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MANAGEMENT INFORMATION SYSTEMS

Course Code: MBAMS 10201 Credit Units: 03

Course Objective:

Information Systems (IS) enables new approaches to improve efficiency andefficacy of business models. This course will equip the students withunderstanding of role, advantages and components of an Information System. Theobjective of the course is to help students integrate their learning from functionalareas, decision making process in an organization and role of Information Systemsto have a vintage point in this competitive world.

Course Contents:

Module I: Basic Concepts of Information System

Role of data and information, Organization structures, Business Process, SystemsApproach and introduction to Information Systems.

Module II: Types of IS

Resources and components of Information System, integration and automation ofbusiness functions and developing business models. Role and advantages ofTransaction Processing System, Management Information System, Expert Systemsand Artificial Intelligence, Executive Support Systems and Strategic InformationSystems.

Module III: Architecture & Design of ISArchitecture, development and maintenance of Information Systems, Centralizedand Decentralized Information Systems, Factors of success and failure, value andrisk of IS.

Module IV: Decision Making Process

Programmed and Non- Programmed decisions, Decision Support Systems, Modelsand approaches to DSS

Module V: Introduction to Enterprise Management technologies

Business Process Reengineering, Total Quality Management and EnterpriseManagement System viz. ERP, SCM, CRM and Ecommerce.

Module VI: Introduction to SAD

System Analysis and Design. Models and Approaches of Systems Development.


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Examination Scheme:

Components P-1 C-1 CT-1 EE

Weightage (%) 10 10 20 60

Text & References:

Text:

Management Information Systems, Effy OZ, Thomson Leaning/VikasPublications

Management Information Systems, James A. OBrein, Tata McGraw-HillReferences:

Management Information System, W.S Jawadekar, Tata Mc Graw HillPublication.

Management Information System, David Kroenke, Tata Mc Graw HillPublication.

MIS: Management Perspective, D.P. Goyal, Macmillan Business Books. MIS and Corporate Communications, Raj K. Wadwha, Jimmy Dawar, P.

Bhaskara Rao, Kanishka Publishers.

MIS: Managing the digital firm, Kenneth C. Landon, Jane P. Landon, PearsonEducation.


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Name of Institution: Amity Business School

Subject: Management Information Systems

Course: MBA

Semester: 2nd

Module 1

Basic Concepts of Information System:Role of data and information, Organization structures, Business Process, SystemsApproach and introduction to Information Systems.

Objectives:

1. To understand the role of data and information in todays businessenterprise.

2. To study the organization as a structure and its different functional layers3. To explain business processes and their working in synergy to achieve

organizational goals.4. Understanding system concepts.5. To understand the components and working of a system.6.

Explain why knowledge of information systems is important for businessprofessionals.

7. To understand the relevance and utility of Information systems8. Give examples to illustrate how the business applications of information

systems can support a firms business processes, managerial decision-making, and strategies for competitive advantage.

9. Provide examples of several major types of information system of businessorganizations in the real world.


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Introduction: (4 Lectures + 1 Tutorial)

An understanding of the effective and responsible use and management ofinformation systems is important for managers, business professionals, and otherknowledge workers in todays networked enterprises. Information systems play a

vital role in the e-business and e-commerce operations, enterprise collaborationand management, and strategic success of businesses that must operate in anetworked global environment.

An information system uses the resources of people, hardware, software, data, andnetworks to perform input, processing, output, storage, and control activities thatconvert data resources into information products. Data are first collected (input)and converted to a form that is suitable for processing. Then the data aremanipulated and converted into information (processing), stored for future use(storage), or communicated to their ultimate user (output) according to correct

processing procedures (control).


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Lecture 1:

Objective of the Lecture:

1) To give an overview of the course and its syllabus2) To explain the meaning of data and Information. To highlight their

differences, and their roles in a business organization.

Main Lecture:

Todays business environment is essentially global There is a need to improve

the efficiency and effectiveness of the business processes for competitive

advantage.

The art of management is all about decision making. Decision making can no

longer be ad hoc in nature it must be backed by lots of facts and figures and

resultant information. Each decision taken has an effect on the organization hence

the role of data and resultant information is of extremely vital.

1.1 Data:

It is a set of facts and figureswhich are random, unorganized, are not classified,

ordered or sorted. They do not convey much meaning. They are raw facts orobservations, typically about physical phenomena or business transactions. More

specifically, data are objective measurements of the attributes (characteristics) of

entities, such as people, places, things, and events.

1.2 Data Resources:

Data constitutes a valuable organizational resource. Thus, data resources must be

managed effectively to benefit all end users in an organization. The data resources

of information systems may be typically organized into Databases which are a

collection of logically related records or files. A database consolidates many

records previously stored in separate files so that a common pool of data records

serves many applications.


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1.2 Process:

They may be any set of tabulations, sorting, comparisons, calculations done on the

data to make it more meaningful. They may be procedures or work flows forconversion of data into meaningful information.

Thus data is subjected to a value-added process (data processing or information

processing) where:

Its form is aggregated, manipulated, and organized. Its content is analyzed and evaluated It is placed in a proper context for a human user

1.3 Information:

This is data which has been tabulated, sorted, classified etc. It conveys meaning

and gives a picture of the object/event under consideration to specific end users.

Thus Information is processed data, which has been placed in a meaningful and

useful context for an end user.

Fig 1.3 A


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Attributes of Information:

1. Timely

2. Accurate3. Relevant4. Complete, integrity, consistency, validity, etc.

Fig 1.4 A


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Summary:

Information processing (or data processing) activities include the following: Input of data resources Processing of data into information Output of information products


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Lecture 2

Objectives:

1.

To study the business organisation as a structure and its various functionallayers.

2. To understand the transformation of data as we transcend the levels ofmanagement.

3. To elucidate the basic functions of the levels of management.

2.1 Organization Structure (Levels of Management)

Fig 2.1 A

Each organization has a structure which facilitates its chain of command. The

management of an organization can broadly be divided into three overlapping

layers. Usually the organization is viewed as a triangle depicting the hierarchy and

diminishing number of employees with the increasing levels of management.

The top level of management is focused on chalking out long term tactics and

strategies for the organization. They are largely involved in futuristic perspectives.

They try to work out plans for the organization which can help them achieve their


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vision and mission. They also have to counter the intense competition of the

markets.

Middle management carries out the programs and plans of senior management.The most important activity of the next stratum of management is control. The top

management sets the targets and strategies of the operations with a long term

perspective.

The long term plans are then converted into short term and measurable targets. A

path to achievement of the vision is clearly laid out. This path then helps the actual

operations of the organization to monitor their progress and achievements.Deviations within permissible limits may be allowed but any major shortfalls are

immediately addressed and lead to precautionary and remedial measures being

taken to put the process back in control.

The bottom most layers may be considered to consist mainly of lower levels of

management usually in charge of the daily routine operations of the business

organization. These routine day to day transactions generate large quantities of

detailed data. Any transaction or operations of the lower strata of the organization

usually involves procedures which are highly structured in nature. They usually

follow a non deviating routine; these procedures then can hence be easily

converted into computer programmes of the intended software.


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Summary:

Thus the three levels of management deal with data and its progressively

processed forms. The lower levels of management deal with extremely detaileddata. This is voluminous and some parts of it may be irrelevant. Every transaction

or unit activity taking place in the organization generates a trail of data. This data

is then processed, and starts giving a comprehensive picture for the middle

management to accomplish their tasks of ensuring the systems are in control. This

is the further analyzed and studied for trends and patterns to become the

knowledge capital for the top levels of management. This knowledge management

then becomes a tool for corporate warfare.


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Lecture 3

Objectives of the Lecture:

1)

To understand the meaning of business processes.2) To explain the importance of business processes and their working insynergy to achieve organizational goals

3) To comprehend the systems concept4) To understand the working and components of a system.

Main Lecture

3.1 Business Process: The procedure or the work flow of doing any task is called

a business process. It may also be defined as the manner in which work is

organized and coordinated to produce the required product and service. The data

generated due to a transaction in an organization is converted into information in

the work flow of a business process. The analysis of this resultant information is

then used for control of the operations of an organization by comparing results to

established company goals and helping to identify problem areas and opportunities

for improvement. This data and information forms an important input for short

term or long term planning.


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Fig. 3.1 A

3.2 System:

A group of interrelated components, with a clearly defined boundary, working

together towards a common goal by accepting inputs and producing outputs in an

organized transformation process is called a system.

A system maybe composed of several smaller subsystems. Each of the system has

its own sub goal, takes it input, does some processing and then converts it into

output according to the goal /objective in perspective. The subsystems need to

work with each other with synergy so that the objective of the parent system is

achieved. The subsystems may have interfaces with each other in terms of

communication or documents. This collaboration is important for the success of

the system as a whole


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A system (sometimes called a dynamic system) has three basic interacting

components or functions. These include:

Input:It involves capturing and assembling elements that enter the system to be

processed. This may be data which is requiring transformation.

Process:

It involves transformation processes that convert input into output. This may be an

activity or a combination of activities which may be classification, sorting,

tabulation, calculation etc which may be aimed at converting of data intoinformation for the end-user.

Output:

Output involves transferring elements that have been produced by a transformation

process to their ultimate destination. This is the result of the process and this may

be used for analysis, working out of trends, future projections and predictive

decision making.

.

Feedback:

A fourth dimension can be added to the above, that of feedback. Feedback is a

very important process for any managerial action. An understanding of the

problems faced by the end users may go a long way in the improvement of the

process. Feedback provides data about the performance of the system.


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Other System Characteristics:

A system does not exist in a vacuum; rather, it exists and functions in an

environment containing other systems.

Subsystem: A system that is a component of a larger system, where the largersystem is its environment.

System Boundary: A system is separated from its environment and other systems

by its system boundary.

Interface: Several systems may share the same environment. Some of these

systems may be connected to one another by means of a shared boundary, or

interface.

Open System: A system that interacts with other systems in its environment iscalled an open system (connected to its environment by exchanges of inputs and

outputs).

Adaptive System: A system that has the ability to change itself or its environment

in order to survive is called an adaptive system

Summary:

Hence the systematic conversion of data into information, to aid and enhance the

process of decision making is an important managerial activity.

Input Process Output


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Lecture 4

Objective of the Lecture:

1)

To understand the basic concepts of Information System.2) To link utility of Information Systems to organizations

Main Lecture

4.1 Information Systems:

Any organized combination of people, hardware, software, communications

networks, and data resources that retrieves, stores, transforms, and disseminates

information in an organization.

In an information system, people use hardware, software, data and networks as

resources to perform input, processing, output, storage, and control activities that

transform data resources into information products.

Need for IS and Impact of IT on an Organization

There is a need for each organization to analyze its operational data as each andevery company is facing global competition. No longer is the competition

restricted to geographical domains. The competition is with multi national

companies or even with e-commerce where the consumer has diverse avenues to

not only to make his final choice but also in terms of initial enquiries and FAQ s

of the product in question. Even the after sales service/suggestions and complaints

have been re-routed to an IT enabled medium. CRM thus acquires a new

dimension with immediate feedback and complaint redress.

Thus there is an urgent need for the companies to work with their maximum

efficiency & effectiveness to be able to withstand the onslaught of the intense

competition.


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There is another very subtle advantage that of increased transparency and the

resultant accountability of processes and organizations. Each activity that is

mapped electronically leaves an auditable trail.

There is also the far reaching effect of IT and IS on organizations that of

Enterprise Collaboration Systems which can be defined as the use of software

tools to support communication, coordination, and collaboration among the

members of networked teams and workgroups.

The collaboration between the stake holders increases manifold. The free flow of

data (EDI) and prompt payments (EFT) have a cascading effect on all departmentsof the business and contribute immensely to bottom lines by decreasing operation

costs and thus maximizing profits.

Fig 4.1 A

In these days of global proximities, IT can become the cause and driver of

organization renewal and innovation which can give immense gains as an agile

competitor. It has become simply infrastructural costs


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Tutorial 1 / Lecture 5

Objectives:

1) To discuss problems if any2)

To discuss a case study

CASE STUDY

Theres nothing like a punchy headline to get an article some attention. A piece in

the Harvard Business Review (May 2003), shockingly labeled IT Doesnt

Matter. The article has been approvingly cited in The New York Times, analyzed

in Wall Street reports, and e-mailed around the world. But without such a dramatic

and reckless title, I doubt the article would have been much noticed. Its a sloppy

mix of ersatz history, conventional wisdom, moderate insight, and unsupportable

assertions. And it is dangerously wrong.

Author Nicholas Carrs main point is that information technology is nothing more

than the infrastructure of modern business, similar to railroads, electricity, or the

internal combustion engineering advances that have become too commonplace for

any company to wangle a strategic advantage from them. Once-innovative

applications of information technology have now become merely a necessary cost.

Thus Carr thinks todays main risk is not under-using IT but overspending on it.

But before we get any further, lets have a reality check. First, lets ask Jeff

Immelt, the CEO of General Electric Co., one of the premier business corporations

in the world, this question: How important is information technology to GE?

Heres his answer: Its a business imperative. Were primarily a service-oriented

company, and the lifeblood for productivity is more about tech than it is about

investing in plants and equipment. We tend to get a 20 percent return on tech

investments, and we tend to invest about $2.5 billion to $3 billion a year. Then

lets ask Dell Corporation CEO, Michael Dell: Whats your take on Nick Carrs


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thesis that technology no longer gives corporate buyers a competitive advantage?

Heres his answer: Just about anything in business can be either a sinkhole or a

competitive advantage if you do it really, really bad or you do it really, really well.

And information technology is an often misunderstood field. Youve got a lot ofpeople who dont know what theyre doing and dont do it very well. For us, IT is

a huge advantage. For Wal-Mart, GE, and many other companies, technology is a

huge advantage and will continue to be. Does that mean that you just pour money

in and gold comes out? No, you can screw it up really bad. Finally, lets ask

Andy Grove, former CEO and now Chairman of Intel Corporation, a direct

question about IT: Nicholas Carrs recent Harvard Business Review article says:

IT Doesnt Matter. Is information technology so pervasive that it no longer

offers companies a competitive advantage? Andy says: In any field, you can

find segments that are close to maturation and draw a conclusion that the field is

homogeneous. Carr is saying commercial-transaction processing in the United

States and some parts of Europe has reached the top parts of an S-curve. But

instead of talking about that segment, he put a provocative spin on itthat

information technology doesnt matterand suddenly the statement is grossly

wrong. It couldnt be further from the truth. Its like saying: I have an old three -

speed bike, and Lance Armstrong has a bike. So why should he have a competitive

advantage? So, basically, Carr misunderstands what information technology is.

He thinks its merely a bunch of networks and computers. He notes, properly, that

the price of those has plummeted and that companies bought way too much in

recent years. Hes also right that the hardware infrastructure of business is rapidly

becoming commoditized and, even more important, standardized. Computers and

networks per se are just infrastructure. However, one of the articles most glaring

flaws is its complete disregard for the centrality of software and the fact that

human knowledge or information can be mediated and managed by software.

Charles Fitzgerald, Microsofts general manager for platform strategy, says that

Carr doesnt put enough emphasis on the I in IT. The source of competitive


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advantage in business is what you do with the information that technology gives

you access to. How do you apply that to some particular business problem? To say

IT doesnt matter is tantamount to saying that companies have enough information

about their operations, customers, and employees. I have never heard a companymake such a claim. Paul Strassman who has spent 42 years as a CIOat General

Foods, Xerox, the Pentagon, and most recently NASAwas more emphatic. The

hardwarethe stuff everybodys fascinated withisnt worth a damn, he says.

Its just disposable. Information technology today is a knowledge-capital issue.

Its basically a huge amount of labor and software. Says he: Look at the

business powersmost of all Wal-Mart, but also companies like Pfizer or FedEx.

Theyre all waging information warfare.

Case Study Questions:

1. Do you agree with the argument made by Nick Carr to support his position that

IT no longer gives companies a competitive advantage? Why or why not?

2. Do you agree with the argument made by the business leaders in this case in

support of the competitive advantage that IT can provide to a business? Why or

why not?

3. What are several ways that IT could provide a competitive advantage to a

business? Use some of the companies mentioned in this case as examples. Visit

their websites to gather more information to help you answer.

(Source: Adapted from David Kirkpatrick, Stupid-Journal Alert: Why HBRs

View of Tech Is Dangerous, Fortune, June 9, 2003, p. 190; Robert Hoff, Andy

Grove: We Cant Even Glimpse the Potential, BusinessWeek, August 25, 2003,

pp. 8688; and Speaking Out: View from the Top, BusinessWeek, August 25,

2003, pp. 10813.)


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Objective Type Questions

Q1 An information system is a combination of hardware, software, and data

resources that transforms information in an organization. True False

Q2 There are three fundamental reasons for all business applications of

information technology. They relate to the three vital roles that information

systems can perform for a business enterprise. One of these roles is support of its

business processes and operations.

True False

Q3 In any organization, end users rely on many types of information systems

like:

A) Simple manual (paper-and-pencil) information systems.

B) Formal (written procedures) and informal (word-of-mouth) systems.

C) Computer-based information systems.

D) All of the above.

Q4 Within the context of an information system, which one of the following

would be considered a typical end user?:

A) Managers.

B) Accountants.

C) Customers.



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MODULE 2 -Types of IS

Resources and components of Information System, integration and automation of

business functions and developing business models. Role and advantages of

Transaction Processing System, Management Information System, Expert Systemsand Artificial Intelligence, Executive Support Systems and Strategic Information

Systems.

Introduction:

E-business is all about going much beyond just the use of the Net, It is about the

combination with other technologies and forms of electronic communication, to

enable any type of business activity

This chapter introduces the fast-changing world of business applications of

information technology, which increasingly consists of what is popularly called e-

business applications. E-business is the use of the Internet and other networks and

information technologies to support electronic commerce, enterprise

communications and collaboration, and Web-enabled business processes, both

within a networked enterprise and with its customers and business partners.


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Objectives: ( 6 Lectures + 1 Tutorial)

1. Identifying the various cross-functional enterprise systems, and giving

examples of how they can provide significant business value to a company.

2.

Understanding Transaction Processing Systems.3. To identify several basic competitive strategies and explain how they can

use information technologies to confront the competitive forces faced by a

business.

4. Identify several strategic uses of technology and give examples of howthey give competitive advantages to a business.

5. Learning about Artificial Intelligence and its applications which can beused in business.

6. To give examples of several ways in which expert systems can be used inbusiness decision-making situations.


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Lecture 6


1)

To study the Information Systems and its components.2) To understand automation of business functions3) To discuss examples of Functional Business Systems.

Main Lecture:

6.1 An IS has the following components.

Peopleend users and IS specialists Hardwarephysical devices and materials used in information processing

including computer systems, peripherals, and media

Software sets of information processing instructions including systemsoftware, application software and procedures

Data facts or observations about physical phenomena or businesstransactions. Any unit event or activity in an organization generates data.

Networkcommunications media and network infrastructure Communications Media examples include twisted-pair wire, coaxial and

fiber-optic cables, microwave, cellular, and satellite wireless technologies

Network Infrastructure examples include communications processorssuch as modems and inter-network processors, and communications control

software such as network operating systems and Internet browser packages


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Fig 6.1 A

Functional business systems are composed of a variety of types of

information systems (transaction processing, management information, decision

support, etc.) that support the business functions of:

Accounting Finance Marketing Productions/operations management Human resource management


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There is a strong emphasis in many organizations to develop such composite or

cross-functional information systems that cross the boundaries of traditional

business functions in order to reengineer and improve vital business processes.These organizations view cross-functional information systems as a strategic way

to share information resources and improve the efficiency and effectiveness of a

business, thus helping it attain its strategic objectives.

Business firms are turning to Internet technologies to integrate the flow of

information among their internal business functions and their customers and

suppliers. Companies are using the World Wide Web and their intranets andextranets as the technology platform for their cross-functional and inter-

organizational information systems.

Examples:

Marketing Systems:

Marketing information systems integrate the information flow required by many

marketing activities. Marketing information systems provide information for:

Internet/intranet websites and services make an interactive marketingprocess possible where customers can become partners in creating,

marketing, purchasing, and improving products and services.

Sales Force Automation Systems use mobile computing and Internettechnologies to automate many information processing activities for sales

support and management. Increasingly, computers and networks are

providing the basis for sales force automation. In many companies, the

sales force is being outfitted with notebook computers that connect them to

web browsers, and sales contact management software that connect them to

marketing websites on the Internet, extranets, and their company intranets.


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Characteristics of sales force automation include:o Increases the personal productivity of salespeople.o Dramatically speeds up the capture and analysis of sales data from the

field to marketing managers at company headquarters.o Allows marketing and sales management to improve the delivery of

information and the support they provide to their salespeople.

o Many companies view sales force automation as a way to gain astrategic advantage in sales productivity and marketing responsiveness.

Interactive marketing: Customers are not passive participants, but areactively engaged in a network-enabled proactive and interactive process. It

encourages customers to become involved in product development,

delivery, and service issues. This is enabled by various Internet

technologies, including chat and discussion groups, Web forms and

questionnaires, and e-mail correspondence.

Targeted Marketing: Companies can customize their web advertisingmessages and promotion methods to appeal to people in specific

communities. These can be communities of interest, such as virtual

communities of online sporting enthusiasts or arts and crafts hobbyists, or

geographic communities formed by the websites of a city or other local

organizations.

o Contentadvertising such as electronic billboards or banners can beplaced on various website pages, in addition to a companys home

page. These messages reach the targeted audience.

o Contextadvertising appears only in Web pages that are relevant tothe content of a product or service. So advertising is targeted only at

people who are already looking for information about a subject

matter that is related to a companys products.


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o Demographic/Psychographicmarketing efforts can be aimed onlyat specific types or classes of people: unmarried, twenty-something,

middle income, male college graduates.

oOnline Behavioradvertising and promotion efforts can be tailoredto each visit to a site by an individual. This strategy is based on

web cookie files recorded on the visitors diskdrive from previous

visits. Cookie files enable a company to track a persons online

behavior at a website so marketing efforts can be instantly developed

and targeted to that individual at each visit to their website.

Summary:

Marketing Information Systems are good examples to explain the use of

information used in strengthening business functions. The cross functional

linkages of information improve the efficacy of all processes concerned.


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Lecture 7


1)

To study the examples of Manufacturing and HRM Information Systems tofurther understand role of automation in business functions.

2) To give an overview of Computer-Based Accounting Information Systems:

Main Lecture:

7.1 Manufacturing Systems(Computer-Integrated Manufacturing (CIM)):

Computer-based manufacturing information systems use several majortechniques to support computer-integrated manufacturing (CIM).

Uses of computers in manufacturing include

o Computer-aided engineering (CAE)o Computer-aided design (CAD)o Computer-aided process planning (CAPP)o Material requirements planning (MRP)o Manufacturing resource planning (MRP-II)o Computer-aided manufacturing (CAM)

Computer-aided manufacturing - (CAM) systems are those that automate the

production process. Some of the benefits of CAM are:

o Increased efficiency through: work simplification and automation, better production schedule planning better balancing of production workloads in production capacity


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o Improved utilization of facilities, higher productivity, better quality controlthrough:

continuous monitoring

feedback and control of factory operations, equipment and robots.

o Reduced investments in production inventories and facilities through: work simplificationjust-in-time inventory policies better planning and control of production better planning and control of finished goods requirements

o Improved customer service through: reducing out-of-stock situations producing high-quality products that better meet customer

requirements

Human Resource Systems:

Traditionally, businesses used computer-based information systems to:

Produce paychecks and payroll reports Maintain personnel records Analyze the use of personnel in business operations

Many firms have gone beyond these traditional personnel management functions

and have developed human resource information systems (HRIS) that also

support:

Recruitment, selection and hiring

Job placement

Performance appraisals


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Employee benefit analysis

Training and development

Health, safety, and security

HRM and the Internet:

The Internet has become a major force for change in human resource management.

For example, companies are:

Recruiting for employees through recruitment sections of their corporatewebsites.

Using commercial recruiting services and databases on the World WideWeb

Posting messages in selected Internet newsgroups Communicating with job applicants by Internet e-mail.

HRM and the Corporate Intranet

Intranet technologies allow companies to process most common HRM

applications over their corporate intranets. For example:

Intranets allow the HRM department to provide around-the-clock servicesto their customersthe employees

Intranets allow for the dissemination of valuable information faster thanthrough previous company channels

Intranets can collect information online from employees for input to theirHRM files

Intranets enable employees to perform HRM tasks with little interventionby the HRM department

Intranets can serve as a superior training tool Intranets enable employees to produce automated paychecks, the online

alternative to timecards


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Accounting Systems (Online Accounting Systems)

Accounting information systems are being affected by Internet and client/server

technologies. Using the Internet, intranets, extranets, and other network changesaccounting information systems monitor and track business activity. The online,

interactive nature of such networks calls for new forms of transaction documents,

procedures, and controls. Many companies are using or developing network links

to their trading partners through the use of the Internet or other networks for

applications such as order processing inventory control, accounts receivable, and

accounts payable.

Summary:

After studying the role of data and information in various information systems

such as Manufacturing Systems, Accounting Systems and Human Resource

Management Systems one can comprehend how the level of efficiency increases

in various business processes once the computer based information systems are in

place.


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Lecture 8:

Objectives:

1)

To define a Transaction2) To understand the concept of Transaction Processing System.3) To study the role and advantages of TPS

Main Lecture:

Transaction Any unit event happening in the organization is called a

transaction. A transaction generates data. This data may then form part of the

information generating process which is the basis of all managerial decisionmaking.

8.1 Transaction Processing Systems (TPS):

Everyday routine business processes or transactions produce voluminous data.

Data is entered every second into the company databases. There may be two

modes of data entry and resultant transaction processing:

Batch Processingtransaction data are accumulated over a period of timeand processed periodically. Batch processing is the preferred mode when

the business task in process is not critical in nature. This is used when

benefits of real time processing are not in congruence to the communication

costs involved. Processing of fee or attendance records etc may be

examples of such processing.

Real-Time Processingdata are processed immediately after a transactionoccurs. This is essential for processes which are critical in nature and

whose records must be current and up to date. No time lag should take

place between the time the data is generated and the time it is updated on

central databases. These are also called OLTPS


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Transaction Processing Cycle

Fig 8.2 A

The process of transaction processing follows the below mentioned steps:

The first step is the entry of the details of any business process andhence the resultant database maintenance which is updating of the

corporate databases of an organization to reflect changes resulting from

day-to-day business transactions.


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The next step is the document and report generation includingtransaction documents, transaction listings and error reports. Reporting

is a very important task of the management process. A report depicts the

status of any task to the complexity and detail specified.

Summary:

TPS are the basic and initial processing systems of a business organization. The

data generated at this preliminary level is used at all ascending levels of

management for control and analysis purposes.


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Lecture 9


1)

To discuss various types of reports2) To link type and complexity of the reports with levels of

management

Some of the types of report generated at lower levels of management may be:

Detailed Reports These reports contain minute details of transactions and

processes involved. These may be an important source of record keeping of theoperations of the organization and add to the archives of the organization. They

may be further processed, modified or summarized for higher levels of the

organization. These may also contribute data to the data warehouse or data mart

maintained for the organization. Older data and reports may form a part of the

legacy systems of the organization.

Summary Reports These are those reports which are prepared to give a

comprehensive and holistic picture of the organization. They may be used to

review the systems and ensure that the systems are in control and in consonance

with the targets and standards specified.

Periodic Reports or Scheduled Reports: They are produced on a regular basis,

widely distributed, and often contain large amounts of information. These are

reports which are generated at specified fixed intervals of time regardless of

activity. These may be weekly, monthly, yearly etc.


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Non Periodic ReportsThey are generated as a function of activity and not time.

They may follow some other methodology of generation such as:

Push Reports generated by a member of the organization to highlightsome activity or task of importance.

Demand Reportsgenerated on demand to give a picture of the activity ortask specified. These may be made as detailed or as comprehensive as

specified by the relevant authority. Demand Reports fill irregular needs for

information (SQL, QBF)

Inquiry Processingmaking inquiries and receiving responses concerningthe results of transaction processing activities

Summary:

Information Technology has enhanced inter-organization collaboration with its

business partners and intra organization communication within the networked

enterprise. Data driven tasks improve vital business processes as also contributing

to archival systems.


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Lecture 10


1. To understand OLAP (Online Analytical Processing) and DataVisualization Systems (DVS) as tools for ESS

2. To study Executive Support SystemsOnline Analytical Processing:

Online analytical processing enables managers and analysts to interactively

examine and manipulate large amounts of detailed and consolidated data from

many perspectives (analytical databases, data marts, data warehouses, data mining

techniques, and multidimensional database structures, specialized servers and

web-enabled software products).

Online analytical processing involves several basic analytical operations:

Consolidation - Involves the aggregation of data. This can involve simpleroll-ups or complex groupings involving interrelated data.

Drill-Down - OLAP can go in the reverse direction and automaticallydisplay detailed data that comprises consolidated data.

Slicing and Dicing - Refers to the ability to look at the database fromdifferent viewpoints. Slicing and dicing is often performed along a time

axis in order to analyze trends and find patterns.


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OLAP applications:

Access very large amounts of data to discover patterns, trends, andexception conditions

Analyze the applications between many types of business elements

Understand aggregated data Compare aggregated data over hierarchical time periods Present data in different perspectives Involve complex calculations between data elements Are able to respond quickly to user requests so that managers or analysts

can pursue an analytical or decision thought process without being hindered

by the system

DVS (Data Visualization Systems):

DVS represent complex data using interactive three-dimensional graphical forms

such as charts, graphs, and maps

DVS tools help users to interactively sort, subdivide, combine, and organize data

while it is in its graphical form.

10.1 Executive Information Systems (ESS)

Executive Information Systems are those which aid and support the top levels of

managers in their working. These information systems provide top executives,

managers, analysts, and other knowledge workers with immediate and easy access

to information about a firms key factors that are critical to accomplishing an

organizations objectives. They may include personalized decision support,

modeling, information retrieval, data warehousing, what-if scenarios, and

reporting. Trend analysis and futuristic data form a very large part of the data and

information provided to Executives. The presentation forms are tailored to the

preferences of the executives using the system


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OLAP techniques and DVS form a very large component of the tools available to

the top management to integrate data from all over the organization into at-a-

glance graphical indicators and controls. They also supports the work of senior

executives by providing access to company data and general information on theindustry and economy.

Capabilities of EIS include:

Information is presented in forms tailored to the preferences of theexecutives using the system. Heavy use of graphical user interface and

graphics displays.

Information presentation methods used by an EIS include exceptionreporting and trend analysis. The ability to drill down allows executives to

quickly retrieve displays of related information at higher levels of detail.

Internet and intranet technologies have added capabilities to EIS systems. EISs have spread into the ranks of middle management and business

professionals as they have recognized their feasibility and benefits, and as

less-expensive systems for client/server and corporate intranets become

available.

10.2 Strategic Information Systems

These systems are a part of the EIS and are specifically designed to help the

managers to work out the strategies and long term plans for the organization.

These may help to get information about the markets and competitors.


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Types of reports used in higher levels of management

Exception Reports: They notify management when a system goes out of control

so that directions for appropriate corrective action are given.

Predictive Reports: They are extremely useful in taking futuristic decisions, andmake use of statistical modeling techniques (regression, time series, simulation).

Summary:

Strategic Information Systems and Executive Information systems are informationsystems originally designed to support the strategic information needs of topmanagement. However, their use is spreading to lower levels of management and

business professionals. EIS are easy to use and enable executives to retrieveinformation tailored to their needs and preferences. Thus, EIS can provideinformation about a companys critical success factors to executives to supporttheir planning and control responsibilities.


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Lecture 11

Objectives:

1.

To identify how artificial intelligence can be used in business.2. To give examples of several ways expert systems can be used in businessdecision-making situations.

Main lecture:

11.1 Business and AI

Business and other organizations are significantly increasing their attempts toassist the human intelligence and productivity of their knowledge workers withartificial intelligence tools and techniques.

AI includes:

Natural languages Industrial robots Expert systems Intelligent agentsArtificial intelligence (AI) is a science and technology based on disciplines suchas computer science, biology, psychology, linguistics, mathematics, andengineering. The goal of AI is to develop computers that can think, as well as see,hear, walk, talk, and feel. A major thrust of AI is the development of computerfunctions normally associated with human intelligence, such as reasoning,learning, and problem solving. AI applications may include all or some of thefollowing technologies.

Knowledge-Based Systems - An information system, which adds aknowledge base and with some reasoning capability to the computer-basedinformation systems.

Adaptive Learning Systems - An information system that can modify itsbehaviour based on information acquired as it operates.

Natural Interface: -The development of natural interfaces is considered amajor area of AI applications and is essential to the natural use ofcomputers by humans. For example, the developments of natural languagesand speech recognition are major thrusts of this area. Being able to talk tocomputers and robots in conversational human languages and have them


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understand us is the goal of AI researchers. This application areainvolves research and development in linguistics, psychology, computerscience, and other disciplines. Efforts in this area include:

o Natural Language - A programming language that is very close tohuman language. Also, called very high-level language.

o Multisensory Interfaces - The ability of computer systems torecognize a variety of human body movements, which allows themto operate.

o Speech Recognition - The ability of a computer system to recognizespeech patterns, and to operate using these patterns.

o Virtual Reality - The use of multisensory human/computerinterfaces that enables human users to experience computer-simulated objects, entities, spaces, and worlds as if they actuallyexisted.

11.2 Expert SystemsOne of the most practical and widely implemented application of artificialintelligence in business is the development of expert systems and otherknowledge-based information systems.

Expert System - A computer-based information system that uses its knowledgeabout a specific complex application area to act as an expert consultant to users.The system consists of knowledge base and software modules that performinferences on the knowledge, and communicate answers to a users questions. ESprovide answers to questions in a very specific problem area by making humanlikeinferences about knowledge contained in a specialized knowledge base. Theymust also be able to explain their reasoning process and conclusions to a user.

Components of Expert Systems:

The components of an expert system include a knowledge base and softwaremodules that perform inferences on the knowledge and communicate answers to ausers question.


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The interrelated components of an expert system include:

Knowledge base: - the knowledge base of an ES contains:1. Facts about a specific subject area2. Heuristics (rule of thumb) that express the reasoning procedures of an

expert on the subject

Software resources: - An ES software package contains:1. Inference engine that processes the knowledge related to a specific

problem2. User interface program that communicates with end users.3. Explanation program to explain the reasoning process to the user4. Software tools for developing expert systems include knowledge

acquisition programs and expert system shells

Hardware resources: - These include:1. Stand alone microcomputer systems2. Microcomputer workstations and terminals connected to minicomputers or

mainframes in a telecommunications network3. Special-purpose computers

People resources: - People resources include:1. Knowledge engineers2. End-users

Expert System Applications:

Using an expert system involves an interactive computer-based session, in which:

The solution to a problem is explored with the expert system acting as aconsultant.

Expert system asks questions of the user, searches its knowledge base for factsand rules or other knowledge.

Explains its reasoning process when asked. Gives expert advice to the user in the subject area being explored. Examples include: credit management, customer service, and productivity

management.


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Some Examples:

Expert systems typically accomplish one or more generic uses. Some of them are:

Decision management Diagnostic/troubleshooting Maintenance scheduling Design/configuration Selection/classification Process monitoring/control

Summary:

Artificial Intelligence. The major application domains of artificialintelligence (AI) include a variety of applications in cognitive science,robotics, and natural interfaces. The goal of AI is the development ofcomputer functions normally associated with human physical and mentalcapabilities, such as robots that see, hear, talk, feel, and move, and softwarecapable of reasoning, learning, and problem solving. Thus, AI is beingapplied to many applications in business operations and managerialdecision making, as well as in many other fields.

Expert Systems. Expert systems are knowledge-based information systemsthat use software and a knowledge base about a specific, complexapplication area to act as expert consultants to users in many business andtechnical applications. Software includes an inference engine program thatmakes inferences based on the facts and rules stored in the knowledge base.A knowledge base consists of facts about a specific subject area andheuristics (rules of thumb) that express the reasoning procedures of anexpert. The benefits of expert systems (such as preservation and replicationof expertise) must balance with their limited applicability in many problemsituations.


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Test your understanding:

1. What are some of the most important applications of Expert Systems inbusiness? Defend your choices.2. What is the business value of AI technologies in business today? Useseveral examples.


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Lecture 12 /Tutorial 2

Objectives:

1. To discuss problems and doubts if necessary2. To discuss a case study

Case Study:

Manipal Hospital is situated in Bangalore city known as Garden city of India, withpopulation of around 6 million. The hospital is set on Airport Road, is in thecentre of eastern part of the city, opened its doors in 1990 for in and aroundBangalore citizens to usher in a new era in sophisticated and specialized medicalcare in the southern part of the country. The hospital is housed in a magnificenttwin towered, centrally air-conditioned, fourteen storied building with a bedstrength of 450 at each of the towers totaling 900.

This hospital is an addition to the Manipal family of health care institutions whichincluded four medical, two dental nursing and pharmacy colleges and 10 hospitalswith a total of around 5000 beds. All of this represents four decades of their totalexperience and expertise in medical education and health services and it is thistrack record that ensures the quality of Manipal Hospital, Bangalore, known toeach and every citizen of Bangalore. This hospital has provided sophisticatedmedical and surgical facilities. It has gained reputation in Bangalore as a centrefor medical excellence and it is all due to the pre-eminence of the specialists on itsmedical staff, its highly skilled nurses and support staff and sophisticated and

medical equipments.

A premier, multi specialty unique hospital with multi-units situated at Bangalore,Mangalore, Manipal, Nepal, Sikkim and Goa is committed to providingpersonalized care of the highest order the widest scope of advanced medicalfacilities. The hospital offers its medical services on-a-break-even financial basisthis bringing high quality healthcare on commercial terms. The individual healthinsurance plans, company group insurance plans and some subsidized inpatientbeds in line with Government directives are some of the highlights that bringsophisticated treatment to the middle class family. Besides these, they havestandard screen programs at a very nominal rate for the middle class families andexecutive screen programmes for the privileged class at a higher rate coveringcomplete blood count, uri-analysis, stool examination, blood grouping, bloodsugar, urea, cholesterol, electrolyte, lipid profile, X-ray chest, ECG, creatinine,triglycerides and finally consultation with physicians, gynecologists etc. Theywork towards a preventive approach, pinpointing all possible risk areas andoffering solutions to each and every problem area with the cream of medical


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fraternity and state-of-the-art equipment, each of the Manipal hospital is a costcentre.

The central office is at Manipal, where the Medical Director and other Directorsworking there provides corporate guidance to all of their other hospitals. They

decide important matters connected with all their units. At Bangalore, CEO headsthe three hospitals (two situated in the Airport Road, one at each of the towers andthe third hospital known as North Side Hospital situated at Malleswaram,northern part of Bangalore with 62 beds}. One hospital at one of the towers dealswith heart operations and is headed by Divisional Head and designated asDirector, Operations. Similarly in the second tower for three different operations,like Nephrology/Urology, Neurology, Diagnostics, there are three DivisionalHeads who control the operations in their respective area. The fifth DivisionalHead of Bangalore is at the North side hospital. Each of the Divisional Heads hasdifferent departments under them and each accounts as a separate cost centre. The

various departments are personnel, engineering, maintenance, purchase accounts,Matron, Finance Officer, pharmacy, laundry, security, kitchen, Housekeeper etc.their clients all at the same level. Each of these officers has again assistants,senior assistance and junior assistants etc. to look after various sub-functions.Since inception of Manipal Hospital in 1991, the hospital has computerizedvarious recurring activities like inpatient, outpatient admissions, transfers,discharges, registration and certain corporate activities, payrolls, billing etc. fromthe computers and software packages engineers to suit their operations. Thoughthe computerization activities are in full swing at various departments, theinterconnectivity is lacking and the system is also old, to cope up with increased

work. At present, they do not have connection between computers of differentdepartment and also with different hospitals. As such the hospital was veryserious in modernizing the old computer system at each of the departments and toexpand its activities to other departments and to have connectivity to varioushospitals including their hospitals at Nepal and Sikkim which are far off.

The hospital considering its future expansions as well anticipated increased workload negotiated with some of the reported consultants in the software field, aboutsix months back and is likely to entrust to one of the leading software companiesat Bangalore (short listed) for full computerization of the hospital. They are likelyto spend a huge amount for computerization activities and the pilot project is tocommence in April. Manipal Hospital at present is having MIS activities, at onenodel centre at each of the hospitals do not have a separate department, but allMIS activities comes under Finance Controller.


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The pilot project commencing in April includes computerization of the following:

Front Office (Administration, registration, discharge, transfer etc.)Inpatient

BillingOut patient

Billing

Accounts PurchaseStores

Payroll

CDR Medical records ward management, OT scheduling, doctors appointments

scheduling, engineering and maintenance, laundry, kitchen, housekeepingall wads etc.

Laboratory (Inter/facing) Computerized Library etc. Radiology

Many of the activities, through existing are to be updated with new systems andwherever systems do not cover departments, these are to be included.

According to Mr. Sairam, who in Incharge of all these activities at presentconfirms that the entire work will be done in ten phases as under within a span of2 years maximum.Pilot project at Manipal Hospital (Tower 1450 beds)

Extend the pilot project to (Tower 2450 beds) Extend the same to North side hospital Connect all the three thru WAN Simultaneously with activity 1, work starts at Manipal1600 beds Simultaneously with activity 2, work starts at Mangalore1000 beds Connect Bangalore, Mangalore, Manipal across all the hospital through

extended WAN


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Extend the similar activities to Nepal Extend the similar activities to Goa and Sikkim Connect all hospitals

During this period, care will be taken to include all high tech systems like expert

system (may be useful for hospital research work), executive information systemsand ES for top managements to take decisions on vital matters.

QUESTIONS:

1. Do you feel that SIS and EIS are required in hospital informationsystem? Give explanations for both yes and no answers.

2. Analyze whether the expert system could be used effectively in HospitalR & D activities.


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Objective Type Questions

Q1 Several major types of databases may be found in computer-using

organizations. Operational databases are described as databases that store

detailed data needed to support the business processes and operations of the

business enterprise. A transaction processing database is one type of

operational database.

True False

Q2 Transactions are business _____________ that occur as part of doing

business such as sales, purchases, deposits, withdrawals, refunds, and payments.

Q3 Transaction processing systems process data in two basic ways. One way is

real-time processing, where transaction data are processed __________ after a

transaction occurs.

Q4 Online transaction processing systems play a role in electronic commercebut the major roles are played by the Internet, extranets, and other networks

that tie them electronically to their customers or suppliers for online

transaction processing not the data collected from data systems.

True False

Q5 An information system is a combination of hardware, software, and data

resources that transforms information in an organization.

True False


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Q6 There are three fundamental reasons for all business applications of

information technology. They relate to the three vital roles that information

systems can perform for a business enterprise. One of these roles is support of itsbusiness processes and operations.

True False

Q7 In any organization, end users rely on many types of information systems

like:

A) Simple manual (paper-and-pencil) information systems.

B) Formal (written procedures) and informal (word-of-mouth) systems.

C) Computer-based information systems.


Q8 Within the context of an information system, which one of the following

would be considered a typical end user?:

A) Managers.

B) Accountants.

C) Customers.



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Module III

Module III: Architecture & Design of IS

Architecture, development and maintenance of Information Systems, Centralized

and Decentralized Information Systems, Factors of success and failure, value andrisk of IS.

Objectives:

1. To understand the concept of IT architecture2. To discuss its components3. To revise centralized and decentralized databases.4. To discuss the reasons of success and failures of IS

Introduction (2 lectures + 1 Tutorial)

IT has become a major bridge between the many disparate departments thatexist in organizations. However, without integration, a corporation mayhave many different "islands of automation", all of which have their ownautonomous information systems. Therefore, as information systemssoftware differs from section to section, integration and coordination is a

must to facilitate firms utilizing the full potential of the benefits thatinformation systems have to offer.


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Lecture 13

Objectives:

1. To understand the concept of IT architecture2. To discuss its components3. To revise centralized and decentralized databases.

Main Lecture:

13.1 What is IT Architecture?

It is a conceptual design that includes:

Technology Platform networks, computer systems, systemsoftware and integrated enterprise application software

Data Resourcesdatabases Applications Architecturebusiness applications IT Organization organizational structure of the IS function and

distribution of IS specialists

13.2 Centralized Systems and Decentralized Systems:

The nature of the IT structure in relation to other business units within an

organization has yielded a choice between control or coordination (Gordon &Gordon, 2000). In other words, this can be recast as centralization versusdecentralization.

Centralized Systems:

Centralization refers to the allocation of all IT resources to one particular businessunit that provides IT services to the whole firm (Gordon & Gordon, 2000). Themain characteristics of a centralized approach include control, efficiency andeconomy. Centralized approaches are effective in gaining or regaining controlover an organizations information system (Robson, 1997). A centralized IS may

have always been centralized or it may be a cost saving regrouping of anorganizations IS to one particular location.


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Decentralized Systems:

Decentralization gives individual business units autonomy over their own ITresources without any major considerations over other units unless it is essential tothe overall organization policy (Gordon & Gordon, 2000). The main traits of a

decentralized approach include flexibility, empowerment of individual businessunits and service orientation. Decentralized approaches tend to be just as efficientas centralized ones in regard to meeting individuals needs.

The Advantages of Centralized Information Systems:

The main advantages of centralized systems are that they provide centralizedcontrol using established technology and vendors (Kroenke & Hatch). They thusinvolve less technical risks. Information Systems professionals providing highlyreliable operation maintain such systems. There should be no confusion over

responsibilities and the software and hardware used should interface easily(Robson). Duplication of effort, resources and expertise is also reduced, savingcost and time.

The Disadvantages of Centralized Information Systems:

Centralized systems entail a high initial cost disadvantage (Kroenke & Hatch).Furthermore, the information systems professionals who install and operate suchsystems are also expensive. The bureaucracy and inflexibility of such systems alsocan cause costs to escalate (Robson). Due to one central system carrying out allthe requested tasks, this system is obviously going to be much slower than adecentralized arrangement where each business unit has its own autonomoussystem for local tasks (Robson). Similarly, local, independent processing is notallowed and the entire information system is dependent on the one ISinfrastructure (Kroenke & Hatch). If the system fails, the entire system isinoperable. In addition, many centralized information systems are isolated fromreal business priorities and concerns (Robson). Personal attentions to individualgroups are not possible.

The Advantages of Decentralized Information Systems:

In decentralized information systems, startup costs are relatively low (Kroenke &Hatch). Tailoring and scaling the system to individual needs is also possible. Thus,local processing is enabled. In other words, there is increased autonomy(Hodgkinson). Organizational flexibility and responsiveness is a major advantagebrought by autonomy. Due to this autonomy, there is greater scope for motivatingand involving users (Robson). Due to the fact that local individuals control theirown information system, the logic is that they will have to act in a much more


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responsible way because they control their own destiny. Perhaps the mostimportant advantage is that reliability is increased greatly because multiplecomputer systems are involved (Kroenke & Hatch). If one computer system fails,the system or at least part of it will still be able to function.

Decentralization also offers benefits of increased accountability, motivation andmanagement responsiveness (Hodgkinson). Decision-makers are brought closer tocustomers, too. Customers provide the information to make important decisions.This applies to all aspects of the organization and not just the IT section.

The Disadvantages of Decentralized Information Systems:

By their very nature, decentralized systems lack a centralized control (Kroenke &Hatch). This can be very disadvantageous as conflicting ideas arise and clashes inpolicy leading to delays and inefficiency arises as a result. Similarly, the one

vendor may supply not all the many different components of the overall systems.This can lead to similar problems as those resulting from the conflicting ideas.There also is a high degree of duplication of resources, effort and expertise, whichwastes time and causes cost increases.

IT as an enabler of Centralization and Decentralization:

In many organizations, the potential benefits of the contribution of IT inorganizations have been sorely under-appreciated (Moreton & Chester). IT canenable information sharing, support business processes and transactions and linkcustomer information. Thus, the organization will have closer links with suppliers,customers and other business partners. IT can have a strong influence on thebargaining relationships between buyers and sellers. Internal information sharingin organizations, for example between departments, is also enhanced by IT.Information can be stored and retrieved far easier than in non-IT enabledorganizations while management can communicate with employees or each othermore easily. As well as this, teamwork and group collaboration is also madeeasier. More indirectly, IT provides the employees of an organization with newskills, helps with the design plans of an organization and provides tools thatenhance education among employees

A fundamental question to ask is whether or not IT will lead to centralization ordecentralization (Dewett & Jones). In terms of centralization, ManagementInformation Systems enable management to obtain information more quickly andaccurately, reducing uncertainty. Managers may make better decisions than theywould have made without the aid of IT. With regard to decentralization, electronicbulletin boards and discussion groups enable lower and middle level managers tostay better informed about organizational issues.


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Lecture 14:

Objectives:

1 To understand the reasons of success and failure of IT2 To discuss a relevant case study

14.1 Success and Failure with IT:It is important that students realize that information technology and informationsystems can be mismanaged and misapplied so that they create both technologicaland business failure.

Top Five Reasons for Success Top Five Reasons for Failure

User involvement Lack of user input

Executive management support Lack of executive support

Clear statement of requirements Incomplete requirements andspecifications or changing requirementsand specifications

Proper planning Lack of direction

Realistic expectations Technological incompetence

Case Study:

Chicago Board of Trade: From Failure to Success in Managing Information

Technology

Picture 3,000 traders in the pit waving their hands and screaming orders forstocks, bonds, and commodities. Millions of dollars in investments are changinghands every minute. Suddenly, screens freeze; orders wont execute. Mayhemreigns, as millions of dollars are lost with every tick of the clock. Thats the worstthing that can happen, says Carol Burke, executive vice president and chief ofstaff at the Chicago Board of Trade (CBOT) (www.cbot.com). But two years ago,trading-floor systems were crashing almost weekly because of a deteriorating IT


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infrastructure, costing the exchange and its members millions of dollars. In July2001, after two years of operating in the red, the board of directors brought in anew management team for CBOT, including Executive Vice President and CIOBill Farrow. A total IT revamp got the exchange back to in-house profitability. By2002, its profit had risen to $25 million, trading-system crashes were virtually

unheard of, and CBOT was once again bullish on technology. Farrow walked intoan IT situation that was grim. The chairman said, Bill, you have very smallshoes to fill, he recalls. That tells you a lot. IT was in disarray, agreesBurke, a 20-year CBOT veteran. There were a lot of good people in IT, but therewas a real lack of leadership, says Chip Bennett, senior vice president oftechnology solutions and Farrows first hire at CBOT. The infrastructure wasancient, unreliable, and undocumented. For example, desktop PCs ran a versionof Windows no longer supported by Microsoft. Nearly every key process wasrouted through a group of old, midrange Tandem computers in an environment socomplex that developing a new process took more than 90 steps. Project and

budget controls were lacking, and quality control was substandard. IT was full ofsilos and fiefdoms, so there were no economies of scale. Morale was low. Therewas a place called the wall, where nearly 100 yellow sticky notescommemorated people who had gotten fed up and left. Yet many werecomplacent. Tech jobs were called the golden hammock, Farrow says. Onceyou got in, you could have a very easy, very, very long career in technology here.That attitude made no friends on the business side. We would go to IT and say,Help us, recalls Kevin Lennon, vice president of real estate operations. Thefeeling we got was that we were taking them away from something moreimportant. Other than Y2K, IT hadnt completed a single project in four years. As

a result, people had no experience in project management disciplines, and returnon investment was a foreign concept. No ROIs were doneever, Farrow says.Technology did not have to provide a return for investing the money in it. Therewas such a lack of credibility between the business and IT sides that the businesspeople had totally given up, Farrow says. Farrow began by taking inventory ofwhat he had. He documented systems and technical architecture, nailed downvendor relationships and service-level agreements, and evaluated security systems.Simultaneously, he faced the bigger challenge of building new relationships withskeptical business managers. He assigned IT managers to counterparts on thebusiness side to brainstorm regularly about how technology could support businessgoals. Denise Schaller, director of technology and data products for floor supportapplications, who has 21 years experience at CBOT, says her weekly meeting withthe two vice presidents of exchange operations has changed everything. If I haveany business questions, issues, priorities they help sort it out, she says.Replacing the ancient Tandems with Sun Unix servers and Oracle databases, aprocess that Schaller thought would take two years, got done in half the timebecause her new partners in business helped with the analysis, legwork, and scope.Farrow boosted quality assurance with additional software testing and backed it up


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by putting IT troubleshooters on the trading floor every day when the marketopened. Im on the spot, so I can see any problems and react immediately, saysSchaller. Farrow established a project management office to centralize the projectportfolio and the IT skills pool. He also brought ROI to project agendas. Farrowused news of the turnaround to attract technology professionals with new skills,

particularly in the areas of security and business analysis. But there were painfuldecisions as well; including letting 15 IT managers go. The permanent ITworkforce shrank from 250 to fewer than 200, supplemented by temporarycontract help as required by the project load.

Soon, IT completed 66 projects. Then, CBOT handled 33 million contracts33percent more than in the previous February, without a single system stutter. Wehave a much more stable and robust environment with fail-over abilities, saysBurke. If there were a problem in a primary system, it would fail over to a backupand be seamless to the marketplace. Throughout the turnaround, IT has

maintained a flat budget. If you are wasting 35 percent of your money, thats a lotof money to put back into information technology to make it robust, Farrow says.

Case Study Questions

1. What were several major reasons the IT organization had failed at the ChicagoBoard of Trade? Explain the impact of each on CBOT.2. What were several key management changes and initiatives that Bill Farrowimplemented to make IT successful at CBOT? Explain the impact of each on

CBOT.3. Does the experience of CBOT prove that IT is a business function that needs tobe managed like any other business function? Why or why not?

(Source: Adapted from Kathleen Melymuka, Market Rally, Computerworld,pp.4041. )


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Lecture 15/Tutorial 3

Objectives:

a. To discuss problems and doubts if necessaryb. To discuss a case study

Until the late 1990s, Mitsubishi Motor Sales of America Inc.(www.mitsucars.com) was only about cars, and its approach to retail customerservice reflected that. There were more than 18 toll-free customer service numbersthat callers had to navigate to find information on topics ranging from financing tosales to repairs. We were fragmented in our approach, and we clearly lacked a

customer focus, says Greg ONeill, executive vice president and generalmanager. Mitsubishi decided to change that. As part of a companywide shift to anincreased focus on customers, executives challenged the call center to provideonevoice and one set of ears for the customer, says CIO Tony Romero. Thatwas the beginning of a continuing drive toward improved customer servicethrough a customer relationship management (CRM) initiative that wouldeventually engage multiple departments and 18 vendors. Today, Mitsubishi hasone call center and an outsourced service provider that handles the most basiccalls. The cost per call has decreased by about two-thirds, and that savings alonepaid for the system in 18 months, according to Rich Donnelson, director of

customer relations. The system saves agents time and uncertainty and enabled thecall center to handle 38 percent more volume, with an even staffing level.Meanwhile, the companys customer satisfaction rate rose by 8 percent, accordingto a survey by J. D. Power and Associates. Mitsubishis call center project teamincluded members from its sales, marketing, finance, and IT departments, all ofwhich contributed resources as needed. Early on, the team members establishedsome rules of the road. First, they would selectively choose best-of-breed CRMsoftware components, not the integrated CRM suites that seemed intent on force-fitting Mitsubishis needs into fixed product offerings. But that required a constantstruggle to keep 18 vendors heading in the same direction. The team members alsodecided to implement changes slowly, adding a technology only when allemployees were using the last one implemented. This approach allowed call centeragents to get comfortable with the new technology over time. To accommodate thedeliberate, modular approach, all products had to pass the three S test: Is itsimple? Does it satisfy? Is it scalable? If we couldnt answer yes to all three, wedidnt do it, says Greg Stahl, Mitsubishis director of advertising. The journeybegan in earnest in June 1999, when Mitsubishi chose to outsource its most basiclevel of customer calls to Baltimore-based Sitel Corp. Within two months,


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Mitsubishis 18 toll-free customer numbers and the multiple call centers behindthem were consolidated, and call center software from Siebel Systems wasimplemented. Also, as part of the companywide customer focus, a newcustomercentric database was consolidated in-house the next year. The databasebecame the engine powering the call center, but unfortunately, dirty data were a

major stumbling block. The project stalled for months as the data were cleansedand updated. In early 2001, a digital phone switch from Avaya Inc. was installedthat allowed flexible skillsbased call routing. Callers to the single toll-freenumber were routed based on menu choices. About half the callers got theinformation they needed from an interactive voice response unit, which cananswer fairly sophisticated queries without live contact. Simple calls went to Sitel,and the rest were routed to call center agents with the appropriate skills. In March2001, graphical user interface upgrades put 11 screens worth of customerinformation on one screen of call center agents. And Smart Scripts workflowsoftware from Siebel provided agents with decisiontree scripts and automated

customer correspondence. In May 2001, Mitsubishi managers began listening tooutsourced service calls, and they could see agents screens with Avaya IP Agentsoftware. The next month, the company started using workforce managementsoftware from Blue Pumpkin Software to hourly forecast call center coverage.Then NiceLog software from Nice Systems was installed to record agents voiceand screen activity for quality assurance and training. Aside from happiercustomers, the benefits to call center employees include career growth and higherpay. Previously, agents in separate call centers handled specific areas: accounts,vehicles, titles, or retailer queries. Now the silos are gone and agents can learnnew skills in multiple areas, greatly increasing call center flexibility. The

workforce management software schedules training time during lags, and agentswho learn multiple skills earn more money. Call center turnover, which hastraditionally been more than 20 percent, was about 7 percent last year. ONeillsays the executive team members regularly listen in on service calls to get a feelfor customer concerns, and they act on what they hear. That bubble up ofinformation has driven more early marketing decisions and made us moreeffective earlier on than I could have ever thought, ONeill says. Thats been ahuge dividend.

Case Study Questions

1. What are the key application components of Mitsubishi system? What is thebusiness purpose of each of them?

2. What are the benefits to a business and its customers of a system likeMitsubishis?3. Do you approve of Mitsubishis approach to acquiring and installing its ITsystem? Why or why not?


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(Source: Adapted from Kathleen Melymuka, Driven to Better Service,Computerworld, July 8, 2002, pp. 4041.)


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Module IV: Decision Making Process

Programmed and Non- Programmed decisions, Decision Support Systems, Models

and approaches to DSS

Learning Objectives:

1. Identify the changes taking place in the form and use of decision making inbusiness.

2. To understand the types of decisions and their differences3. Describe how online analytical processing can meet key information needs

of managers.

4. Explain the decision support system concept and how it differs fromtraditional management information systems.

Introduction (4 Lectures + 1 Tutorial)

Decision Support Trends

Using information systems to support business decision making has been one of

the primary thrusts of the business use of information technology. The fast pace

of new information technologies like PC hardware and software suites,

client/server networks, and networked software made decision support available to

lower levels of management, as well as to non-managerial individuals and self-

directed team of business professionals.

This trend has accelerated with the dramatic growth of the Internet and intranets

and extranets that net-work companies and their stakeholder. The e-commerce

initiatives that are being implem

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