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Study Notes A S H R A F R E H M A N C F E ACCA Paper 3 . 4 Business Information Management Summer 2006

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Study Notes

ASHRAF

REHMAN

CFE ACCA Paper

3.4Business Information ManagementSummer 2006

3.4

BUSINESS INFORMATION MANAGEMENT BY: Ashraf Rehman

CHP 1 - ORGANIZATIONAL INFORMATION REQUIREMENTSINFORMATION

Basic concepts - Data: raw information relating to facts, events and transactions, such as numbers, descriptions, etc. - Information: data processed in such a way that it is meaningful to the person receiving it - strategic level: topmost policy making level where the long term objectives anddirection of the Organization is decided upon (e.g. industry, new products, new markets)

- tactical level: level where decision is takes as to how the resources of the business should be employed to achieve the business objectives- operational level: level where day to day activities are planned, monitored and controlled

- structured decision: decision taken objectively, based on clearly defined procedures - unstructured decision: decision taken subjectively, based on hunch, experience or trial-error basis - semi structured decision: a combination of structured and unstructured decision - information is used for: - planning (strategic, tactical and operational) - recording transactions - controlling - performance measurement - decision making - categories of decision making: - planning decisions (budgets, forecasts, investment appraisals, etc) - control decisions (variance reports, working capital statements, fin. Stments) - qualities of good information A accurate C complete C cost beneficial U user targeted R relevant A authentic T timely E easy to use - see table on pg. 8 as to how poor information can be improved - the cost of obtaining info and the benefit from using that info should be kept in mind, but practically it is not easy to quantify the same - internal users of info - directors, GMs, departmental heads, supervisors, staff, etc. - external users of info - bankers, creditors, customers, suppliers, media, government, tax authorities, etc.

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Cost and benefit of a new information system - costs of a new information system are as follows: - equipment cost (hardware) - installation cost (hardware installation, e.g. room. A/C, wiring) - system development cost - personnel cost (training cost, salaries) - operating cost (maintenance cost, consumables) - benefits of a new information system are as follows: - savings in cost by not using the old system (salaries, consumables) - additional savings resulting from the new and enhanced system (e.g. increased sale revenue, better stock control leading to less stock losses, etc. - revenue from the sale of old equipment / system - there are other 'intangible' costs and benefits of a new info system which cannot be quantified in monetory terms, such as: - cost: staff dissatisfaction, learning curve - benefits: customer satisfaction, better decision making abilities

TYPES OF INFORMATION SYSTEMS- organization requires different types of info systems provide different level of information to different functional areas Office Automation Systems (OAS)- OAS are designed to increase the productivity of data workers

- includes document management, facilitating communication, etc.

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

- mostly includes internal data to be used by departmental heads - used for planning, monitoring and controlling operations

Executive Support Systems (ESS) - uses data from both internal and external sources and presents it to the Senior Management for strategic and unstructured decision making - salient characteristics of an Executive System: F Filter down capability E external information available S summarized information G GUIs M manipulation features available P presentation tools available M modeling features available Decision Support System - provides support for making semi-structured or unstructured decisions - DSS distinguishes between the structured portion and the un-structured portion in the data, so that effective analysis / decision making can be done - DSS normally consists of: - large database of facts - problem 'exploring' facility, I.e. users can explore different scenarios using 'what-if' and sensitivity analysis approaches - graphical tools to present statistical data

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Structured decisions - based on pre-defined rules or formula - clearly defined method of solving a problem Un-structured decisions - not based on pre-defined rules or formula - involves subjectivity - based on experience, sixth sense or 'educated guess' Semi-structured decisions - combination of structured and un-structured decisions - some portion is objective (I.e. based on pre-defined rules / formula) and some portion is subjective (I.e. based on experience or sixth sense) Expert Systems (discussed in chapter 3) Knowledge Work Systems (KWS) - knowledge work means creating new knowledge or information by research, experimentation and investigation into existing trends and products

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

INFORMATION SYSTEMS SECURITYSecurity ?? - protection of data from - accidental or deliberate threats - which might cause unauthorized modifications, disclosure or destruction of data AND - protection of information systems from - degradation or non-availability of services Aspects covered: - prevention - 100% prevention practically impossible - detection - normally used in combination with prevention techniques, e.g. user logs - deterrence - e.g. computer misuse could lead to termination of employee - recovery procedures - taking regular backups - correction procedures - introducing stricter controls - threat avoidance - change the entire design of the system

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Types of controls - security controls un-controllable physical threats fire , water, weather, lightning, terrorism, etc. physical access controls: personnel - guards mechanical & electrical controls - swipe cards, PIN, password locks, etc. bio-chemistry controls - hand prints, eye retina, etc. logical controls: - passwords: - problems with passwords - users may forget their password - password may be very easy to guess - users may share the password with colleagues / friends - users may write the password somewhere - recommended passwords arrangements includes: - password to be changed on a regular basis - password must not be told or written down - password to be easy to remember - password be hard to guess - should not appear on the screen - audit trails (system logs) - administrative controls (employee selection, job rotation) - integrity controls - to ensure CAV (completeness, accuracy, validity) of data at input, processing and output stage- input controls - field checks, sequence checks, control totals, range & limit checks

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

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3.4

BUSINESS INFORMATION MANAGEMENT

CHP 2 - STRATEGIC ROLE OF ISBY: Ashraf Rehman

STRATEGIC PLANNINGStrategic Planning - Strategic Planning (SP) is a long term (L/T) plan to achieve set mission / goals. The time horizon for this type of planning is 5-10 years - SP is done keeping in mind the following: - mission, goals and objectives - external evaluations - customers - substitute products - suppliers - new entrants - competitors - PEST (political, economic, social, technological) - in-house evaluations - capacity and resources - 4 M evaluation (men, material, machinery & money) - strategic plan formulation technique: - strategic analysis (including options generation) - strategic choice - strategy implementation Types of strategy - corporate: what type of business to do - business: how to do the business - functional / operational: grassroot departmental planning for day-to-day operations

INFORMATION MANAGEMENT STRATEGYInformation management strategy - focuses on 'how information is managed within the organization' - IM strategy is concerned with: - developing and implementing IS/IT strategies - overall IS/IT control environment Importance of forming an IM strategy - EARL's Theory - information is an important resource, just like any other resources of the company - IS/IT activities can have a major impact on the business- technologies are changing rapidly all the time, hence you have to manage IS/IT properly

- IS/IT is increasingly being used as a strategic weapon for business Information System (IS) Strategy ? - deals with WHAT Business Objectives can be achieved by using IT

IS / IT STRATEGY

- exploits IS/IT options to support current business strategies or create new strategic options

- integrates IS planning with organization's L/T strategy - e.g. use of robotic machinery, online systems (ticketing, credit cards,), etc. - IS strategy planning is done keeping in mind: - corporate plans - business needs

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- Management's expectations Information Technology (IT) Strategy ? - Addresses the concept of HOW the IS strategy will be achieved - Deals with IT options (hardware and software) that can be used to achieve the IS strategy - e.g. use of computers, electronic data processing & communication, softwares, etc. - IT strategy planning is done keeping in mind: - current use of IT equipment - current infrastructure - cost & benefit of making a particular function / department computerized - implications on workforce (training, etc.) Why is IS/IT strategy important ??? - aligns IS/IT activities with the overall corporate strategies / needs - supports strategic and operational activities - involves high costs - critical to success - specially if its your strategic weapon or competitive advantage or serving as a barrier to entry for new companies - affects on the quality of analysis and presentation of Management Info. for DM - facilitates better customer service Steps to prepare an IS/IT strategy - understanding the business strategy - understanding the CSF - highlighting the information requirements in line with the business strategy / CSF - reviewing the current information systems, focusing on - the overall IS environment (management awareness and response to IS/IT) - software - database - hardware - position comparison on the basis of business strategy, information requirements and the current infrastructure, I.e. analyze the gaps and ways to eliminate it - developing an IS/IT strategy focusing on a balance between the following: - contribution towards the business strategy - risks and returns - development and maintenance costs Contents of an IS/IT strategic plan - business strategy - CSF - IS/IT strategies (hardware, software, database) - how IS/IT strategies would support business strategy and CSF - Resource requirments - major milestones of implementation - performance indicators Challenges with IS - lack of specialist knowledge - lack of overall control and coordination - pace of technology - cost controls - compatibility of systems Use of IT - planning and forecastingPage 8 of 91

- recording transactions - scenario building and decision making - measuring and improving performance - service improvement - gaining competitive edge Two methodologies to determine what sort of information is required by an Organization is detailed below: Enterprise Analysis - also known as Business Systems Planning - involves examining Organization's entire - structure - process - functions - data elements to identify the key elements and attributes of data and information

ESTABLISHING THE INFORMATION REQUIREMENTS

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- 3 different methods of carrying out enterprise analysis: - bottom-up planning approach (infrastructure led): focuses on ensuring that transaction systems are in place to provide basic operational information - top-down planning approach (business led): focuses on the overall business objectives of the Organization and then the underlying systems are put in place to ensure compliance - mixed approach: a combination of bottom-up and top-down - advantage - gives a comprehensive view of the use of data, information and systems - disadvantages: - results in tooooo much data - might be costly to review each and every process and functions - focuses on existing information only and does not concentrate on future needs - ignores external environment / factors Critical Success Factors (CSF) - also known as Strategic Analysis Approach - small number of key operational goals vital to the success of the Organization - denotes those important business areas where 'everything must go right', in order to achieve the business objectives - monitoring CSF are used to maintain the current performance - building CSF are used to expand business - CS factors are determined keeping in mind: - organization's business objectives - identifying factors critical to the business objectives - setting key performance indicators and benchmark targets - CSF could relate to: - the industry trends - environment (economy, customers, competitors, etc.)

- internal activities (competitive strategies, new products, parent company targets)

- performance indicators are used to measure how you are performing against the established CSF targets, I.e. compares budgets with actuals - advantages of CSF: - considers environment as well - focuses on information rather than processes - facilitate top management participation - disadvantages of CSF: - there might be numerous CSF at grass root level, which needs to be aggregated - focuses towards the needs of top management - CSF change often

PEST Analysis ?? P E S T political economic social technical

PEST ANALYSIS

- an organization works in two environments: - general environment - PESTPage 10 of 91

- strategic planning has to take into account both the general as well as the task environment Examples of PEST (general) Political countries laws & regulationssafety acts employment laws

- task environment - factors directly relevant, e.g. customers, suppliers, competitors

environmental protection acts tax / fiscal laws government policy demand and supply business stability business cycle (boom periods, etc.)

Economic

economic growth inflation and interest rates exchange rates overseas market

Social

demographics (study of local people and their habits) thnicity e age and gender groups family structures geography employment rates

Technological

availability compatibility required skills available

support and maintenance options communication infrastructure frequency of changes

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

Economic

is your customers and suppliers technologically advanced is the organization is flexible to change and fast changing technology is the investment in IS/IT justified Is system has ability to manage exchang,Inflation & interest rate society's trends towards IT, e.g. Internet, e-commerce lay-off of staff due to automation user resistance to systems and changes availability of IS/IT skilled staff availability of hardware and related technologies existing systems and their compatibility system maintenance, modifications and upgradeness the need for having quick and reliable information

is there economic stability and growth - otherwise no IT investment would be made

Social

Technological

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uld be made

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3.4

BUSINESS INFORMATION MANAGEMENT BY: Ashraf Rehman

CHP 3 - KNOWLEDGE MANAGEMENTKNOWLEDGE MANAGEMENT

Definitions: - knowledge: information within people's minds

- knowledge management: process of - collecting - storing, and - using the knowledge held within the Organization - Knowledge Work Systems (KWS): info systems that facilitate the creation, storing and usage of new knowledge

- knowledge workers: people whose primary job is creating new knowledge or products which Organization may sell in future. E.g.. includes engineers, graphic designers, scientists, etc.

- data workers: people who processes and distributes information, e.g. accountants Purpose of knowledge management systems - capturing, processing, storing and using of - explicit knowledge knowledge (facts, transactions and events) already known to the Organization - tacit knowledge knowledge known to the people of the Organization, which has not yet been documented, I.e. the people have not yet shared it with the organization - four types of knowledge management systems - knowledge distribution (Office Automation systems) - knowledge sharing (Group Collaboration Systems) - knowledge creation (KWS) - knowledge capturing and codification (Artificial Intelligence Systems) Knowledge distribution systems - uses Office Automation Systems for distributing knowledge - e.g. includes: - word processing - voice mails - emails - knowledge is distributed - within the same department - between various department - to the external environment (e.g. customers, government, etc.) Knowledge sharing systems - used to provide access to databases and communication systems to workers, so that they can share the knowledge amongst themselves - software systems normally used for knowledge sharing - GroupWare - Intranet - Extranet GroupWare - GroupWare is a term used to describe a software that provides functions for thePage 17 of 91

use of collaborative groups - widely dispersed group members can work together through GroupWare, e.g. project teams - popular GroupWare are Lotus Notes, Microsoft Exchange, etc. - features of a GroupWare includes: - messaging (advanced e-mail facilities) - conferencing (e.g. video, tele, etc.) - specialized folders / project databases - scheduler (electronic diaries) - documentmanagement (everyone can update the same document) - workflow management (keep track of task status of a project) - journal (which keeps track of pre-specified important activities) - jotter (for jotting down quick notes / reminders) - others: to do list, hyperlinks, address books Intranet - a 'private' internet being used internally by the Organization, using web browser - potential applications includes - company news letters - online documents, e.g. policies & procedure manual - employee pages / details - objectives of intranet - easy access to corporate information and reference materials (e.g. policies) - decreased paper work - creates sense of organizational unity - ensures consistency across the organization - benefit of intranet: - low startup cost - reduced distribution cost for information - low training cost - easy expansion Extranet - Extranet can also be used by authorized outsiders, through passwords (e.g. by business partners and suppliers, etc.) Difference b/w GroupWare and intranet GroupWare relatively expensive cost strong document tracking strong security vast services fast paced large teams environment Knowledge creation system - uses Knowledge Work Systems (KWS) - KWS uses tools such as : - analytical tools - powerful graphics facilities - communication tools - user friendly interface - e.g. of KWS are - Computer Aided Design (CAD) Intranet

- sort of a mini internet of an Organization, which uses firewall to protect it from outsiders

relatively cheap relatively weak relatively weak limited medium paced small teams

- KWS are info systems that facilitate the creation, storing and usage of new knowledge

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- Virtual Reality Systems (VRS)

- VRS simulates realistic atmosphere which are very close to real sensations

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

- knowledge can be documented

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- eliminates involvement of humans in routine tasks - disadvantage of AI: - expensive systems - takes a long time to develop Expert Systems - consists of pre-feeded knowledge, facts and reasoning of a human expert, which is used by the system to recommend a decision - views, experience and decision making patterns of experts are feeded - ES focuses more on reasoning rules (IF & THEN), as compared to DSS which focuses more on computation and presentations of facts - normally used in circumstances where there is incomplete information and experts are not available to take an immediate decision - ES normally consists of: - knowledge database, where the experience, rules, facts are stored - reasoning engine, which correlates the problem with the knowledge database and recommends an appropriate decision - explanation function, which explains as to how and why the recommended decision was taken by the ES - ES is normally used in - legal advice - tax advice - investment decisions / forecasting - education & training - problems with ES - long development time - high cost - only functions in those areas where rules can be applied to the knowledge Neural Network - modeled on the basis of biological process of a human brain - it learns from the experiences - more advanced from Expert Systems as Neural Network do not rely on a 'set of pre-fed rules' but also develops a hidden layer of experience and logic Fuzzy Logics - traditional programming requires precise commands, such as 'yes' or 'no' - fuzzy logics involves using more generic commands - for e.g. - traditional command: if room temperature is less than '60 degrees', raise heater to 'high' - fuzzy command: if room temperature is hot, increase the heater power

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Intelligent Agents - software which are given specific tasks to undertake and then the programme is left running and the human operator carries on with other tasks - the programme reports back to the human operator at the end of the task or when it requires further information in order to complete the task - e.g. is intelligent search engines General problems relating to knowledge management - inadequate system to capture knowledge - inadequate system to process and distribute knowledge - organization does not know what knowledge is already available to it - difficulties of measuring intangible benefits from implementing knowledge system - sometimes leads to information overload

INTRODUCTION TO DATABASESDefinition - Database: a collection of data, which services many application softwares - Database Management System (DBMS): Software that creates and maintain a database and manages access of the application softwares to the data Software that allows for the organization, manipulation, processing, storing, retrieval, and sorting of data held within a system - Data independence: data is separate (i.e. independent) from the application softwares - Data redundancy: duplication of data items - Data integration: the ease at which application softwares accesses the data - Data integrity: data is accurate, secure and reliable Characteristics of a database Shared different users access the same data, hence reducing data redundancy Control Flexibility enhances integrity and security of the dataable to meet all sort of user requirements, I.e. evolutionary to future needs

Independence

separate from the application software - two main advantages:

- data layout can be altered without affecting the application programme

- database can present many styles of presentation to different users using the same data

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Factors considered when designing a database - analysis of information needs (e.g. CSF monitoring, audit requirements, etc,) - logical design of the database - physical design and setup of the data base - data entry and upkeep functions - data retrieval and reporting functions - monitoring, maintenance and security requirements Facilities offered by a DBMS - ability to add, amend and delete records - ability to retrieve data - ability of controlling access to data (e.g. password management) - ability to recover from system breakdown - ability to interface with all application softwares Elements of a DBMS - Data Definition Language (DDL) - defines the form of each Data item in the database e.g. defining input field checks for each data - Data Manipulation Language (DML) - specialized language to manipulate data within the data, e.g. of a DML is Structured Query Language (SQL) - Data Dictionary - program used to organized and store the data and maintains a directory of the stored data Advantages of database - unanimous and integrated data - data integrity - data security - data independence - minimum redundancy

- evolutionary capabilities, I.e. adopts changes in the Organizational requirements with ease - flexibility - reports can be generated from the database in any format required

Disadvantages of database - high security risks, as the entire data of the Organization is in one place - initial development cost may be high Database Administrator (DBA) - person responsible for the entire electronic data of the Organization - strategic tasks includes: - defining Organization's present and future data / information needs - choosing suitable file structure - defining hardware needs to support the database

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

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

DATABASE STRUCTURES

Hierarchical Database Model - shows data in a 'reverse-tree' format - data is stored in a parent-to-children relationship, I.e. one to many relationship - one parent can have many children but one child can only have one parent - see diagram 2.3 on pg. 79 - the hierarchical model is unsuitable for situations involving / requiringmany-to-many relationships, as it would result in data redundancies

- each data item is related to one item above it, but to any number of data items below it

- the model is only appropriate where there are large numbers of routine requests for information, e.g. airline reservation systems - uses pointers (elements attached to record the location of related records) Network Database Model - this model allows many-to-many relationships between data items - parents can have many children and children can have many parents - see diagram 2.4 on pg. 79 - uses pointers to a much larger extent than the hierarchical model

- the model minimizes data redundancies and leads to a better response time to queries

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

DATA WAREHOUSINGIntroduction - Data warehouse is a database that accumulates and stores the entire data taken from various Transaction Processing Systems (TPS) in the Organization as well asexternal data (e.g. competitor's prices) - it is a combination of various operational databases of past many years

- data warehouse is used because operational data resides in many different types of - the data is consolidated to provide reports, analysis, reporting and query facilities - data warehouse could be updated daily, weekly or monthly, depending on the information needs of the Organization and availability of the information - Data mart are alternatives to data warehouse, which focuses on small portions of the entire data warehouse - data marts contain data related to a particular function / areas, such as sales, stocks, etc. Features of data warehouse - subject oriented: i.e. focused on data groups and not application softwares - integrated: info being transferred from various software should be in similar format - time variant: data kis organized over time period - non volatile: data cannot be editedsystems (e.g. financial accounting, stock systems, point of sale systems), I.e. scattered

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Tools available to extract information - various tools are available to extract information from data warehouse or data marts, such as Online Analytical Programming (OLAP) - these tools provides the following features: - query and reporting tools - to generate simple queries and reports - intelligent agents - try to discover any hidden pattern / relation between the data, by using neural networks and fuzzy logics - multi-dimensional analysis tools - through which information can be viewed from various perspectives, e.g. pivot tables Advantages of data warehousing - data can be accessed without affecting the use of the TPS - wide range of data available at a central platform - ease of analysis, decision making and queries - data marts leads to a higher focus on specific functions / areas - data mining can be done effectively

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

- it discovers previously unknown relationships by taking a thorough insight into the historic behavior - data mining helps in predicting future trends, based on historic patterns - data mining helps in revisiting: - marketing strategies - advertising campaigns / loyalty schemes - product design - pricing strategies - customer segmentation and focus- data mining uses statistical analysis tools as well as neural networks, fuzzy logics, etc.

- see case example 3.12 on pg. 89 - see case example 3.13 on pg. 90 - the following types of result may be obtained from data mining - association (linked to a single event) - sequences (timing) - classifications (identify related groups) - clustering (advanced form of classifications) - forecasting (discovers future patterns)

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

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3.4

BUSINESS INFORMATION MANAGEMENT BY: Ashraf Rehman

CHP 4 - SYSTEM THINKING AND BUSINESS SYSTEMSPROBLEM SOLVING APPROACHES

- based on general system theory, there are two main approaches to solve problems- Hard - concentrates on procedures and technologies to solve problems - Soft - focuses more on social and cultural aspects of problems

- there are numerous methodologies which exist for hard and soft approaches, the following two will be discussed: - for hard approach: SDLC developed by National Computing Centre (NCC) - for soft approach: Checkland's Soft System Methodology Introduction - 'hard' is associated with the physical or mechanical aspects of the problems, rather than human or psychological problems - hard approach is hence more suitable for structured problems / situations - for e.g. increase production capacity of the factory to 1 million units p.a. Suitable in following circumstances - problem is clearly defined - objectives are clear - information needs are known - standard solutions are applicable System Development Life Cycles (SDLC) - SDLC approach is part of hard system approach - SDLC stages includes: - feasibility study - identification of alternatives in line with the businessobjectives and carrying out technical, operational, social & economic feasibility

HARD SYSTEMS APPROACH

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

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SOFT SYSTEMS APPROACHIntroduction - 'soft' is associated with the human or psychological aspects of the problems, rather than physical or mechanical problems

- soft approach is hence more suitable to unstructured or 'fuzzy' problems / situations

- the purpose of SSM is to enhance the understanding of complex social situations which entails many diversified views / requirements - for e.g. Organization losing customers Suitable in following circumstances - problem is difficult to define - judgments, experience and sixth sense is also involved - not clear what is known and what is needed - no standard solution is available Examples of soft problems in IT system development - job security (employee may feel that they would be fired due to automization)

- changes in the working environment (may disturb the existing social environment) - bewilderment (system may cause confusion relating to responsibilities / reportings) - fear of depersonalization (system may take back authority / position) Examples through which the above could be solved - inform staff (of the purpose, plans, event, staffing changes, etc.) - logical explanations (the change is for betterment) - participation (in design and defining user requirments) - training - management commitments - maintaining existing work patterns as far as possible

- career prospects (employee may feel that their career would stop as they are not expert in IT)

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

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2- Situation expressed - The problem is documented / expressed using 'rich picture' diagram - see BPP diagram on pg. 107

- Rich pictures are cartoon-like freehand pictorial representation of the situation

3- Relevant systems & root definitions - root definition describes the stakeholders' perspective (viewpoint) of the systemi.e. what is the core purpose and expectation from the system from his point of view

- CATWOE is a mnemonic which helps in ensuring the completeness of the information acquired relating to root definition - CATWOE stands for: C Customers (beneficiaries of the system) A Actors (people who perform the tasks in the system) T Transformation process (the core activity of the system or the change brought about by the system) W World view / Weltanschauung (underlying expectations from the system) (e.g. could be the objextive / purpose of the system) O Owner (highest authority / owner of the system) E Environment (factors outside the system that impose constraints on its operations (e.g. laws, business environment / requirments, workload, etc.) 4- Conceptual models- CM documents key activities that needs to be performed to satisfy the root definition - CM focuses 'what' activities needs to be done and not on 'how' activities are to be done - CM provides a basis for discussions and stimulates 'in-depth' thinking and better understanding for the proposed system - see diagram on pg 104 - practice case e.g. on pg 103

5- Comparison of conceptual model with rich picture (problem situation) - this brings together the reality (rich picture) and the required system (concept model) to achieve the root definitions 6- Debate on feasible and desirable changes - requires everyone involved to discuss the ideas triggered by the various analysis, and to arrive at a win-win situation - consensus may not be easy 7- Implement agreed changes

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Definition

BUSINESS SYSTEMS

- System: a set of interacting components that operate together to accomplish a purpose

- Business System: collection of people, machine and methods to accomplish the business objectives Hierarchy of systems - Corporate level: supports the Organization as a whole and includes strategicoutlook and relationships with external elements. System includes overall forecasting, financial planning

- Divisional level: many organizations are divided into distinct sub-units operating in different industrial sector or providing different goods & services. System includes analysis of the concerned industry - Department level: emphasis is on the implementation of Organizations strategies System includes tactical analysis / MIS - Operational level: emphasis is on the control of day-to-day operations. System includes TPS Socio-technical systems - an organization consists of 3 sub-systems: - structure - technological systems (systems and facilities available) - social systems (concerning with people, their thinking and styles) Business automation

BUSINESS AUTOMATION & RATIONALIZATION

- use of automated working methods to speed up the performance of existing tasks

- the risk and reward of automization is low - IT based e.g.: - general purpose softwares (Word, Excel, etc.) - electronic cash registers

- email - intranet

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

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BUSINESS PROCESS RE-ENGINEERING(extreme, thorough) Introduction - BPR is the fundamental rethinking and radical redesign of business processes to

achieve dramatic improvements in major areas of business, such as costs, performance, quality, speed, etc. - entire business processes are overhauled - fundamental and radical indicates that BPR starts from scratch, I.e. the basic objectives / questions are addressed - dramatic means that the results of BPR should be very apparent, not just a marginal increase / decrease How is BPR done - the essence of BPR revolves around the final customers, and hence the processes are mostly reviewed in the following sequence - understanding of customer needs and sensitivity (reactions to quality, price, etc.) - customer ordering process - marketing and sales - product distribution channels - product manufacturing processes including quality and look of the product - purchasing and materials logistics - support services - administration , finance and personnel deptts. - following questions are asked for each and every process - why is it being done in this way? - are their better alternates of this process (what if) - how can we better able to serve customer needs at a lower cost - successful BPR depends on - strong hands-on commitment from the management - sense of 'ownership' by all involved - spirit of shared learning and progress - see example 5.12 on pg. 114 Characteristics of a re-engineered process - several jobs are combined into one job - workers are given decision making powers to a defined extent - work is performed where it makes the most sense - one manager provides a single point of contact, rather than a 'tall' hierarchy BPR methodologyPage 31 of 91

- develop clear business vision and process objectives - identify the processes to be redesigned - understand and analyze the existing procedures - review how IT could be built-in to achieve the process objectives in a better way - design and build a prototype of the new process and share it with the users - implement - monitor results IT and BPR - using IT does not mean that a process as been re-engineered - IT should be in line with the process requirements to meet the process objectives - some aspects where IT has been used as a re-engineering tool: - E-commerce - shared databases and integration - virtual busines - wireless data communication - AIs (expert systems, KWS, etc.) - online services - EFTs / EDIs Advantages of BPR - revolves around customers' needs - provides cost advantages, resulting in a competitive edge - encourages a long-term strategic view of the operational processes - reduces organizational complexities by eliminating duplication / wasteful processes Limitations of BPR - often misunderstood as a narrow focused activity - often seen as a cost cutting exercise, which is not the only case - requires far-reaching and long term commitment by the management - BPR enthusiasm may result in some 'good' practices being discontinued - often taken as a 'fashionable cure-all' exercise

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Major reasons why BPR fails - cost of BPR may exceed the benefits - BPR has been done too late - BPR reforms were not suitable for the culture or structure of the organization - inherent risk with BPR is quite high Hammer's 7 principles of BPR - process should be 'outcome' oriented and not 'task' oriented - personnel who uses the output from the process should perform the process - geographical dispersed resources should be treated as centralized - parallel activities should be 'linked' rather than integrated - doers should be allowed 'self managing' - info should be captured at source - information processing should be done in the work that produces information Zuboff's Automate, Informate & Transformate Theory - Automate: automation - Informate: rationalization - Transformate: business process re-engineering - Zuboff is similar but focuses 100% on IT involvement

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3.4

BUSINESS INFORMATION MANAGEMENT BY: Ashraf Rehman

CHP 5 - BUSINESS CASE DEVELOPMENT & GAP ANALYSISBUSINESS CASE DEVELOPMENT- Business case is a justification for a project (investment) to be undertaken General approach to business case development - where we are W2R - where we want to be W3B - how to get there (GT)2 - going to get there - overall decision also used by examiner in past papers - to cover historic situations: - where we were W3 - where we went wrong W4 Cost benefit analysis - key part of business case development - various methods includes: - payback period - accounting rate of return - discounted cash flows: - net present value - internal rate of return - cost of a new system are as follows: - equipment cost (hardware) - installation cost (hardware installation, e.g. room. A/C, wiring) - system development cost - personnel cost (training cost, salaries) - operating cost (maintenance cost, consumables) - benefits of a new system are as follows: - savings in cost by not using the old system (salaries, consumables) - additional savings resulting from the new and enhanced system (e.g. increased sale revenue, better stock control leading to less stock losses, etc. - revenue from the sale of old equipment / system

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- there are other 'intangible' costs and benefits which cannot be quantified, it could just be expressed in the feasibility report as text. E.g. are - cost: - staff dissatisfaction - learning time - benefits - customer satisfaction - better decision making ability - the following can be done with the intangible costs and benefits - ignore them altogether - assign quantitative values based on educated assumptions - present them separately alongwith the financials Contents of a Business Case Report - Terms of Reference (TOR) or introduction - outline of current position, highlighting the problem areas - relevant objectives - gap analysis - analysis of different options available (including cost benefit analysis) - conclusion and recommendation as to the preferred option

BUSINESS ANALYSISIntroduction - Business analysis: refers to the analysis of business processes, relationships and performances (although there is no specific definition of business analysis) - difference between business analysis (BA) and system analysis (SA) - SA has a narrow focus than a BA - SA focus on operations of the system and BA focuses on the surrounding business issues - BA reviews information system in light of the Organizations overall strategy and position and SA on the users needs Information Audit - Aims to determine the info need of users and decide how these needs could me met - 3 stages: - info need analysis - info analysis (existing info available) - gap analysis

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

Opportunities competitive edge compatible with other systems e-commerce possible later on

Threats vendor dependency system failure will be costly

SWOT and IS STRATEGY GRID McLaughlin approach to IS Strategy SITUATION T (external) OExplore (to maintain position) Attack Protect (from competetor) Beware

S W IS CAPABILITY (internal)

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Sensitivity analysis - business case development involves future uncertainties - sensitivity analysis deals with uncertainties, based on 'what-if' approach - key variables are identified and then they are amended by a x% to see the impact on the bottomline - this highlights those variables which are most likely to have a significant effect on the bottomline (I.e. those which variable which are sensitive) - after the sensitive variables are highlighted, the management can: - try to obtain the best possible future estimates on them - apply strict controls on them - alter the plan to eliminate the sensitive variables altogether Current Situation Analysis (CSA) - also known as 'resource' analysis - this analysis is in light of the Organization's overall strategy and position - a CSA for IS/IT project covers all related aspects, including: - hardware - softwares - communication devices - network topologies - SDLC - maintenance procedures - contingency plans - Earl's System Audit Grid, Strategic Grid, BCG Growth Share Matrix, Application Portfolio are some

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Earl's System Audit Grid

Current systems are plottedRenew / invest further divest / dispose maintain / enhance re-assess

BUSINESS VALUE

High Low

Low High TECHNICAL QUALITYStrategic Grid (McFarlan / McKenny) Org's level of dependence on IT is plotted Str. Importance High of PLANNED IS LowTURNAROUND: STRATEGIC: expect in future to give comp edge SUPPORT: FACTORY no str value

Low

High Str. Importance of CURRENT IS

BCG Growth Share Matrix Potential cash inflow / outflow of products are plotted Market Growth

High Low

QUESTION MARKS DOGS

STARS CASH COWS

Low

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

High Market Share

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- DOGS: - ex cows - IS/IT not strategically important - strategy: DIVEST - QUESTION MARKS: - justifications to invest - strategy: BUILD / HARVEST Applications Portfolio (Peppard Strategic Grid)) Impact of individual systems in an Org is plotted

Strategic Importance in future Comp environment

High Low

high potential applications Support applications

strategic applications key operational application

Low

High

Strategic importance in current comp environment

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

Gap analysis in IS/IT - determines whether systems meets the current (or predicted) informational requirements of the Organization - see graph on pg. 133 para 3.8 - it is not possible to fill the simple gap, as time does not stand still - efforts should be focused on filling the continuous gap Methods for closing IS/IT continuous gap - adoption of new hardware - adoption of new software - adoption of new technology (internet) - outsource the function - adoption of GroupWare's and knowledge management principles Selecting strategies to close the IS/IT continuous gap Portfolio Analysis Grid Risk and benefits of planned systems are plotted POTENTIAL BENEFITS

High Low

idnetify & develop routine

cautiously examine AvoidPage 39 of 91

Low

applications

Avoid

Low High PROJECTED RISK

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

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3.4

BUSINESS INFORMATION MANAGEMENT BY: Ashraf Rehman

CHP 6 - INFORMATION SYSTEMS & COMPETITIVE POSITIONINTEGRATING IS/IT WITH BUSINESS OBJECTIVES

Successful IS/IT strategies Successful IS/IT strategies are those which: - are in line with the overall corporate strategies - satisfies user needs - evolutionary instead of revolunationary IS/IT Evolution Stages - Richard Nolan's Theory

- also known as Richard Nolan's Stage Hypothesis or Nolan's Six Stage Growth Model

- 6 stages: - Initiation / Clerical usage - automation of clerical operations and initial use of technology (e.g. spreadsheets, word processors, application softwares, etc.) - Contagion - involves rapid growth in use of IT as users become more familiar and sees the benefits (e.g. more application softwares, etc.), leading to unplanned and haphazard growth - Control awareness - involves introduction of tighter management controls over IT development and use, in order to control the overspending and inefficiencies - Integration - IT seen as an integral part of business operations and henceapplications are integrated to be used across the organization (e.g. shared database)

- Data administration - focus shifts from information processing to informational requirements. Info now seen as a business resource - Maturity - IS/IT strategy seen as part of business planning - problems with the Theory: - developed in early computarization days (1970s) - linearity (sequence may not be followed) - size and cost (currently, it may not apply to small sized PC based companies) Integration process - CSF is the link between the business strategy and the IS/IT strategy - integration process is s follows: - define business objectives (e.g. raise earnings per share) - identify CSF (e.g. new customers, products) - develop the IS/IT to support the CSF (e.g. customer database) - IS strategy involves three components / architectures - data architecture (logical layout-database structure) - software architecture (application softwares) - hardware architecture (equipment, networking, communications)

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

EFFECT OF IS/IT ON INDUSTRYCompetitive Edge - a gain or advantage that an organization has over its competitors - could be in the form of good quality, cheaper price, better image in the eyes of customers, new up-to-date products, etc. - IT can contribute in competitive edge if the organization is 'information' intensive, e.g. banking, airlines, etc. but no in 'less information' sensitive organizations - As per Porter and Millar, IS/IT can impact industries in three ways - change the industry structure - create new business and industries - create a competitive edge Change in industry structure - IS/IT affects the following factors working in the industry - threats of new entrants (barriers to entries)(Defensive: economies of scale, high capital costs Offensive: unique innovation)

- bargaining power of suppliers (erode / reduce)(better communications, EDIs, exploiting competition amongst suppliers)

- bargaining power of customers (lock-them-in)(better service, accessibility, increases switching costs, better customer analysis)

- threats of substitute products(IT itself can be a substitute product, new leisure activities e.g. games, music)

- existing competitive rivalry(give competetive edge, discussed below)

Porter's 5 Forces ModelCreating new business and industries - new industries have been created due to IS/IT, e.g. ISPs, etc. - existing industries have changed drastically, e.g. Britannica Encyclopedias now coming on 1 CD rather than in a set of 37 books Create a competitive edge (addressed below)

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Porter's competitive strategies - there are 3 generic strategies for achieving competitive advantages: - industry-wise cost leadership - industry-wise differentiationthrough the product design and quality, marketing manner, etc.

IS/IT CREATING COMPETITIVE EDGE - PORTER'S VALUE CHAIN

by reducing per unit production cost through better utiliztion of resources through IT

- focus on certain segments and not entire industry

through customized products, segmental analysis of target customers, etc.

Porter's Value Chain - a model of value activities of an organization - value activities are those activities which adds value to the product - value chain model divides organization's activities into 9 generic activities - 5 primary and 4 support activities - primary activity is an activity which involves the making of the product, e.g. manufacturing process - support activity is an activity which supports primary activities or other support activities, e.g. human resource - see diagrams 4.6 a & b on pgs 156/157 - value chain can be used to design a competitive strategy, by focusing resources on areas where further values can be added (e.g. automating physical tasks, generating good reports, etc.). Activities on the value chain PRIMARY ACTIVITIES: Inbound logistics - activities to receive, store and internally distribute the materials, e.g. purchasing, warehousing, etc. - IT system which can be used: - material planning modules / JITs in ERPs / MRP - bar coding - inventory system integrated with accounting system Operations - activities to produce the product, including packaging and testing - IT system which can be used: - computer aided manufacturing systems (CAMs) - robotics - production planning modules in ERPs - process control moduels

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Outbound logistics - activities to distribute the product to the customer, including warehouses & distribution channels - IT system which can be used: - sale order processing systems linked with inventory systems - EPOS - E-Commerce - EFT Marketing & sales - activities to receive orders from customers + promotions, e.g. advertisement - IT system which can be used: - Customer Relationship Management modules (CRMs) (cookies) - online order booking and tracking systems - sale order processing systems linked with inventory systems - E-commerce Service - activities to help retain product value, e.g. after sale service, installations, warranties - IT system which can be used: - Customer query / complaint tracking systems SUPPORT ACTIVITIES: Procurement purchasing of necessary inputs e.g.: Procurement Planning Modules, extranet, EDI Technology Development development of machines, computers, processes and systems E.g.: Computer Aided Designs (CAD) Human resource management activities to train, develop and remuneration to staff E.g.: intranet, Personnel Planning Modules, payroll, CBTraining, electronic attendance Infrastructure overall management, financing, planning of the organization, e.g. top mgmnt E.g.: intranet, groupware, MIS, EIS, ES, data mining

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IS/IT adding value to a product - E.g. of areas where IS/IT can be used to add value to a product - robotics - CADs - machine / production / process control systems - EPOS / barcoding - computer aided manufacturing processes (CAMs) - intranet / extranet - Enterprise Resource Planning (ERPs) systems - online systems - procurement / material planning (MRPs and JIT) systems - personnel / HR systems - customer relationship management (CRM) - KWS - EDIs and E-commerce - integration (shared databases, networking) IS/IT leading to competitive advantage - above points related to adding value, PLUS - establishing entry barriers - differentiating products - increasing cost efficiencies - affecting the cost of switching operations - decreasing supplies and administrative costs - enhanced integration with customers and suppliers - developing new products using KWS

OUTSOURCINGOutsourcing - Outsourcing is buying any service from outside, rather than employing own staff and resources - in IT, outsourcing means that an external Organization is carrying out the IT functions for your Organization in lieu of a pre-agreed price- normally done if the Organization does not have the expertise, support staff or time

- the term 'turn-key services' means that the vendor is providing all the services from start to the end,, I.e. you only have to turn a key- organizations involved in providing outsourcing services includes facilities management

consultancy companies, software houses, hardware maintenance companies, etc. - when you outsource, the third party usually takes over the existing staff under Transfer of Undertakings (Protection of Employment) Regulations, (TUPE).

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Types of outsourcing Total outsourcing - entire IT is outsourced to a single supplier - IT is seen as a support service - strategic control has to be retained within the organization - organization can focus more on its core activities - normally based on long-term contract Multiple / selective outsourcing - a range of suppliers are used to decrease dependency on a particular supplier - could lead to coordination problems amongst the various suppliers - IT is seen as a support service - strategic control has to be retained within the organization - organization can focus more on its core activities - could be based on short-term contracts Joint venture outsourcing - a partnership is drawn with the supplier on a risk and reward sharing basis - organization normally holds 49% of the supplier's company - leads to some control of the organization over the supplier Incremental outsourcing - starts with outsourcing smaller activities first and then go on increasing - a cautious approach Others - adhoc outsourcing: short period temporary outsourcing (e.g. shortage in staff during peak - project outsourcing: entire project is outsourced (e.g. development of software) - partial outsourcing - some activities are outsourced, e.g. hardware maintenance Factors to be considered before outsourcing - is the activity strategic for the organization? - can the activity carried out in isolation (I.e. the function should have limited interfaces, e.g. payroll) - how much time will still be spent on monitoring the outsourced arrangement - how frequently will our requirements change - cost benefit analysis

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Advantages of outsourcing - specialist staff / knowledge is available (particularly for small Organizations) - organization can concentrate more on 'core' activities - cheaper (in certain cases due to economies of scale for vendor) - new skill and technological knowledge becomes available - fixed price contracts makes budgeting easier - cost beneficial in case of Legacy Systems Disadvantages of outsourcing - dependent on third person to provide you your own information - confidential information are in hands of a third person - if IS your strategic weapon, then you may lose your competitive edge Types (level) of services available in IT outsourcing - time share vendors: provides online access to external processing capabilities, usually charged on a time-used basis - service bureaux: provides specific processing functions at offsite premises - facilities management: refers to onsite services for e.g. in IT processing, equipment is at our premises but managed by external staff The Service Level Contract (SLC) / Agreement (SLA) should include: - details of services to be provided alongwith timings - duration, price and other modus-operandi of the arrangement - employment issues (TUPE Law) - ownership and legality of softwares (in case of software development) - arrangement for an exit route (I.e. if contract is to be discontinued) - dispute resolving procedures INSOURCING - means recruiting IS/IT staff from other departments of the Organization, rather than recruiting a new staff from outside - develops a high degree of in-house expertise and specialization - advantages of insourcing: - reduced recruitment cost - increase staff retention and motivation - disadvantage includes: - business people may not have a through or advanced technical aptitude- reduce cost in integrating the IT staff with the corporate culture and business needs

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BESPOKE OR OFF THE SHELF SOFTWARE Bespoke Software - software is constructed keeping in mind the requirements of a specific organization (I.e. tailor-made) House contracted for this purpose

- it could be constructed either by the 'in-house' System Department or by a Software

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

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

Off-the-Shelf Software -'ready to install and use' software available in the market - sold to a wide range of users and intended to handle the most common requirements - e.g. Microsoft Office 2000, Peachtree Accounting Software, etc. Advantages of off the shelf software - available and implementable almost immediately - generally cheaper than the bespoke software - upgrade versions are automatically available in the market - normally of better quality and standard due to extensive testing and user feedback, - relatively error free, i.e. no bugs - well documented and tested user manuals Disadvantages of off the shelf software - a standard solution might not suit the organization's need - hard to reach the supplier for upgradation / problem shooting - competitors might be using the same package, hence there is no competitive edge - may be incompatible with the other software currently in use Customized Version of Off-the-Shelf Software - standard software can be customized to suit the organization's needs. - this can be done by purchasing the source code of the software and then having it modified in-house or by paying the main company for having it tailor made for us Advantages of customized versions - advantages are substantially same as bespoke software, PLUS - development time can be much quicker - if modification is done in-house, then the organization can acquire in-depth knowledge of the software, and hence can ensure smooth running Disadvantages of customized versionsPage 48 of 91

- it may prove costly in the long run as all new versions will also have to be customized time and again - customization may introduce bugs that do not exist in the standard versions

- in-house IT deptt might have to acquire additional skills to handle customized versions

SOFTWARE CONTRACTS AND LICENSES Software development contract - generally used for bespoke software developed by an external party - covers the following aspects: - cost - duration of development - warranty terms - support available - arrangements for upgradation - maintenance arrangements - ownership, including the source codes (particularly in case of specially written Programmes) Software license - generally used for off-the-shelf software - covers aspects such as - number of users - can it be modified without user's consent - circumstances under which the license will be terminated - limitation of liability (in case of fraud or malfunction) - obligations to correct bugs

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Software piracy - piracy means unauthorized copying / usage of software - piracy may lead to a civil suit (case) and the employees / users might have to face a criminal liability - the most common piracy is Corporate Overuse, I.e. the software has been installed in more machines than originally agreed - installation of a software on a laptop and then using it offsite or at home is normally not a piracy LEGACY SYSTEMS Legacy system - a system which is now old (normally 10 yrs) and not adequately meeting the needs of the Organization, but is still being used - such a system is still being used because huge cost had been incurred on it - since the systems are quite old and inflexible, they cannot interface with the current softwares running in the Organization - the cost of maintaining legacy systems is also high because you have to keep staff trained for an outdated software - problems to shift from legacy systems to new systems: - it is very difficult to re-write the program codes as no system document available - as it is a mega project in it self, it may not be viable in terms of time, resources and costs - many other systems may get effected if the core system is changed

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3.4

BUSINESS INFORMATION MANAGEMENT BY: Ashraf Rehman

CHP 7 - INTERNET AND E-COMMERCEINTERNET

Definitions

- internet: global network connecting millions of computer to send and receive information - www (world wide web): a multi media facility, providing color screen, sounds, graphics, etc. / system of internet servers that supports special format files (eg html) - website: points within the internet network, created by individuals / companies to provide information, entertainment, etc. - http (hyper text transfer protocol): the language in which the information is retrieved from the internet

- URL (universal resource locater): a unique address which describes the location of a website- browsers: interfacing Programmes used to access internet, e.g. internet explorer, Netscape

Current use of internet - providing information - transactions (e-commerce) - marketing - relationship enhancement - entertainment - communiction Characteristics of internet - shifts powers from sellers to buyers as they are now very well informed or the available choices - reduces transaction costs - enhances speed, range and accessibility of information Advantages of having a corporate website - additional customers can become aware of the company - details of forthcoming events / products can be posted on the site - transactions can be done, e.g. e-commerce - feedbacks can be received from customers - having a website gives a good technological impression Characteristics of effective website - general appearance should be appealing - should be available 24/7 - integrated with company systems - maintain customer history - ability to advertise and promote - security and trust

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Problems with internet - growing rapidly, without any formal organization / control / law - exposes the system to various security hazards, e.g. hacking, virus, etc. - quality / authenticity of the information may be questionable - consumes too much time as it is tempting and hard to resist - speed and conectivity issues Factors influencing use of internet in business - nature of customer (IT oriented, literate, geographically dispersed, etc.) - cost - both to organization as well as customer - frequency of contact with customers - nature of industry - value addition (eg speed, accuracy, simplicity) E.g. of security dangers linked with internet - viruses can enter the systems - hacking - disaffected employees may alter / damage the data by sitting at home - employees may download inaccurate information or virus-hidden software (e.g. beta version of a software) - information being transmitted may be intercepted - communication links / lines may break down and distort the data

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What can a website do ?? - answers frequently asked questions (FAQs) - keyword search - tells you the status of a particular process (say flight details, DHL parcels) - e-mails - bulletin boards / e-groups - transactions Hackers - hacking is unauthorized access to computer systems - primary aim is to corrupt the data or make a copy - hacking softwares could be used which enables rapid guessing using hundreds of permutations and combinations per minute - prevention measures includes: - physical security of equipment - effective password arrangements - data encryption - system logs Viruses - a piece of software which infects Programmes and data and possibly damages them - viruses are generally placed in common software which are frequently used, e.g.: - free software from internet - pirated software (because they are cheap) - games software (wide appeal) - email attachments - virus can also spread through common floppies - the following are e.g. of the types of viruses - file viruses (will destroy the file to which it is attached) - trojan viruses (the file to which this virus is attached works normal, but at the same time the virus is destroying other files) - boot sector viruses (activates at the time computer is switched on) - time bombs (activates on a certain date and time) - logic bombs (activates upon the occurrence of a certain event, e.g. amount of hard disk reaches certain capacity) - worms (spreads through the entire computer by reproducing / multiplying itself) - macros (activates when "macro" features of a S/W are run)

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- anti-viruses are software which detects and destroys viruses (e.g. Norton, mcafee) - prevention steps against viruses: - installation of powerful and updated anti virus software - thoroughly testing external softwares - usage of tested and marked diskettes - very limited external floppy / CD drives on PCs and workstations - thoroughly testing all incoming attachments being downloaded from internet Safety measures relating to internet - encryption - involves scrambling the data at one end of the line , transmitting the scrambled data and unscrambling it at the receivers end (e.g. star TV decoders) - firewall: a security device that isolates the sensitive parts of the Organization's systems from those areas which are available to external users - authentication - a unique identity is attached with the file which is then unkeyed with a specific algorithms to ensure authentication- dial back security - the person requiring access to the system will dial into it and identify - automated shutdowns - all unsuccessful attempts should be logged and investigated and - system logs - records of all users logging in and logging out are kept by the system

himself and then the system will dial back to him after verifying his identity

the system should shutdown after 3 consecutive unsuccessful logon attempts

Electronic Data Interchange (EDI) - a form of computer to computer data transfer (mails, invoices, information) - advantages: - reduces transmitting delays - avoids re-keying - reduces costs - facilitates shorter lead times - provides opportunities to improve customer services - disadvantages: - compatibility problems - junk emails - security risks (hacking, viruses, etc.) - decreases physical interaction E-commerce - E-commerce: conducting business electronically via communication links, I.e. the process of trading on internet- E-commerce facilitates the sales and distribution aspects of an Organization, as follows:

E-COMMERCE

- reduced sale, marketing and distribution staff - electronic marketing - collecting information about customers (eg registration forms) - click streams - keeping a track of which properties a user is clicking while he is on the website

Advantages of Internet and E-commerce (as well as advantages differences with traditional business style) - small companies can move into the global stream - new dimensions of availability of information - speed - new business partnerships (e.g. amazon .com - book seller) - promotes transparent pricing

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- provides sophisticated market segmentation opportunities - decreased transaction cost - decreased use of cash Setting up an E-business - telecommunication infrastructure - hardware - software - linking back office operations with web operations (e.g. linking of TPS) - mechanism for order fulfillment (virtual supply chain) - customer registration arrangements - e-marketing Risks attached with e-commerce (from customers point of view) - confidentiality of private information (say, credit card number) - lack of paper-based audit trails for transactions - possibility of misuse of customer credit card number by the trader - fake orders Disadvantages of e-commerce - involves an unusual mix of persons (web designers and administrators, IT staff, marketing staff, etc.) - high development and interfacing costs - slow payback period, I.e. profits will be realized after some time - due to globalization, legal requirements of all countries have to be considered - lack of trust of customers on e-business - security issues related to internet Customer services aspects - rapid response time - response quality - navigability - download times - security and trust - fulfillment - uptodate - availability of the site

Virtual Supply Chain - supply chain is the entire chain of obtaining the raw materials and delivering the goods to the customer - traditional practices were paper-based, e.g. a purchase order sent to the supplier or invoice sent to the customer

- uses advanced technologies to coordinate the activities within the SC (e.g. web based tech) - virtual supply chain is based on communication links (internet / extranet) through which the supplier as well as the customers are online with the Organizations systems - also, separate companies can join together for a joint project, without the teams physically meeting each other

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

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DEVELOPING STRATEGY FOR INTERNET AND E-COMMERCEDevelopment methodology- strategy for internet and e-commerce should be developed considering the following:

- organizational culture - systems and processes - infrastructure and support requirements - training of staff - customers

- following is the broad roadmap for developing a strategy - understand customer segment - upgrade customer interaction - understand service processes - decide technology - deal with tidal wave (the initial switch to the e-commerce) - e-marketing - implementation aspects and timeframes

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GLOBALIZATION- Globalization: the trend of standardization of - products - qualities - pricing - policies and procedures on a world wide basis Advantages of globalization: - access to global customers - financial implications - take advantage of global economic and fiscal differences (cheap labour, low taxes) Disadvantages of globalization: - legal complications - dynamic global environment leads to rapid changes in strategies Country wise factors to keep in mind before globalization - share of the particular country in the global activity of the Organization - tax regimes - language and culture - infrastructure - wage levels - skill levels of employees - government control regulations such as tariffs, quotas, bans, etc. Global Business Strategy - Domestic exporter: all activities are done at one place and then exported across the globe - Franchise or licensing: product designs and specifications are controlled centrally but countries have their own production and distribution facilities - Multinational: strategic activities are centralized but core activities are managed within individual countries, eg corporate strategy at centre and dept strategy local - transnational entities: all activities are managed globally, with 'branches' within individual countries - factors which are kept in mind to decide upon above are: - customer demands - purchasing requirements - competition - industry specification and size - government regulations

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Global Information Strategy - Centralized: all system development and operations is performed at one place (in case of domestic exporter strategy) - Duplicated: all system development is performed at one place but each country implements and maintains its own systems (in case of franchise / licensing strategy) - Decentralized: each country develops and operates its own systems (in case of multinational strategy) - Networked: system development and operations is performed in many locations (in case of transnational entity strategy). Some or all systems may be implemented worldwideDomestic exporter

Multinational

Franchise

Transnational

Centralized Duplicated Decentralized Networked

XX XX XX X X XX X

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

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3.4

BUSINESS INFORMATION MANAGEMENT

CHP 8 - IMPLEMENTING CHANGEBY: Ashraf Rehman

PLANNING AND IMPLEMENTING CHANGEPossible reactions to change - acceptance - indifferent (unbothered) - passive resistance (refuse to accept) - active resistance (deliberate spoiling or deliberate errors) Steps relating to planning and implementing a change - determine need for the change - prepare tentative plan with some alternatives (preferably based on brainstorming with affectees) - analyze probable reactions - make a final decision amongst the alternatives - establish timetables for the change - firm communication of the plan to the concerned parties - implement the change - post review the implemented change Kurt Lewin's Change Process - UNFREEZE: most difficult stage; show why change is required and motivate - MOVE: put change into affect - REFREEZE: consolidate or reinforcement the change (e.g. reward or punishment) Champion of Change Model - the Champion of Change Model recognizes the importance of change being led by a 'change agent', who may be an individual or a group - the following are the steps identified in this Model: 1 - senior management decide on a broad term what is to be done, and then they have to: - support the change - review and monitor the progress - endorse and approve the change after it has been implemented 2 - a change agent is appointed 3 - change agent has to win the support of the functional and operational managers 4 - change agent uses the functional and operational managers to bring the change and give them the necessary support

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3Cs: Commitment, Coordination and Communication - Commitment: this has to be from all stakeholders, but particularly from top management, as they have to allocate resources to achieve the changes - Coordination: ensuring that all involved are working in an efficient and effective manner towards the common objectives. Requires planning and control - Communication: right persons must communicate the right things at the right time in the right way. Important in all phases, i.e. start, execution and end PROJECTS Project life cycle? - is the major time periods through which any project passes - The following are the stages of a project - Defining (whether the project should begin & then objective setting) - Planning (devising a workable scheme to achieve overall project goal, including feasibility, fact finding and option analysis) - Implementing (coordinating people & resources to carry out the plan and then implementing the project) - Controlling (ensuring project objectives are met by monitoring & measuring performance) - Completing (formalizing acceptance & bringing it to an orderly end) Project Initiation Document - project initiation document (PID) should be drawn out to document the following: - business objectives - project goals - scope - resources and constraints - risk analysis - ultimate users Project management tools - project budget - work breakdown structure - Gantt chart - critical oath analysis / PERT - resource histograms Advantages of project management tools - improved project monitoring - more effective planning - focusing on critical / problem areas - improved resource allocations - easier visualization of relationships

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Document used in project management - project plan - progress report - completion report - post-completion report What to do if the project is behind schedule? - do nothing - add more resources - work smarter - replan or reschedule - introduce incentives to work faster - change specifications Change control procedures - major reasons for changing the project plan could be: - you are behind schedule - new technology is now available - change in personnel - change in business environment - the earlier the change, the less expensive and easy to incorporate - the following should be addressed when considering a change: - consequences of not implementing the change - impact of the change on the time, quality and cost of the project - the risks associated with the change - change procedures includes: - need and feasibility of the required change - appropriate approvals - document all changes in the plan - implement the changes practically

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

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User resistance - there are three types of user resistance to a change in IS: People Oriented: - factors internal to users, for e.g. users may not wish to learn a new program or amend their working practice - this can be overcome by: - user orientation to shoe the benefits of the new systems - finding the 'internal' reasons and trying to address it - persuasion or strict orders System Oriented: - factors related to the new system, for e.g. a poorly designed user interface will lead to user resistance - this can be overcome by: - user involvement in the design stage - user training of the system - finding the reasons and trying to address it in the software Interaction: - caused by interaction of the users and the system, for e.g. user may fear that it cultural or political rather than system inefficiencies - this can be overcome by: - reorganize the organization structure before the implementing the system - restructure incentive schemes which might be eliminated due to systems (e.g. users will be afraid that overtime will finish due to systems) Ways to control inherent risks - the following are the ways through which the inherent risks of a system changeover can be reduced: - Organization Impact Analysis: study of how the systems will affect the structure, staff attitude, operations, etc. - Ergonomics: study of work and work environment in order to improve peoples efficiency e.g. Human Computer Interface (HCI) - external integration tools: involve users throughout the process - internal integration tools: involve the best experts and suitable technical personnel - formal planning and control tools: e.g. critical path analysis, Gantt chart, PERTmay take away some of their power or influence on the Organization, I.e. resistance is

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SYSTEMS DEVELOPMENT LIFECYCLES System development lifecycles ?? - the stages through which a system moves through from inception until the time it is discarded or replaced - when a project lifecycle ends, it is unlikely that ongoing maintenance will be part of the project scope but in system development lifecycle, the ongoing maintenance is also included the scope A disciplined approach to system development - feasibility study - identification of alternatives in line with the business objectives and carrying out technical, operational, social & economic feasibility - system investigation - fact finding exercise of the existing systems, e.g. volume of transactions, response time, etc. - system analysis - the above facts are analyzed in light with the various proposed alternatives - system design - technical phase addressing detailed specifications, e.g. input, outputs, program design, file design and security - programme coding - system design is converted into a software - system implementation - steps to put software into operation - review & maintenance - ensures that the system is meeting the objectives set out in the feasibility study and is running smoothly What can go wrong ?? Investigation & Analysis stage - problem not understood fully - insufficient resources for investigation - lack of user input Design stage - lack of user input - inflexible / incompatible design - future needs cot considered - no or insufficient Organization Impact Analysis (I.e. how the change will effect the Organization's structure, operations, attitude, decision making and control) Programming stage - programmers supplied with inadequate / incomplete specifications - insufficient time and resources allotted to programming stage - program codes not documented

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Testing stage - insufficient time and resources allotted to testing stage - unorganized testing - insufficient user involvement Implementation stage - lack of user training - 'urgent' implementation System development techniques / concepts / tools - SSADM - Waterfall method - Spiral method - Case tools - 4 GLs - prototyping - JAD - RAD STRUCTURED SYSTEM DESIGN