the scope of the process that created it.
Validity/integrity/Correctness. /ata should be correct with respect to the real world
entity that they represent.
Security. /ata should be protected from unauthoried access.
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Consistency. Dhenever more than one data element in a database represents related
real world values, the values should be consistent with respect to the relationship.
Non-redundancy: 4o two data items in a database should represent the same real
world entity.
Independence. /ata at different levels should be independent of each other so that
the changes in one level should not affect the other levels.
Easily Accessible. It should be available when and where it is needed i.e. it should
be easily accessible.
Recoverable. It should be recoverable in case of damage.
Flexible to change. It should be fle%ible to change.
"o create, manage and manipulate data in databases, a management system !nown as
database management system was developed.
Comparison of Traditional File-Based Approach and Database Approach
At the beginning, you should understand the rationale of replacing the traditional file$based
system with the database system.
File-based System
&ile$based systems were an early attempt to computerie the manual filing system. &ile$
based system is a collection of application programs that perform services for the end$users.
'ach program defines and manages its data.
*owever, five types of problem are occurred in using the file$based approach#
1. Separation and isolation of data
Dhen data is isolated in separate files, it is more difficult for us to access data that should be
available. "he application programmer is required to synchronie the processing of two or
more files to ensure the correct data is e%tracted.
2. Duplication of data
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Dhen employing the decentralied file$based approach, the uncontrolled duplication of data
is occurred. +ncontrolled duplication of data is undesirable because#
i. /uplication is wasteful
ii. /uplication can lead to loss of data integrity
3. Data dependence
@. +sing file$based system, the physical structure and storage of the data files and
records are defined in the application program code. "his characteristic is !nown as
program$data dependence. Ma!ing changes to an e%isting structure are rather
difficult and will lead to a modification of program. Such maintenance activities are
time$consuming and sub(ect to error.
5. Incompatible file formats
"he structures of the file are dependent on the application programming language. *owever
file structure provided in one programming language such as direct file, inde%ed$sequential
file which is available in C616K programming, may be different from the structure
generated by other programming language such as C. "he direct incompatibility ma!es
them difficult to process (ointly.
Fixed queries / proliferation of application programs
&ile$based systems are very dependent upon the application programmer. Any required
queries or reports have to be written by the application programmer. 4ormally, a fi%ed
format query or report can only be entertained and no facility for ad$hoc queries if offered.
Database Approach:
In order to overcome the limitations of the file$based approach, the concept of database and
the /atabase Management System (/MS) was emerged in B.s.
A number of advantages of applying database approach in application system are obtained
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1. Control of data redundancy
"he database approach attempts to eliminate the redundancy by integrating the file.
Although the database approach does not eliminate redundancy entirely, it controls the
amount of redundancy inherent in the database.
2. Data consistency
1y eliminating or controlling redundancy, the database approach reduces the ris! of
inconsistencies occurring. It ensures all copies of the data are !ept consistent.
3. More information from the same amount of data
Dith the integration of the operated data in the database approach, it may be possible to
derive additional information for the same data.
4. Sharing of data
/atabase belongs to the entire organiation and can be shared by all authoried users.
5. Improved data integrity
/atabase integrity provides the validity and consistency of stored data. Integrity is usually
e%pressed in terms of constraints, which are consistency rules that the database is not
permitted to violate.
6. Improved security
/atabase approach provides a protection of the data from the unauthoried users. It may
ta!e the term of user names and passwords to identify user type and their access right in the
operation including retrieval, insertion, updating and deletion.
7. Enforcement of standards
"he integration of the database enforces the necessary standards including data formats,
naming conventions, documentation standards, update procedures and access rules.
8. Economy of scale
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Cost savings can be obtained by combining all organiationSs operational data into one
database with applications to wor! on one source of data.
9. Balance of conflicting requirements
1y having a structural design in the database, the conflicts between users or departments can
be resolved. /ecisions will be based on the base use of resources for the organiation as a
whole rather that for an individual entity.
,.. Improved data accessibility and responsiveness :1y having an integration in the
database approach, data accessing can be crossed departmental boundaries. "his feature
provides more functionality and better services to the users.
11. Increased productivity
"he database approach provides all the low$level file$handling routines. "he provision of
these functions allows the programmer to concentrate more on the specific functionality
required by the users. "he fourth$generation environment provided by the database can
simplify the database application development.
12. Improved maintenance
/atabase approach provides a data independence. As a change of data structure in the
database will be affect the application program, it simplifies database application
13. Increased concurrency
/atabase can manage concurrent data access effectively. It ensures no interference between
users that would not result any loss of information nor loss of integrity.
14. Improved backing and recovery services
Modern database management system provides facilities to minimie the amount of
processing that can be lost following a failure by using the transaction approach.
DBMS Architecture:
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,. External view# "his is a highest level of abstraction as seen by user. "his level of
abstraction describes only the part of entire database. It is based on the conceptual model, is
the end user view of data environment. 'ach e%ternal view described by means of a schema
called an e%ternal schema or subschema.
9. Conceptual level# At this level of database abstraction all the database entities and the
relationships among them are included. 6ne conceptual view represents the entire database.
the conceptual schema defines ths conceptual view.
?. Internal(physical level # "his lowest level of abstraction. it closest to physical storage
device. It describes how data are actually stored on the storage medium. "he internal
schema, which contains the definition of the stored record, the method representing the data
fields, e%presses the internal view and the access aids used.
Data Independence:
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,. "he ability to modify a scheme definition in one level without affecting a scheme
definition in a higher level is called data independence.
9. "here are two !inds#
o Physical data independence
"he ability to modify the physical scheme without causing application
programs to be rewritten
Modifications at this level are usually to improve performance
o Logical data independence
"he ability to modify the conceptual scheme without causing
application programs to be rewritten
+sually done when logical structure of database is altered
?. Kogical data independence is harder to achieve as the application programs are
usually heavily dependent on the logical structure of the data. An analogy is made to
abstract data types in programming languages.
Components of DBMS
A database management system (/1MS) consists of several components. 'ach component
plays very important role in the database management system environment. "he ma(or
components of database management system are#
/atabase Access Kanguage
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"he main component of a /1MS is the software. It is the set of programs used to handle the
database and to control and manage the overall computeried database
,. /1MS software itself, is the most important software component in the overall
9. 6perating system including networ! software being used in networ!, to share the
data of database among multiple users.
?. Application programs developed in programming languages such as CTT, 5isual
1asic that are used to to access database in database management system. 'ach
program contains statements that request the /1MS to perform operation on
database. "he operations may include retrieving, updating, deleting data etc . "he
application program may be conventional or online wor!stations or terminals.
*ardware consists of a set of physical electronic devices such as computers (together with
associated IF6 devices li!e dis! drives), storage devices, IF6 channels, electromechanical
devices that ma!e interface between computers and the real world systems etc, and so on. It
is impossible to implement the /1MS without the hardware devices, In a networ!, a
powerful computer with high data processing speed and a storage device with large storage
capacity is required as database server.
/ata is the most important component of the /1MS. "he main purpose of /1MS is to
process the data. In /1MS, databases are defined, constructed and then data is stored,
updated and retrieved to and from the databases. "he database contains both the actual (or
operational) data and the metadata (data about data or description about data).
0rocedures refer to the instructions and rules that help to design the database and to use the
/1MS. "he users that operate and manage the /1MS require documented procedures on
hot use or run the database management system. "hese may include.
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,. 0rocedure to install the new /1MS.
9. "o log on to the /1MS.
?. "o use the /1MS or application program.
@. "o ma!e bac!up copies of database.
A. "o change the structure of database.
B. "o generate the reports of data retrieved from database.
Database Access Language
"he database access language is used to access the data to and from the database. "he users
use the database access language to enter new data, change the e%isting data in database and
to retrieve required data from databases. "he user write a set of appropriate commands in a
database access language and submits these to the /1MS. "he /1MS translates the user
commands and sends it to a specific part of the /1MS called the /atabase 7et 'ngine. "he
database engine generates a set of results according to the commands submitted by user,
converts these into a user readable form called an Inquiry <eport and then displays them on
the screen. "he administrators may also use the database access language to create and
maintain the databases.
"he most popular database access language is SNK (Structured Nuery Kanguage). <elational
databases are required to have a database query language.
"he users are the people who manage the databases and perform different operations on the
databases in the database system."here are three !inds of people who play different roles in
database system
,. Application 0rogrammers
9. /atabase Administrators
?. 'nd$+sers
Application Programmers
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"he people who write application programs in programming languages (such as 5isual
1asic, 7ava, or CTT) to interact with databases are called Application 0rogrammer.
Database Administrators
A person who is responsible for managing the overall database management system is called
database administrator or simply /1A.
"he end$users are the people who interact with database management system to perform
different operations on database such as retrieving, updating, inserting, deleting data etc.
It is a collection of conceptual tools for describing data, data relationships, data semantics,
and consistency constraints.
'ach new data model capitalied on the shortcomings of previous models
Common characteristics#
Conceptual simplicity without compromising the semantic completeness of the
<epresent the real world as closely as possible
<epresentation of real$world transformations (behavior) must be in compliance with
consistency and integrity characteristics of any data model
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"he data model can be divided as follows#
,. *ierarchical model
9. 4etwor! model
?. <elational model
@. '$r modeling
A. Semantic models
6b(ect relational model
"he *ierarchical /ata Model is a way of organiing a database with multiple one to many
relationships. "he structure is based on the rule that one parent can have many children but
children are allowed only one parent. "his structure allows information to be repeated
through the parent child relations created by I1M and was implemented mainly in their
Information Management System. (IM&), the precursor to the /1MS.
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"he model allows easy addition and deletion of new information. /ata at the top of the
*ierarchy is very fast to access. It was very easy to wor! with the model because it wor!ed
well with linear type data storage such as tapes. "he model relates very well to natural
hierarchies such as assembly plants and employee organiation in corporations. It relates
well to anything that wor!s through a one to many relationship. &or e%ample8 there is a
president with many managers below them, and those managers have many employees
below them, but each employee has only one manager.
"his model has many issues that hold it bac! now that we require more sophisticated
relationships. It requires data to be repetitively stored in many different entities. "he
database can be very slow when searching for information on the lower entities. De no
longer use linear data storage mediums such as tapes so that advantage is null. Searching for
data requires the /1MS to run through the entire model from top to bottom until the
required information is found, ma!ing queries very slow. Can only model one to many
relationships, many to many relationships are not supported. Clever manipulation of the
model is required to ma!e many to may relationships. &or e%ample8 what if a professor
teaches classes, and is also a graduate studentE
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2) The Network Model
"he 4etwor! Model replaces the hierarchical tree with graph thus allowing more general
connection with the nodes. "he more difference between this model to hierarchical model is
in case of handling 4 #4 relation . in other words it allows to have more than , parent.
Advantages and disadvantages of Network Model:
Conceptual Simplicity: (ust li!e hierarchical model it also simple and easy to
Capability to handle more relationship types# the networ! model can handle one
to one,#, and many to many 4# 4 relationship.
Ease to access data: the data access is easier than the hierarchical model.
Data Integrity: Since it is based on the parent child relationship, there is always a
lin! between the parent segment and the child segment under it.
Data Independence: "he networ! model is better than hierarchical model in case of
data independence.
Disadvantages of Network Model:
System Complexity# All the records have to maintain using pointers thus the
database structure becomes more comple%.
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Operational Anomalies: As discussed earlier in networ! model large number of
pointers is required so insertion, deletion and updating more comple%.
Absence of structural Independence: there is lac! of structural independence
because when we change the structure then it becomes compulsory to change the
application too.
3) The relational data model:
"he relational database organies data in a series of tables. 'ach table has its own
field;s specific to the type of data being stored. "he database management system
(/1MS) designed around the relationships between tables has survived more than
two decades because of its fle%ibility. 6nce the user enters data into a table and saves
it in the massive database, a query will recall the information at any time.
Ease of use: "he revision of any information as tables consisting of rows and
columns is much easier to understand.
Flexibility: /ifferent tables from which information has to be lin!ed and e%tracted
can be easily manipulated by operators such as pro(ect and (oin to give information in
the form in which it is desired.
Precision: "he usage of relational algebra and relational calculus in the manipulation
of the relations between the tables ensures that there is no ambiguity, which may
otherwise arise in establishing the lin!ages in a complicated networ! type database.
Performance: A ma(or constraint and therefore disadvantage in the use of relational
database system is machine performance. If the number of tables between which
relationships to be established are large and the tables themselves effect the
performance in responding to the sql queries.
Physical Storage Consumption: Dith an interactive system, for e%ample an
operation li!e (oin would depend upon the physical storage also. It is, therefore
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common in relational databases to tune the databases and in such a case the physical
data layout would be chosen so as to give good performance in the most frequently
run operations. It therefore would naturally result in the fact that the lays frequently
run operations would tend to become even more shared.
Slow extraction of meaning from data: if the data is naturally organied in a
hierarchical manner and stored as such, the hierarchical approach may give quic!
meaning for that data
"he 'ntity$<elationship ('<) model was originally proposed by 0eter in ,-2B as a way to
unify the networ! and relational database views. Simply stated, the '< model is a conceptual
data model that views the real world as entities and relationships. A basic component of the
model is the 'ntity$<elationship diagram, which is used to visually represent data ob(ects.
&or the database designer, the utility of the '< model is#
P It maps well to the relational model. "he constructs used in the '< model can easily be
transformed into relational tables.
P It is simple and easy to understand with a minimum of training. "herefore, the model can
be used by the database designer to communicate the design to the end user.
P In addition, the model can be used as a design plan by the database developer to implement
a data model in specific database management software.
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Three Basic Operations in a Relational Database
Select: Creates subset of rows that meet specific criteria
1oin: Combines relational tables to provide users with information
Project: 'nables users to create new tables containing only relevant information
&ollowing are advantages of an '$< Model#
Straightforward relation representation: *aving designed an '$< diagram for a
database application, the relational representation of the database model becomes
relatively straightforward.
Easy conversion for E-R to other data model: Conversion from '$< diagram to a
networ! or hierarchical data model can: easily be accomplished.
Graphical representation for better understanding: An '$< model gives
graphical and diagrammatical representation of various entities, its attributes and
relationships between entities. "his is turn helps in the clear understanding of the
data structure and in minimiing redundancy and other problems.
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Disadvantages of E-R Data Model
&ollowing are disadvantages of an '$< Model#
No industry standard for notation: "here is no industry standard notation for developing
an '$< diagram.
Popular for high-level design# "he '$< data model is especially popular for high level.
"he Semantic /ata Model (S/M), li!e other data models, is a way of structuring data to
represent it in a logical way. S/M differs from other data models, however, in that it focuses
on providing more meaning of the data itself, rather than solely or primarily on the
relationships and attributes of the data.
It is a conceptual data model that includes the capability to e%press information that enables
parties to the information e%change to interpret meaning (semantics) from the instances,
without the need to !now the meta$model. Such semantic models are fact oriented (as
opposed to ob(ect oriented). &acts are typically e%pressed by binary relations between data
elements, whereas higher order relations are e%pressed as collections of binary relations.
"ypically binary relations have the form of triples# 6b(ect$<elation "ype$6b(ect. &or
e%ample# the 'iffel "ower Wis located inX 0aris.
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The object oriented data model:
Definition: realization of the discrete model of real world using an obect centered a!!roach
in which an obect has both !h"sical #attribute$ and geometric characteristics% &ifferent
t"!es of obects can interact because the" are not confined to se!arate la"ers%
Object relational data model
An ob(ect relational database management system (6</1MS) is a database management
system with that is similar to a relational database, e%cept that it has an ob(ect$oriented
database model. "his system supports ob(ects, classes and inheritance in database schemas
and query language.
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6b(ect relational database management systems provide a middle ground between relational
and ob(ect$oriented databases. In an 6</1MS, data is manipulated using queries in a query
language. "hese systems bridge the gap between conceptual data modeling techniques such
as entity relationship diagrams and ob(ect relational mapping using classes and inheritance.
6</1MSs also support data model e%tensions with custom data types and methods. "his
allows developers to raise the abstraction levels at which problem domains are viewed.
/ata security refers to protective digital privacy measures that are applied to prevent
unauthoried access to computers, databases and websites. /ata security also protects data
from corruption. /ata security is the main priority for organiations of every sie and genre.
/ata security is also !nown as information security (IS) or computer security.
Database security:
/atabase security concerns the use of a broad range of information security controls to
protect databases (potentially including the data, the database applications or stored
functions, the database systems, the database servers and the associated networ! lin!s)
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against compromises of their confidentiality, integrity and availability. It involves various
types or categories of controls, such as technical, proceduralFadministrative and physical.
Database security is a specialist topic within the broader realms of computer security,
information security and ris! management.
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Operation support systems
Information systems have always been needed to process data generated by, and used in,
business operations. Such operations support systems produce a variety of information
products for internal and e%ternal use. "he role of a business firm;s operations support
systems is to process business transactions, control industrial processes, support enterprise
communications and collaborations, and update corporate databases efficiently.
Transaction processing system
"0S serve the need of operational level of the organiation. It is defined as, recording the
daily day$to$day transactions basis for the conduct of business. It is highly structured.
"ransaction processing is performed manually or with mechanical machines8 computer$
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based data processing has altered the speed and comple%ity of transaction processing, but not
the basic function. "hey process transactions in two basic ways. In batch processing,
transactions data are accumulated over a period of time and processed periodically. In real-
time (or online) processing, data are processed immediately after a transaction occurs. &or
e%ample, point$of$sale (06S) systems at many retail stores use electronic cash register
terminals to capture and transmit sales data electronically over telecommunications lin!s to
regional computer centers for immediate (real$time) or nightly (batch) processing.
"he transaction processing cycle begins with a transaction which is recorded in some way.
Although hand$written forms are still very common, transactions are often recorded directly
to a computer by the use of an online terminal. <ecording of the transaction is generally the
trigger to produce a transaction document. /ata from the transaction is frequently required
for the updating of master files8 this updating may be performed concurrently with the
processing of transaction document or by a subsequent computer run.
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0rocess control systems monitor and control physical processes. &or e%ample, a petroleum
refinery uses electronic sensors lin!ed to computers to monitor chemical processes
continually and ma!e instant (real$time) ad(ustments that control the refinery process.
'nterprise collaboration systems enhance team and wor!group communications and
productivity and include applications that are sometimes called office automation systems.
&or e%ample, !nowledge wor!ers in a pro(ect team may use e$mail to send and receive e$
messages or use videoconferencing to hold electronic meetings to coordinate their activities.
6ffice automation is a popular term for the application of computer and communications
technology to office functions. It supports not only clerical office wor! but also the wor! of
management and professionals. /ocument preparation, message and document
communications, and public data services are some of the e%amples of 6AS. 6ffice
automation has a number of applications ranging from internal
communication to long$distance e%ternal communication. "he ma(or applications of
office automation are in following areas#
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,. Dord processing.
9. /es!top publishing.
?. 5ideote%t.
@. /ocument imaging.
A. 'lectronic mail.
B. 'lectronic calendaring.
2. 5ideo J Audio conferencing.
3. &acsimile transmission.
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An information system that provides information to support managerial decision ma!ing.
More specifically, information reporting system, e%ecutive information system, or decision
support system and business professionals is a comple% tas!. Conceptually, several ma(or
types of information systems support a variety of decision$ma!ing responsibilities# (,)
management information systems, (9) decision support systems, and (?) e%ecutive
information systems
QuickBooks is a popular accounting package that automates small office or home office
(SOHO) accounting transaction processing while providing business owners with
management reports.
Management information systems (MIS) provide information in the form of reports and
displays to managers and many business professionals. &or e%ample, sales managers may
use their networ!ed computers and Deb browsers to receive instantaneous displays about
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the sales results of their products and access their corporate intranet for daily sales analysis
reports that evaluate sales made by each salesperson.
Management information systems (MIS) are the most common form of management support
systems. "hey provide managerial end users with information products that support much of
their day$to$day decision$ma!ing needs. Management information systems provide a variety
of reports and displays to management. "he contents of these information products are
specified in advance by managers so that they contain information that managers need.
Management information systems retrieve information about internal operations from
database that have been updated by transaction processing systems. "hey also obtain data
about the business environment from e%ternal source.
Information products provided to managers include displays and reports that can be
furnished (,) on demand, (9) periodically, according to a predetermined schedule.
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/ecision support systems (/SS) are a natural progression from information reporting
systems and transaction processing systems. /ecision support systems are interactive,
computer$based information systems that use decision models and specialied database to
assist the decision ma!ing process of managerial end users. A decision support system is an
organied collection of people, procedures, databases and devices used to support a problem
with the specific decision ma!ing. "he /SS differs from an MIS in the support given to
users , the decision emphasis the development and approach and system components, speed
and output.
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'%ecutive information systems ('IS) are management information systems tailored to the
strategic information needs of top management. "op e%ecutives get the information they
need from many sources, including letters, memos, periodicals, and reports produced
manually as well as by computer systems. 6ther sources of e%ecutive information are
meetings, telephone calls, and social activities. "hus, much of a top e%ecutive;s information
comes from non$computer services. Computer generated information has not played a
primary role in meeting many top e%ecutives; information needs.
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An e%pert system is a !nowledge$based information system8 that is, it uses its !nowledge
about a specific area to act as an e%pert consultant to users. "he components of an e%pert
system are a !nowledge base and software modules that perform inferences on the
!nowledge and offer answers to a user;s questions. '%pert systems are being used in many
different fields, including medicine, engineering, the physical sciences, and business. &or
e%ample e%pert systems now help diagnose illnesses, search for minerals, analye
compounds, recommend repairs, and do financial planning. '%pert systems can support
either operations or management activities.
=nowledge Management systems (=MS), Dor!ers create, organie, and share important
business !nowledge wherever and whenever it is needed. &or e%ample, many !nowledge
management systems rely on Internet and intranet Deb sites, !nowledge bases, and
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discussion forums as !ey technologies for gathering, storing, and disseminating business
!nowledge. In this way, !nowledge management systems facilitate organiation learning and
!nowledge creation and dissemination within the business enterprise.
"he strategic role of information systems involves using information technology to develop
products, services, and capabilities that give a company strategic advantages over the
competitive forces it faces in the global mar!etplace. "his creates strategic information
system, information systems that support or shape the competitive position and strategies of
an enterprise. So a strategic information system can be any !ind of information systems
("0S, MIS, /SS, etc.) that helps an organiation gain a competitive advantage, reduce a
competitive disadvantage, or meet other strategic enterprise ob(ectives.
As a future managerial end user, it is important for you to realie that information systems
directly support both operations and management activities in the business functions of
accounting, finance, human resource management, mar!eting, and operations management.
Such business information systems are needed by all business functions.
&or e%ample, mar!eting managers need information about sales performance and trends
provided by mar!eting information systems. &inancial managers need information
concerning financing costs and investment returns provided by financial information
It is also important to realie that information systems in the real world are typically
integrated combinations of several types of information systems we have (ust mentioned.
"hat;s because conceptual classification of information systems are designed to emphasie
the many different roles of information systems. In practice, these roles are integrated into
composite or cross$functional information systems that provide a variety of functions. "hus,
most information systems are designed to produce information and support decision ma!ing
for various levels of management and business functions, as well as do record !eeping and
transaction processing systems.
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Support Systems
An Executive Support System ("ESS") is designed to help senior management ma!e
strategic decisions. It gathers, analyses and summarises the !ey internal and e%ternal
information used in the business.
A good way to thin! about an 'SS is to imagine the senior management team in an aircraft
coc!pit $ with the instrument panel showing them the status of all the !ey business
activities. 'SS typically involve lots of data analysis and modelling tools such as Vwhat$ifV
analysis to help strategic decision$ma!ing.
A management information system ("MIS") is mainly concerned with internal sources
of information. MIS usually ta!e data from the transaction processing systems (see below)
and summarise it into a series of management reports.
MIS reports tend to be used by middle management and operational supervisors.
Support Systems
/ecision$support systems (V/SSV) are specifically designed to help management ma!e
decisions in situations where there is uncertainty about the possible outcomes of those
decisions. /SS comprise tools and techniques to help gather relevant information and
analyse the options and alternatives. /SS often involves use of comple% spreadsheet and
databases to create Vwhat$ifV models.
=nowledge Management Systems (V=MSV) e%ist to help businesses create and share
information. "hese are typically used in a business where employees create new !nowledge
and e%pertise $ which can then be shared by other people in the organisation to create
further commercial opportunities. Oood e%amples include firms of lawyers, accountants
and management consultants.
=MS are built around systems which allow efficient categorisation and distribution of
!nowledge. &or e%ample, the !nowledge itself might be contained in word processing
documents, spreadsheets, 0ower0oint presentations. internet pages or whatever. "o share
the !nowledge, a =MS would use group collaboration systems such as an intranet.
As the name implies, "ransaction 0rocessing Systems (V"0SV) are designed to process
routine transactions efficiently and accurately. A business will have several (sometimes
many) "0S8 for e%ample#
$ 1illing systems to send invoices to customers
$ Systems to calculate the wee!ly and monthly payroll and ta% payments
$ 0roduction and purchasing systems to calculate raw material requirements
$ Stoc! control systems to process all movements into, within and out of the business
6ffice Automation Systems are systems that try to improve the productivity of employees
who need to process data and information. 0erhaps the best e%ample is the wide range of
software systems that e%ist to improve the productivity of employees wor!ing in an office
(e.g. Microsoft 6ffice Y0) or systems that allow employees to wor! from home or whilst
on the move.
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A Mar!eting MIS supports the managerial activities, in the product development,
distribution, pricing decisions, promotional effectiveness and sales forecasting. Subsystems
for Mar!eting Information System include$
Mar!eting research.
0roduct /evelopment.
0romotion and Advertising.
0roduct pricing.
"hese subsystems and their outputs help mar!eting managers and e%ecutives increase sales,
reduce mar!eting e%penses and develop plans for future products and services to meet the
changing needs of customers.
Mar!eting <esearch
0opular Mar!eting <esearch (M<) tools are Surveys, pilot studies and interviews. "he
ob(ective of M< is to conduct a formal study mar!et and customer preferences. Mar!eting
research can identify prospects as well as the features that current customers really want in a
good or service such attributes as style, color, sie, appearance, and general fit can be
investigated through mar!eting research. 0ricing, distribution channels, guarantees and
warranties, and customer service can also be determined.
6nce entered into the mar!eting information system, data collected from the mar!eting
research pro(ects is manipulated to generate reports on the !ey indicators li!e, customer
satisfaction and total service calls. &orecasting demand can be an important result of the
mar!eting research of sophisticated software. /emand forecasts for products and services
are also critical to ma!e sure raw materials and supplies are properly managed.
0roduct /evelopment
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0roduct development is the process of the conversion of raw materials into finished goods
and services and focuses primarily on the physical attributes of the product. 0lant capacity,
labor s!ills, engineering factors and materials are important factors in ma!ing the product
development decisions. In many cases, a computer program is used to analye these various
factors and to select the appropriate mi% of labor, materials, plant and equipment and
engineering designs. Computer programs also assist ma!e I or I buy decisions.
0romotion and Advertising
Advertising and Sales promotion, one of the important mar!eting functions determines the
product success through the type of promotion done. "he sie of the promotion budget and
the allocation of this budget among various campaigns are important factors in planning.
"elevision coverage, newspaper ads; promotional brochures and literature and training
programs for salespeople are all components of these campaigns. 1ecause of the time and
scheduling savings they offer, computer programs are used to set up the original budget and
to monitor e%penditures and the overall effectiveness of various promotional campaigns.
0roduct 0ricing
0roduct pricing is the !ey area of an organiation which is determined by the sales analysis
that identifies products, sales personnel and customers that contribute to profits and those
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that do not. A variety of reports can be generated to help managers ma!e good sales
decisions. "he sales $ by $ product report list all ma(or products and their sales for a period of
time, such as a month. "his report shows which products are doing well and which ones
need improvement or should be discarded altogether. "he sales $ by $ salesperson report lists
total sales for each salesperson for each wee! or month. "his report can also be subdivided
by product to show which products are being sold by each salesperson. Sales $ by $ customer
report are a tool to use to identify high $ and low $ volume customers.
A Human Resource Information System (HRIS) is concerned with activities related to
employees and potential employees of the organiation and the personnel function relates to
all other functional areas in the business where the human resource MIS plays a valuable
role in ensuring the organiational success. Some of the activities performed by this
important MIS include wor!force analysis and planning8 hiring8 training8 (ob and tas!
assignment8 and many other personnel $ related issues. 0ersonnel issues can include offering
new hires attractive stoc! option and incentive programs. &igure shows some of the inputs,
subsystems, and the *<IS.
*uman resource subsystems and outputs range from the determination of human resource
needs and hiring through retirement and outplacement. Most medium and large
organiations have computer systems to assist with human resource planting, hiring, training
and s!ills inventory and wage and salary administration. 6utputs of the *<IS include reports
such as human resource planning reports, (ob application review profiles8 s!ills inventory
reports, and salary surveys.
Human Resource Planning
6ne of the important aspects of any *<IS is determining personnel and human needs. "he
overall purpose of this MIS subsystem is to put the right number and !inds of employees in
the right (obs when they are needed. 'ffective human resource planning requires defining the
future number of employees needed and anticipating the future supply of people for these
Personnel Selection and Recruiting
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*<IS can be used to help grade and select potential employees. &or every candidate, the
results of interviews, tests, and company visits can be analyed by the system and printed.
"his report, called a (ob applicant review profile, can assist corporate recruiting teams in the
final selection. Deb based screening for the (ob applicants is adopted by many companies.
Applicants use a template to load their resume onto the Internet site. *< managers can then
access these resumes and identify applicants they are interested in interviewing.
Some (obs such as programming, equipment repair and ta% preparation, require very specific
training. 6ther (obs may require general training about the organiational culture,
orientation, dress standards and e%pectations of the organiation. "oday, many organiations
conduct their own training with the assistance of information systems and technology. Self $
paced training can involve computeried tutorials, video programs, and C/$<6M boo!s and
materials. /istance learning, where training and classes are conducted over the Internet, is
also becoming a viable alternative to more traditional training and learning approaches. "his
te%t and supporting material, for e%ample, can be used in a distance $ learning environment.
Scheduling and 1ob Placement
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'mployee schedules are developed for each employee, showing their (ob assignments over
the ne%t wee! or month. 7ob placements are often determined based on s!ills inventory
reports, which show which employee might be best suited to a particular (ob.
Wage and Salary Administration
"he last of the ma(or *<IS subsystems involves determining wages, salaries and benefits,
including medical payments, savings plans and retirement accounts. Dage data, such as
industry averages for positions, can be ta!en from the corporate database and manipulated
by the *<IS to provide wage information and reports to higher levels of management. Dage
and salary administration also entails designing retirement programs for employees. Some
companies use computeried retirement programs to help employees gain the most from
their retirement accounts and options.
"he ob(ective of the manufacturing MIS is to produce products that meet customer needs $
from the raw materials provided by suppliers to finished goods services delivered to
customers $ at the lowest possible cost. All raw materials are converted to finished goods8
the manufacturing MIS monitors the process at almost every stage. 1ar codes, smart labels
could ma!e this process easier. "he smart labels, made of chips and tiny radio transmitters,
allow materials and products to be monitored through the entire manufacturing process#
0rocter J Oamble, Oillette, Dall $ Mart are firms that research into this new manufacturing
MIS. Car manufacturers, which convert raw steel, plastic, and other materials into a finished
automobile, monitor the manufacturing process.
In doing so, the MIS helps provide the company the edge that can differentiate it from
competitors. "he success of an organiation can depend on manufacturing function.
&igure gives an overview of some of the manufacturing MIS inputs, subsystems, and
outputs. "he subsystems and outputs of the manufacturing MIS monitor and control the flow
of materials, products, and services through the organiation. Some common information
subsystems and out $ used in manufacturing are#
P Master 0roduction Scheduling
P Inventory Control
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P 0rocess Control
P Nuality Control and "esting
Master Production Scheduling and Inventory Control
In any manufacturing company the critical tas!s are production scheduling and inventory
control. "he overall ob(ective of master production scheduling is to provide detailed plans
for both the short$term and the long$range scheduling of manufacturing facilities. Master
production scheduling software pac!ages can include forecasting techniques that attempt to
determine the current and the future demand for products and services. After the current
demand has been determined and the future demand has been estimated, the master
production scheduling pac!age can determine the best way to use the manufacturing facility
and all its related equipment. "he result of the process is a detailed plan that reveals a
schedule for every item that will be manufactured.
An important !ey to the manufacturing process is inventory control. &ord Motor Company
decided to use +0S Kogistics to help the company speed the delivery of parts to factories
and finished cars to dealerships. "he new inventory control system has reduced by four days
the time it typically ta!es to ship a finished vehicle to a dealership. 1ut more importantly,
the new system has also reduced vehicle inventory by about ,billion dollars, saving the
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company ,9A million dollars in annual inventory carrying costs, which dramatically
improves &ord;s probability. Many inventory control techniques li!e &ord;s attempt to
minimie inventory related costs.
"he inventory control techniques used in organiations are 'conomic 6rder Nuantity
('6N), <e 6rder 0oint (<60) which determines how much and when to order. Economic
order quantity (EOQ) determines a way as to minimie the total inventory costs. "he
GDhen to orderEH question is based on inventory usage over time.
"ypically, the question is answered in terms of a reorder point (ROP), which is a critical
inventory quantity level. Dhen the inventory level for a particular item falls to the reorder
point, or critical level, a report might be output so that an order is immediately placed for the
'6N of the product.
Another inventory technique used when the demand for one item is dependent on the
demand for another is called Material Requirements Planning (MRP). "he basic goal of
M<0 is to determine$ when finished products, li!e automobiles or airplanes, are needed and
then to wor! bac!ward to determine deadlines and resources needed, such as engines and
tires, to complete the final product on schedule.
Manufacturing resource planning (MRPII) refers to an integrated company, wide system
based on the networ! scheduling, that enables people to run their business with a high level
of customer service and productivity, while lowering costs and inventories. M<0II places a
heavy emphasis on planning. "his helps companies ensure that the right product is in the
right place at the right time.
1ust - in - time (1IT) is a 7apanese approach that maintains inventory at the lowest levels
without sacrificing the availability of finished products. Dith this approach, inventory and
materials are delivered (ust before they are used in a product. A 7I" inventory system would
arrange for a car windshield to be delivered to the assembly line only a few moments before
it is secured to the automobile, rather than having it sitting around the manufacturing facility
while the car;s other components are being assembled. Although 7I" has many advantages8
it also renders firms more vulnerable to process disruptions.
Process Control
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Managers can use a number of technologies to control and streamline the manufacturing
process. &or e%ample, computer can be used to directly control manufacturing equipment
using systems called Computer Aided Manufacturing
(CAM) and Computer Integrated Manufacturing. CAM systems can control drilling
machines, assembly lines, and more. Some of them operate easy to program, and have self I
diagnostic routines to test for difficulties with the computer system or the manufacturing
Computer Integrated Manufacturing (CIM) uses computers to lin! the components of the
production process into an effective system. "he goal of CIM is to tie together all aspects of
production, including order processing, product design manufacturing, inspection and
quality control, and shipping. CIM systems also increase efficiency by coordinating the
actions of various production units. In some areas, CIM is used for even broader functions.
CIM can also be used to integrate all organiational subsystems, not (ust the production
systems. In automobile manufacturing, design engineers can have their ideas evaluated by
the financial managers before new components are built to see whether they are
economically viable, saving not only time but also money.
A Flexible Manufacturing System (FMS) allows manufacturing facilities rapidly and
efficiently change from ma!ing one product to another. In the middle of a production run,
for e%ample, the production process can be changed to ma!e a different product or to switch
manufacturing materials. 6ften a computer is used to direct and implement the changes.
&MS saves the time and cost to change manufacturing (obs can be substantially reduced, and
companies can react quic!ly to mar!et needs and competition. &MS is normally
implemented using computer systems, robotics and other automated manufacturing
equipment. 4ew product specifications are fed into the computer system, and the computer
then ma!es the necessary changes.
Quality Control and Testing
Nuality Control (NC) is being emphasied in all the organiations due to the increased
pressure from customers and concern for high quality. NC is a process that ensures that the
finished product meets the customers; needs. Control charts are used to measure weight,
volume, temperature, or similar attributes are used for continuous process. "hen, upper and
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lower control chart limits are established. If these limits are e%ceeded, the manufacturing
equipment is inspected for possible defects or potential problems.
Sampling process is allowed to accept or re(ect products when the manufacturing process is
not continuous. Acceptance sampling is used for items as simple as nuts and bolts or as
comple% as airplanes. "he development of the control chart limits and the specific
acceptance sampling plans can be fairly comple%.
Dhether the manufacturing operation is continuous or discrete, the results from quality
control are analyed closely to identify opportunities for improvements. "eams using the
total quality management ("NM) or continuous improvement process often analye this data
to increase the quality of the product or eliminate problems in the manufacturing process.
"he result can be a cost reduction or increase in sales.
Information generated from quality I control programs can help wor!ers locate problems in
manufacturing equipment. Nuality Control reports can also be used to design better products.
Dith the increased emphasis on the quality, wor!ers should continue to rely on the reports
and outputs from this important application.
&inancial Information System (&IS) is an information system that provides main repository
data used for managing and reporting financial information to all managers and people
within an organiation and a broader set of people who are decision ma!ers.
"he primary functions of &IS are
P <ecording of all financial transactions in general ledger accounts.
P Oenerating financial reports to meet management and statutory requirements.
P Controlling overall spending through budgetary controls embedded in the system.
P Oenerating the financial statements.
P Integrating financial and operational information from multiple sources, including the
internet, into a single MIS.
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P 0roviding easy access to data for financial and non$ financial users, often through use of
the corporate intranet to access Corporate Deb pages of financial data and information.
P Ma!ing financial data available on a timely basis to shorten analysis turnaround time.
P 'nabling analysis of financial data along multiple dimensions)time, geography, product,
plant, customer.
P Analying historical and current financial activity.
P Monitoring and controlling the use of funds over time.
&igure shows typical input, function$specific subsystems, and outputs of a financial MIS.
&IS in addition, provides information to individuals and groups I stoc!holders and federal
agencies. 0ublic companies are required to disclose their financial results to stoc!holders and
the public. "he &ederal Oovernment also requires financial statements and information
&inancial Management Information System includes a unique role in adding value to a
company;s business process by including Internal and '%ternal Systems that assist the
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organiation in acquiring, using and controlling of cash, funds and other vital financial
&or e%ample, a 0ro(ects /evelopment Company might use a financial MIS subsystem to help
it to use and manage funds. Suppose the firm ta!es <s. ,.,...
deposits on condominium in a new development, until construction begins, the company will
be able to invest these surplus funds. 1y using reports produced by the financial
MIS, finance staff can analye investment alternatives. "he company might invest in new
equipment or purchase global stoc!s and bonds. "he profits generated from the investment
can be passed to customers in different ways. "he company can pay stoc!holders; dividends,
buy higher quality materials, or sell the condominiums at a lower cost. 6ther important
financial subsystems include,
P 0rofitFloss and cost accounting,
P Auditing
Profit/Loss and Cost Systems
0rofitFKoss and cost Systems are two financial subsystems that organie revenue and cost
data for the firm. <evenue and e%pense data for various departments is captured by the
"ransaction 0rocessing System ("0S) becomes a primary internal source of financial
information system. Many departments within an organiation are profit centers, which
mean they trac! total e%penses and net profits. An investment division of a large insurance
or credit card company is an e%ample of a profit center. 6ther departments may be revenue
centers, which are divisions within the company that primarily trac! sales or revenues, such
as a mar!eting or sales department.
Still other departments may be cost centers, which are divisions within a company that do
not directly generate revenue, such as manufacturing or research and development. "hese
units incur costs with little or no direct revenues.
/7 0harmaceuticals, for e%ample, constructed a supercomputer with ,,9 processors to help it
accelerate drug research and development. "he company hopes that the estimated <s. A.,
..,... cost center will result in new or improved drugs. /ata on profit, revenue, and cost
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centers is gathered (mostly through the "0S but sometimes through other channels as well),
summaried, and reported by the profit loss and cost subsystems of the financial MIS.
Auditing is the process of analying the financial situation of a firm whether the reports and
statements produced by the &IS are accurate. 1ecause financial statements, such as income
statements and balance sheets, are used by so many people and organiations (investors,
ban!ers, insurance companies, federal and state government agencies, competitors, and
customers) hence sound auditing procedures are important. Auditing can reveal potential
fraud and can also reveal false or misleading information in a firm.
Auditing can be classified into Internal and '%ternal. Internal auditing is performed by
individuals within the organiation. &or e%ample, the finance department of a corporation
may use a team of employees to perform an audit. "ypically, an internal
audit is conducted to see how well the organiation is meeting established company goals
and ob(ectives $ no more than five wee!s of inventory on hand, all travel reports completed
within one wee! of returning from a trip, and similar measures.
External auditing is performed by an outside group, such as an accounting or consulting
firm. "he purpose of an e%ternal audit is to provide an unbiased picture of the financial
condition of an organiation. Auditing can also uncover fraud and other problems. In some
cases, the financial picture from an e%ternal auditing firm may not always completely reflect
the performance of the company.
Uses and Management of Funds
+sage and Management of funds is another important function of the &IS.
Companies that do not manage and use funds effectively often have lows profits or face
ban!ruptcy. "o help with the funds usage and management, sane ban!s are bac!ing a new
computeried payment System. "he new system has the potential to clear payments in a day
instead of several days or more. 6utputs from the funds usage and management subsystem,
when combined with other subsystems of the financial MIS, can locate serious cash flow
problems and help the organiation increase profits.
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Internal uses of funds include additional inventory, new or updated plants and equipment,
additional labor, the acquisition of other companies, new computer systems, mar!eting and
advertising, raw materials, land, investments in new products, and research and
development. '%ternal uses of funds are typically investment related. 6n occasion, a
company might have e%cess cash from sales that is placed into an e%ternal investment.
'%ternal uses of funds often include ban! accounts, stoc!s, bonds, bills, notes, futures,
options, and foreign currency
An accounting information system (AIS) is a system of collection, storage and processing
of financial and accounting data that is used by decision ma!ers. An accounting information
system is generally a computer$based method for trac!ing accounting activity in con(unction
with information technology resources. "he resulting statistical reports can be used
internally by management or e%ternally by other interested parties
including investors, creditors and ta% authorities. "he actual physical devices and systems
that allows the AIS to operate and perform its functions
,. Internal controls and security measures# what is implemented to safeguard the data
9. Model 1ase Management
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.Types of Accounting Information Systems
"here are three types or categories of accounting information systems. Dhat a business firm
uses depends on the type of business, the sie of the business, the needs of the business, and
the sophistication of the business#
Manual systems
Manual accounting information systems are used mostly by very small businesses and home$
based businesses. If a system is entirely manual, it would require the following# source
documents, general ledger, general (ournal, and special (ournals or subsidiary (ournals you
might need.
Legacy systems
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Kegacy systems are often in e%isting business firms and were used before information
technology got as sophisticated as it is today. 'ven though legacy systems may appear to be
old$fashioned, they have some definite advantages to the firm. "hey contain valuable
historical data about the firm. "he firm personnel tend to !now how to use the system and
understand it. A legacy system has usually been customied to the specific needs of an
individual firm. >ou wonSt find this !ind of customiation in generic accounting software
+nfortunately, legacy systems also have significant disadvantages. 6ften, they have no
documentation. It is usually hard to find replacement parts because hardware and software
may become obsolete. 'ven the computer language that legacy systems use is usually an
older language. Most legacy systems have been built from scratch.
Shivas is one of the India;s leading electronics manufacturers. In India alone, it has ,A sales
subsidiaries, ,@ manufacturing facilities, five research and development centers, and seven
administrative stations. Dith so many different sources of data, the company found itself
with product and customer data that were often inconsistent, duplicate, or incomplete.
/ifferent segments of the company used different data. "hese conditions combined to be a
drag on operational efficiency and drained significant amounts of money from the
corporation as a whole.
'mployees adapted product information to suit the needs of their region. It too! considerable
time and effort to sift through all the data and create a common set of data for launching
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products in India, which allowed competitors to infiltrate mar!ets that Shivas did not reach
in its first phase of a launch. "o solve this problem, Shivas decided to pursue a Gsingle
version of the data.H /aily activities required the data to pass though legacy systems, fa%
machines, e$mail, phone calls, and regular mail. Dith so many people handling the data in
such a variety of formats, inefficiencies and inaccuracies were always a ris!. 'rasing these
problems promised to increase Shivas speed of bringing products to mar!et. "he mar!et
growth overshadowed the costs. 'arlier employees in mar!eting and sales had to request
data from numerous repositories. Dith the new model proposed, a centralied data ban!
sends the information to all employees who need it at the same time, ensuring uniformity.
"he recipients of the data include retail partners and e$commerce vendors, who receive
complete product information at all stages of a product rollout.
Shivas employees receive data on a more targeted basis. "he benefits are more consistent
product rollouts and product information. "he latter ensures that customers do not become
confused while researching their purchases, which could motivate them to abandon
0anasonic for a competitor.
Shivas implemented multi data modeling method. It is a multi$step process that includes
business process analysis, data assessment, data cleansing, data consolidation and
reconciliation, data migration, and development of a master data base. "hese steps produce a
system of records that stores the master file for all of the company;s data. "he
implementation should enforce standards for the formatting and storage of data, such as the
number of fields in an address record or the number of digits in a ZI0 code.
"ime$to$mar!et for a product was reduced from five to si% months to one to two months.
Shivas improved its efficiency by a factor of A and anticipate saving a million rupees a year
while increasing sales by ?.A percent.
Case Questions
,. 'valuate Shiva;s business strategy using the concepts of IS.
9. *ow did Shiva;s suffer in their performance andE Dhat technology factors were
?. *ow Shivas could overcome the challengesE '%plain.
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/epending upon the information needs at different levels of an organiation, information
resource management (I<M) can be studied under five different headsi.e. strategic
management, operational management, resource management, technology management and
distributed management.
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1esides ensuring operational efficiency and providing decision support, information
technology should also contribute to strategic ob(ectives and competitive advantage of a
firm. I<M focuses on developing and managing information systems to significantly
improve operational efficiency promote innovative products and services and build strategic
business alliances.
Information technology and information systems can be managed by functional and process
based organiational structures and managerial techniques. 1usiness and IS managers can
used managerial techniques such as planning models, financial budgets etc. for managing
information resources. At operational level, the information system performs basic functions
and activities which can be classified as#
a) System development
b) 6perations(such as data entry)
c) "echnical services(such as data administration)
Such categoriation ma!es managing IS activities easier and more efficient.
/ata, information, hardware, software communication networ!s and IS personnel are vital
organiational resources that need to be managed li!e other variable business assets. "his is
essential if an organiation is committed to building a strategic information resource base to
increase its competitive advantage in the mar!et. "he success or failure of an information
services department rests primarily on the quality of its people. 6ne of the greatest
challenges for many organiations is getting quality IS professional. Many firms provide
information services personnel with incentives such as salary increments, pro(ect leadership
opportunities and membership in professional associations to encourage and retain good I"
All technologies that process, store and communicate data and information throughout the
enterprise should be managed as integrated systems. Such technologies include database
management, electronic commerce and collaboration systems, I<M aims at bridging such
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technologies. "his tas! becomes the primary responsibility of a chief information officer
(CI6). "he CI6 helps in establishing between the various technologies for the strategic
benefits of the organiation.
Managers are responsible for managing the use of information technology and information
system resources in business units or wor!groups. *owever, with the emergence of end user
computing, I<M is no longer the responsibility of CI6 alone. Most of the information
processing tas!s are done by organiational and computing hardware becomes the
responsibility of end users as well.
Computer crime)an illegal act in which computers are the primary tool)costs the world
economy billions of dollars annually. Computer abuse does not rise to the level of crime, yet
it involves unethical use of a computer. "he ob(ectives of the so$called hac!ing of
information systems include vandalism, theft of consumer information, governmental and
commercial espionage, sabotage, and cyber war. Some of the more widespread means of
computer crime include phishing and planting of malware, such as computer viruses and
worms, "ro(an horses, and logic bombs.
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Alternatively referred to as cyber crime, e$crime, electronic crime, or hi$tech
crime, computer crime is an act commonly performed by a !nowledgeable computer user,
sometimes referred to as a hac!er that illegally browses or steals a companySs or individualSs
private information.
In some cases, this individual or group of individuals may be malicious and destroy or
otherwise corrupt the computer or data files.
0hishing involves obtaining a legitimate user;s login and other information by subterfuge
with messages fraudulently claiming to originate with a legitimate entity, such as a ban! or
government office. A successful phishing raid to obtain a user;s information may be
followed by identity theft, an impersonation of the user to gain access to the user;s resources.
Computer viruses are a particularly common form of attac!. "hese are program instructions
that are able not only to perform malicious acts but also to insert copies of themselves into
other programs and thus spread to other computer systems. Similar to viruses, worms are
complete computer programs that replicate through telecommunications networ!s. 1ecause
of their ability to spread rapidly and widely, viruses and worms can inflict immense damage.
"he damage can be in the form of tampering with system operation, theft of large volumes of
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data (e.g., credit card numbers), or denial of service by overloading systems with a barrage
of spurious requests.
In a "ro(an horse attac!, the malefactor conceals unauthoried instructions within an
authoried program. A logic bomb consists of hidden instructions, often introduced with the
"ro(an horse technique, that stay dormant until a specific event occurs, at which time the
instructions are activated. In one well$!nown case, in ,-3A a programmer at an insurance
company in &ort Dorth, "e%as, placed a logic bomb in his company;s human resources
system8 when he was fired and his name was deleted from the company;s
employee database, the entire database was erased.
6nce a system connected to the Internet is invaded, it may be used to ta!e over many others
and organie them into so$called botnets that can launch massive attac!s against other
systems to steal information or sabotage their operation.
Ethical and social issues in information system:
Model for 'thical, Social, 0olitical Issues
Society as a calm pond
I" as roc! dropped in pond, creating ripples of new situations not covered by old
Social and political institutions cannot respond overnight to these ripples ' It may
ta!e years to develop etiquette, e%pectations, laws
P <equires understanding of ethics to ma!e choices in legally gray areas
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"he introduction of new information technology has a ripple effect, raising new ethical,
social, and political issues $ five moral dimensions
&ive Moral /imensions of Information Age
1. Information rights and obligations
2. Property rights and obligations
3. Accountability and control
4. System quality
5. Quality of life
Key Technologies and Trends in Ethical Issues
Doubling of computer power: More organizations depend on computer systems for
critical operations
Rapidly declining data storage costs: Organizations can easily maintain detailed
databases on individuals
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Networking advances and the Internet: Copying data from one location to another
and accessing personal data from remote locations are much easier
Advances in data analysis techniques
P Companies can analyze vast quantities of data gathered on individuals
P Profiling
P Combining data from multiple sources to create dossiers of detailed
information on individuals
Non-obvious relationship awareness (NORA): Combining data from multiple
sources to find obscure hidden connections that might help identify criminals or
Information about people from disparate sources and find obscure, non$obvious
It might discover, for e%ample, that an applicant for a (ob at a casino shares a
telephone number with a !nown criminal and issue an alert to the hiring manager
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1asic Concepts for 'thical Analysis
<esponsibility# Accepting the potential costs, duties, and obligations for decisions
Accountability# Mechanisms for identifying responsible parties
Kiability# 0ermits individuals (and firms) to recover damages done to them
/ue 0rocess# Kaws are well !nown and understood, with an ability to appeal to
higher authorities
Ethical Analysis - Five Step Process
Identify and clearly describe the facts
/efine the conflict or dilemma and identify the higher order values involved
Identify the sta!eholders
Identify the options that you can reasonably ta!e
Identify the potential consequences of your options
Stockholder Theory:
Managers are agents of the stoc!holders.
"heir only ethical responsibility is to increase the profits of the business
Dithout violating the law or engaging in fraudulent practices
Social Contract Theory
Companies have ethical responsibilities to all members of society
Dhich allow corporations to e%ist based on a social contract
Stakeholder Theory
Managers have an ethical responsibility to manage a firm for the benefit of all its
Sta!eholders are all individuals and groups that have a sta!e in, or claim on, a
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0rofessional codes of conduct# 0romulgated by associations of professionals
'%ample ' AMA, A1A, AI"0, ACM
0romises by professions to regulate themselves in the general interest of society
Real-world ethical dilemmas
6ne set of interests pitted against another. '%ample $ <ight of company to
ma%imie productivity of wor!ers 5s wor!ers right to use Internet for short
personal tas!s
Internet Vulnerability
4etwor! open to anyone
Sie of Internet means abuses can have wide impact
+se of fi%ed Internet addresses with permanent connections to Internet eases
identification by hac!ers
'$mail attachments
'$mail used for transmitting trade secrets
IM messages lac! security, can be easily intercepted
A. Cookies
"iny files downloaded by Deb site to visitor;s hard drive
Identify visitor;s browser and trac! visits to site
Allow Deb sites to develop profiles on visitors
B. Web bugs
"iny graphics embedded in e$mail messages and Deb pages
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/esigned to monitor who is reading message and transmit information to another
C. Spyware
surreptitiously installed on user;s computer
May transmit user;s !eystro!es or display unwanted ads
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