MIS 2019-Min

MANAGEMENT INFORMATION
SYSTEMS
(FOR PRIVATE CIRCULATION ONLY)

2019
PROGRAMME COORDINATOR
Dr. Padmpriya Irabatti
COURSE DESIGN AND REVIEW COMMITTEE

Dr. Lalit Kathpalia Dr. R. Raman
Dr. Manisha Chopde Mr. Jitendra Pawar
Prof. Dimakh Sahastrabuddhe Ms. Sadhana Ghalsasi
Dr. Vinay Vaidya Prof. Kausar Biyabani
Prof. Atul Kahate Prof. Nidhi Khare
COURSE WRITER
Prof. Jayant K.Oke
EDITOR
Ms. Neha Mule
Published by Symbiosis Centre for Distance Learning (SCDL), Pune

2011 (Revision 03, 2015)
Copyright © 2019 Symbiosis Open Education Society

All rights reserved. No part of this book may be reproduced, transmitted or utilised in any form or by any
means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval
system without written permission from the publisher.
Acknowledgement
Every attempt has been made to trace the copyright holders of materials reproduced in this book. Should any
infringement have occurred, SCDL apologises for the same and will be pleased to make necessary corrections
in future editions of this book.
PREFACE
It is indeed my pleasure and privilege to offer this book on ‘Management Information Systems’ (MIS)
to the students of SCDL.
The course structure has been devised keeping in view the student profile and the fact that this is a
distance-learning programme. Accordingly, while the course material begins with the need and evolution
of MIS, it also discusses the related topics in a lucid manner, without in any way compromising the
basic basics. Due focus has also been bestowed on the emerging trends, particularly in the context of
increasing and intensifying global competition.
The student-readers would find repeated references to competitiveness, competitive battlefield and
to MIS as “Facilitator towards gaining the competitive advantage to survive, succeed and prosper in
today’s dynamic and competitive corporate environment”.
The course structure has also been designed viewing MIS from a generalist, practicing manager’s
perspective, who should be able to ask the right questions, know the wrong answer and arrive at the
most optimum decisions, by understanding and utilising computers and Information Technology from
a strategic control perspective. Suitable examples and case studies have also been incorporated.
It must be mentioned that while preparing the course material, I have drawn on materials from a
variety of Books, Journals, Seminar Papers etc. I acknowledge my profound intellectual debt to all
those authors and contributors. Their ideas have shaped my thinking on the subject over the years.
While I trust that the course material would be of real use and value to the student-readers, being a firm
believer in “Kaizen”, I would welcome suggestions and constructive criticism to ensure continuous
improvement.
My sincere thanks to SCDL for providing me an opportunity to share my experiences and knowledge
with a large number of distant learners.
Prof. Jayant K. Oke
iii
ABOUT THE AUTHOR
A Government Open Merit Scholar, Prof. Jayant Oke has done his masters in both Economics and
Management. He has also studied for the Post-Graduate Diploma in Laws and Post-Graduate Diploma
in Computer Applications and Systems Analysis.
He has around three decades of professional experience and credentials, initially as a Banker (selected
as a Probationary Officer for the State Bank Group and was later selected as Economist for the
Corporation Bank by the B.S.R.B., Southern Region, Bangalore) and presently as a Management
Consultant and Corporate Trainer.
As a Banker, Prof. Jayant Oke had a special association with and expertise in Project Management/
Financing, Strategic Planning and Management Information and Control Systems. It was during this
phase that he first encountered and realised the pivotal role of information in the corporate world. He
was instrumental in bringing out an MIS Compendium for the Bank’s operations during the seventies.
The relationship with information and control systems has since continued unabated. It was this
expertise, which helped him to branch off into Project and Management Consultancy during the Post-
1991 Liberalisation, Privatisation and Globalisation (LPG) Era.
Prof. Jayant Oke has been associated with Management education since 1993-94, as a Guest Faculty.
He is a recognised PG Teacher for Management Courses of the University of Pune since 1994.
He was also the former Director of Padmashri Dr. D.Y. Patil Institute of Management and Research, Pune
during 1994-95. He is currently associated as a Guest/ Visiting Faculty with the leading Management
Institutes in Pune, including University of Pune and Symbiosis Institutions.
Prof. Jayant Oke has been, inter alia, associated with a number of Corporate Organisations and with
prestigious Institutes in Pune viz. the Reserve Bank of India, VAMNICOM and YASHADA, as a
Guest Faculty.
Prof. Jayant Oke’s other current interests include Entrepreneurial Development and International
Business Management.
He is presently working on his doctoral research in the area of Corporate Governance.
iv
CONTENTS
Unit No. TITLE Page No.

1 Management Information System 1-24
1.1 Introduction
1.2 Concept of MIS
1.3 Role of MIS
1.4 Characteristics and Pre-requisites of MIS
1.4.1 Pre-requisites of MIS
1.5 Contemporary Approaches to MIS
1.6 Information as a Strategic Resource
1.6.1 Use of Information for Competitive Advantage
1.7 Porter-Millar Postulates
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
2 Information Technology 25-44
2.1 Introduction
2.2 Impact of Information Technology
2.3 Understanding a Computer
2.4 Generations of Computer
2.5 Categories of Computer
Summary
Keywords
Suggested Reading
3 Data Communication and IT Enabled Services 45-80
3.1 Introduction
3.2 Functions and Categories of Software
3.2.1 Software Categories
3.2.2 Leading Microcomputer Operating Systems
3.3 Data Communication
3.4 Data Processing Modes
3.4.1 Other Data Processing Modes
3.5 Data Transmission
3.6 Network
3.6.1 Network Topologies
3.6.2 Types of Network
3.7 Internet
3.8 IT Enabled Services
Summary
Keywords
Suggested Reading
v
4 Management and Decision-Making 81-98
4.1 Introduction
4.2 Management
4.3 Decision-Making
4.4 Decision-Making Process
4.5 Decision-Making Tools
4.6 Principles for Decision-Making
4.7 Decision-Making Models
Summary
Keywords
Suggested Reading
5 Information 99-122
5.1 Introduction
5.2 Information Process
5.3 Sources of Information
5.3.1 MIS and Information Concepts
5.3.2 Classification of Information
5.3.3 Types of Level-Wise Information
5.3.4 Attributes of Information
5.4 Human as Information Processor
5.4.1 The Newell−Simon Model
5.5 Information Requirement
5.5.1 Information Requirements at Different Levels
5.5.2 Techniques to Assess Information Requirement
5.6 Critical Success Factors
5.7 Business System Planning
Summary
Keywords
Suggested Reading
vi
6 Decision Support System 123-150

6.1 Introduction
6.2 Components of DSS
6.2.1 Development of DSS and Desirable Characteristics of DSS
6.2.2 DSS Approach and Core Capabilities
6.3 Structure and Types of DSS
6.4 Group Decision Support System
6.5 Executive Information System/Executive Support System
6.6 Expert Systems
6.7 Artificial Intelligence
Summary
Keywords
Suggested Reading
7 System Analysis and Design 151-164

7.1 Introduction
7.2 Systems
7.3 System Characteristics
7.4 Importance of Systems
7.5 Law of Requisite Variety
Summary
Keywords
Suggested Reading
8 System Development 165-190

8.1 Introduction
8.2 Basic Concepts of System Development
8.3 System Development Process
8.4 Rapid System Development Tools
8.5 Object-Oriented Systems
Summary
Keywords
Suggested Reading
vii
9 The Database Management System 191-202

9.1 Introduction
9.2 Database Management System
9.3 DBMS Components
9.4 Database Model
Summary
Keywords
Suggested Reading
10 Data Warehousing and Data Mining 203-220

10.1 Introduction
10.2 Data Warehousing
10.3 Data Warehouse Structure/Architecture
10.4 Data Mining
10.5 Applications of Data Mining
Summary
Keywords
Suggested Reading
11 Information Security and Control 221-228

11.1 Introduction
11.2 Why Break IT System Security
11.3 Information System Security Threats
Summary
Keywords
Suggested Reading
viii
12 Information System and Quality 229-240

12.1 Introduction
12.2 Need for Software Quality Assurance
12.3 Software Quality
12.4 Software Quality Assurance
12.5 Quality Assurance Standards or Models
Summary
Keywords
Suggested Reading
13 Functional Applications 241-262

13.1 Introduction
13.2 Accounts Payable System
13.3 Production Management System
13.4 Marketing Service System
Summary
Keywords
Suggested Reading
14 Applications in Service Sector 263-275

14.1 Introduction
14.2 MIS Applications in Service Industry
14.2.1 Airlines
14.2.2 Hospitals
14.2.3 Banking
Summary
Keywords
Suggested Reading
Appendix I 276
Glossary 277
ix
Management Information System
UNIT
1
Structure:
1.1 Introduction
1.2 Concept of MIS
1.3 Role of MIS
1.4 Characteristics and Pre-requisites of MIS
1.4.1 Pre-requisites of MIS
1.5 Contemporary Approaches to MIS
1.6 Information as a Strategic Resource
1.7 Porter-Millar Postulates
Summary
Keywords
Suggested Reading
Management Information System 1

Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
●● Define management information system
---------------------- ●● Identify the characteristics of MIS
---------------------- ●● Describe the impact, role and pre-requisites of MIS
---------------------- ●● Describe the contemporary approaches to MIS
●● Discuss about information as a strategic resource
----------------------
●● Evaluate the role of information in a competitive environment
----------------------
---------------------- 1.1 INTRODUCTION
---------------------- Today, we have an unquenchable thirst for information. The society has
changed significantly from the barbarian to the agrarian society, from agrarian
---------------------- to the industrial society and from the industrial society to a society dominated
by the service sector.
----------------------
This structural transformation has brought about discernible changes in
---------------------- the way people think. We are all living, not in an agrarian or industrial society
but in an Information Society. In fact, we generally refer to the present times as
----------------------
the IT Age or the Information Era.
---------------------- Underneath this is a tacit acceptance of the fact that not since the advent
of the automobile and the introduction of the telephone, an invention had such
----------------------
wide-spread impact on our society as the computer, which has ushered in the
---------------------- Information Era.
---------------------- If personal/individual life has been impacted by information, it has

profoundly affected business organisations.
---------------------- We are living in an era characterized by globalisation and liberalisation.
---------------------- Far- reaching changes across borders are sweeping nations and we are all getting
engulfed in a boundaryless global village. However, this emerging scene also
---------------------- requires people to develop the ability of “thinking globally and acting locally”
which is now also being referred to as “glocalisation”. Business operations have
---------------------- become, and are going to become, more and more complex and competitive.
---------------------- The increased complexities can be broadly categorised into business
complexities and management complexities.
----------------------
The increased business complexities could be attributed to:
----------------------
1. Technological revolution
---------------------- 2. Research and development
---------------------- 3. Changes in product/product life cycle
---------------------- 4. Explosion of information
2 Management Information Systems

The increased management complexities could be attributed to: Notes
1. Management science technologies
----------------------
2. Decision-making
----------------------
3. Onset of computers
4. Information feedback system ----------------------
These complexities have in turn necessitated: ----------------------

1. Strategic planning ----------------------
2. Setting of objectives (parameters)
----------------------
3. Devising operational plans
----------------------
4. Obtaining/processing/storing, retrieving and using information for
decision-making ----------------------
Hence, information is today seen, accepted and recognised as an ----------------------
invaluable source to ensure effective and efficient decision-making, thereby
ensuring optimality of results leading to survival and prosperity of business ----------------------
organisations.
----------------------
Information is a resource because:
----------------------
●● It is scarce.
●● It has a cost. ----------------------
●● It has alternative uses. ----------------------
●● There is an opportunity cost factor involved if one does not process
information. ----------------------
It must, however, be remembered that unlike other resources, which can ----------------------
be used only once, information can be used repeatedly. It is also not tangible. A
decision-maker must keep these aspects in mind. ----------------------
Many a times, we really do not have the information we want and then ----------------------
there is a dilemma. The dilemma is beautifully expressed in the following
words, generally referred to as Finagle’s Law of Information: ----------------------
“The information we have, ----------------------

Is not what we want,
The information we want ----------------------
Is not the information we need, ----------------------
The information we need,
Is not available.” ----------------------
Hence, it is said that, ----------------------
“Don’t give the manager,
What he said he wanted. ----------------------
But what he meant.”
----------------------
Thus, because information is so critical, crucial and pivotal for managers
and organisations, Management Information System (MIS) has been developed ----------------------

Notes to facilitate effective and efficient decision-making.
One important aspect of the difference between MIS and routine data
----------------------
processing is the capability to provide analysis, planning and decision-making
---------------------- support.
An MIS orientation means users have access to decision models and
----------------------
methods for querying the database on an ad hoc basis; the database is also
---------------------- an essential part of routine transaction processing and reporting. In MIS,
information is utilized to improve decision-making and achieve improved
---------------------- organisational effectiveness.
----------------------
1.2 CONCEPT OF MIS
----------------------
MIS is the system, which makes available the right information to the
---------------------- right person, at the right place, at the right time, in the right form and at the right
cost.
----------------------
There are, of course, various definitions of MIS. Let us look at some of
---------------------- them.
---------------------- According to Gordon Bitter Davis and Margrethe H. Olson, “MIS
is an integrated user-machine system for providing information to support
---------------------- operations, management and decision-making functions in an organisation. The
system utilizes computer hardware and software, manual procedures/models
----------------------
for analysis, planning, control and decision-making and database.”
---------------------- Kelly has defined MIS as “a combination of human and computer based
---------------------- resources, which result in collection, storage, retrieval, communication and use
of data for the purpose of efficient management of operations and for business
---------------------- planning”.
---------------------- T. Lucey has defined MIS as “a system to convert data from internal
and external sources into information, to communicate that information, in
---------------------- an appropriate form to managers at all levels, in all functions to make timely
and effective decisions for planning, directing and controlling the activities for
---------------------- which they are responsible”.
---------------------- According to Henry C. Lucas, “MIS is a set of organized procedures
which when executed provide information to support decision-making.”
----------------------
Donald W Kroeber and Hugh J. Watson have defined MIS as “an organized
---------------------- set of processes that provide information to managers to support the operations
and decision-making within an organisation”.
----------------------
From the various definitions quoted above, we can state that MIS is an
---------------------- integrated system, which transforms the data (inputs) into reports (outputs) for
facilitating decision-making through processing and using various components
----------------------
of the information system, viz., hardware, software, database, procedures and
---------------------- personnel.
----------------------

A formal MIS system should be able to take care of the following functions: Notes
●● Handling of voluminous data.
----------------------
●● Confirmation of the validity of data and transaction.
●● Complex processing of data and multidimensional analysis, quick search ----------------------
and retrieval. ----------------------
●● Mass storage.
----------------------
●● Communication of the information to the user on time.
●● Fulfilling the changing needs of information. ----------------------
The management information system uses computers and communication ----------------------
technology to deal with the above-mentioned functions.
----------------------
In view of the above definitions, the concept of MIS can be illustrated as
follows in Fig. 1.1: ----------------------
Judgement/ Skill/ External
Processing Logic Intuition Experience Environment ----------------------
Decision
Data Computers ----------------------
Intelligence Design Choice
Human Beings ----------------------
Data Infor- Decision Making
Data base mation
Data Decision Implementation ----------------------
MIS
----------------------
Performance
Monitoring / Feedback ----------------------
----------------------
Fig. 1.1 : MIS Concept
Thus, in our discussions we will always consider MIS, which is based on making ----------------------
use of computers for processing and providing information.
----------------------
Check your Progress 1 ----------------------
----------------------
Fill in the blank.
----------------------
1. MIS is a set of ___________, which when executed, provide
information to support decision-making. ----------------------
Multiple Choice Multiple Response.
----------------------
1. A formal system should be able to take care of:
----------------------
i. Mass storage
ii. Handling of voluminous data ----------------------
iii. Confirmation of the validity of data and transaction ----------------------
iv. Hardware and software
----------------------
----------------------

Notes
Activity 1
----------------------
Using the Internet as your resource, find out more about Management
----------------------
Information System.
----------------------
1.3 ROLE OF MIS
----------------------
As stated earlier, MIS has become necessary due to increased business and
----------------------
management complexities. These complexities demand not only quantitative
---------------------- but also qualitative decision-making. All managers, as we know, have to take
decisions under conditions of risk, certainty or uncertainty.
----------------------
A good manager/decision-maker is one who minimizes, if not eliminates
---------------------- altogether, the elements of risk and uncertainty in decision-making. MIS is
helpful in doing precisely this.
----------------------
Hence, MIS is required to enable managers to take qualitative decisions
---------------------- and ensure success for their respective organisations. MIS also enables the
managers to minimise the element of surprise.
----------------------
Again, MIS enables decision-makers to come out with appropriate
---------------------- response to a business situation. Thus, MIS enables decision-makers to give
either a re-active or a proactive response.
----------------------
As the decisions are also futuristic, MIS facilitates pro-active decision-
---------------------- making − it enables the managers/organisations to be ready for tomorrow. MIS,
thereby, can act or function both as an instrument of defence as well as a weapon
---------------------- for offence, with strong strategic planning base.
---------------------- Impact of MIS
---------------------- MIS creates an information-based work culture in an organisation. Since
MIS plays a very important role in the organisation, it creates an impact on
---------------------- the organisational functioning, performance and productivity. MIS impacts
the management function of an organisation. With a good MIS support, the
----------------------
management of marketing, finance, production and personnel can become more
---------------------- efficient. The tracking and monitoring of the functional targets become easy.
The functional managers are informed about the progress, achievements
----------------------
and shortfalls in the activity and targets. The manager can alter certain decisions
---------------------- with the help of information indicating the probable trends in various aspects
of business. This helps in forecasting and long-term perspective planning. The
---------------------- manager’s attention is brought to a situation, which is exceptional in nature,
inducing him to take action or a decision in the matter.
----------------------
A disciplined information reporting system creates a structured database
---------------------- and a knowledge base for all the people in the organisation. The information
---------------------- is available in such a form that it can be used straight away or by blending and
analysis, saving the manager’s valuable time.
----------------------

MIS affects the organisation by making it convenient to understand the Notes
business better. MIS begins with the definition of data, entity and attributes
respectively, designed for information generation in the organisation. Since all ----------------------
information systems use the dictionary, understanding terms and terminology
becomes easier, thereby bringing clarity in communication and understanding ----------------------
of an event in the organisation. ----------------------
MIS calls for systemisation of the business operations for an effective
----------------------
system design. This leads to streamlining of the operations. It improves the
administration of the business by bringing a discipline in its operations, as ----------------------
everybody is required to follow and use the systems and the procedure. The
process brings a high degree of professionalism in the business objects. ----------------------
Since the goals and objectives of MIS are the product of business goals ----------------------
and objectives, it helps indirectly to pull the entire organisation towards the
corporate goals and objectives by providing relevant information to the people ----------------------
of the organisation.
----------------------
A well-designed system with a focus on the managers makes an impact on
managerial efficiency. The use of computers helps managers to use the tools and ----------------------
techniques, which are impossible to use manually. The ready-made packages
----------------------
make this task simpler.
MIS positively impacts the managerial ability to perform. It also improves ----------------------
the decision-making ability considerably. ----------------------
----------------------
Fill in the blank.
----------------------
1. MIS creates an __________ work culture in an organisation.
----------------------
Activity 2 ----------------------
----------------------
Visit an organisation and discuss the impact of MIS in that organisation with
the manager. Prepare a report on the same. ----------------------
----------------------
1.4 CHARACTERISTICS AND PRE-REQUISITES OF MIS
----------------------
Originally, MIS was envisioned as a single, highly integrated system, bringing
----------------------
together data processing of all organisational functions. However, MIS is
now viewed as a federation of subsystems developed/implemented as needed, ----------------------
but conforming to an overall plan. Each organisation consists of subsystems
like production, inventory, finance, marketing, etc. There could be functional ----------------------
subsystems as well as subsystems of activities as given in Table 1.1 and
----------------------
Table 1.2.
----------------------

Notes Table 1.1 Functional Subsystem
---------------------- Marketing Sales forecasting, sales planning, customer and sales

analysis
---------------------- Manufacturing Production planning and scheduling, cost control
---------------------- analysis
Logistics Planning and control of purchasing, inventories,
----------------------
distribution
---------------------- Personnel Planning personnel requirements, analysing
performance, salary administration
----------------------
Finance and Financial analysis, cost analysis, capital requirements
---------------------- Accounting planning, income measurement
---------------------- Information Information system planning, cost-effective analysis
Processing
----------------------
Top Management Strategic planning, resource allocation
----------------------
Table 1.2 Subsystems of Activities
---------------------- Transaction Processing Processing of orders, shipments and receipts
Operational Control Scheduling of activities and performance reports
----------------------
Management Control Formulation of budgets and resource allocation
---------------------- Strategic Planning Formulation of objectives and strategic plans
Each of these subsystems will have a certain degree of autonomy or
----------------------
independence in its functioning. However, no subsystem can function as an
---------------------- island by itself to the detriment of other functional subsystems. Each subsystem
must comply with the overall corporate goal/plan.
----------------------
Thus, although these subsystems enjoy autonomy, they are loosely
---------------------- connected and are interdependent. MIS as a federation of subsystems is shown
below in Figure 1.2.
----------------------
Information
Production
Processing
Finance &
Marketing
Personnel
Accounts
Logistics
---------------------- Activities
R&D
----------------------
---------------------- Strategic Planning
---------------------- Management Control

----------------------
Operational Control
---------------------- Transaction Processing
---------------------- Data Base Management System
---------------------- Data Base
---------------------- Fig. 1.2 : MIS as a Federation of Sub-systems

This feature has also facilitated the modularity and development of Notes
computer- based information system on a modular pattern, permitting autonomy
but ensuring interdependence and holistic perception. ----------------------
MIS and its users ----------------------
The major users of a computer-based information system are shown in the table
----------------------
below.
Table 1.3 Functions of MIS for Various Users ----------------------
User Functions ----------------------

Clerical Personnel Handle transactions, process input data and answer
queries ----------------------
First-level Managers Obtain operations data, assist in planning, scheduling, ----------------------
identifying out-of-control situations, and make
decisions ----------------------
Staff Specialists Collect information for analysis, assist in analysis,
planning and reporting ----------------------
Management Regular reports, ad hoc retrieval requests, ad hoc
----------------------
analyses, ad hoc reports, assistance in identifying
problems and opportunities, assistance in decision- ----------------------
making, analysis
----------------------
MIS is viewed as a multidisciplinary activity/subject. MIS draws heavily
on various disciplines like Management Accounting, Management Science/ ----------------------
Theory, Organisational Behaviour/Theory, Operations Research, Computer
Science, etc. as illustrated in Figure 1.3. ----------------------
----------------------
Management
Computer Accounting
----------------------
Science Management
Science / Theory ----------------------
MIS
Operations
Behavioural ----------------------
Research
Sciences ----------------------
Organisation
Theory
----------------------
Fig. 1.3 : MIS: A multi-disciplinary subject ----------------------
Management Accounting is meant for monitoring, controlling the ----------------------

organisational performance and initiating course-corrective action whenever/
----------------------
wherever required. It also provides specific information, costs, etc. about various
activities, which can be used for analytical and decision-making activities. ----------------------
Thus, Management Accounting is used in MIS.
----------------------
Management Science techniques and principles are inseparable part
of decision-making. They explain the dynamics of the decision-making ----------------------
process, specify management functions at various levels, and thereby facilitate
development of MIS. ----------------------

Notes MIS has to be developed and implemented in an organisational context.
Organisational Theory/Behaviour enables MIS professionals to understand
---------------------- organisations, their types, cultures and behaviour. These are valuable inputs
as the success of MIS depends on how it adapts to the specific organisational
---------------------- requirements, for example, MIS perception in a proprietary firm, family-owned
---------------------- company, government institution or a multinational enterprise is certainly
different. Hence, MIS also draws heavily on Organisational Behaviour and
---------------------- Theory.
---------------------- Decision-making today involves extensive use of mathematical and
statistical techniques. Model building, creating scenarios, forecasting − all these
---------------------- activities involve mathematical/statistical techniques. These techniques, found
in Operations Research − which uses statistics and mathematics for arriving at
----------------------
an optimal solution − are used in MIS.
---------------------- As stated earlier, MIS is based on computers. It is no wonder that MIS
makes extensive use of computer science and technology for data storage,
----------------------
processing, manipulation, retrieval, etc. because of the speed, processing
---------------------- capability and memory size of the computers.
As MIS cannot be developed without making use of the various theories,
----------------------
principles and formulae, MIS is viewed as a multidisciplinary subject.
---------------------- MIS is considered an evolving subject. MIS has come to play a much
---------------------- larger role in organisations as compared to the 1950s. While initially MIS
brought about technical changes, MIS has since moved into managerial
---------------------- control and further into influencing the core institutional activities as shown in
Figure 1.4.
----------------------
MIS MIS MIS
----------------------
----------------------
Technical Managerial Institutional
---------------------- Changes Control Core
Activities
----------------------
---------------------- Time 1950s 1960s 1970s 1980s 1990s
---------------------- Fig. 1.4 : Changing MIS Focus

---------------------- Though initially MIS started with electronic data processing, it has
since moved to Management Science/Information Systems, Decision Support
---------------------- Systems, Executive Information Systems, Knowledge-based Experts Systems,
Artificial Intelligence, etc. as shown in Figure 1.5.
----------------------
CBIS
----------------------
Computer-Based Information System (CBIS) is essentially a system of
---------------------- information using computer technology to carry out some or all of its planned
tasks. Below is a list of the basic components of computer-based information
---------------------- system.

The first four are known as information technology components: Notes
●● Hardware: These are the devices like the monitor, processor, printer and
----------------------
keyboard, all of which work together to accept, process, show data and
information. ----------------------
●● Software: These are the programs, which allow the hardware to process
the data. ----------------------
●● Database: It is the gathering of associated files or tables containing ----------------------

related data.
----------------------
●● Network: It is a connecting system, which allows diverse computers to
distribute resources. ----------------------
●● Procedures: These are the commands for combining the components ----------------------
above to process information and produce the preferred output.
In the end of all this, it is the people who are the ones using these hardware ----------------------
and software to interface with it and make use of its output.
----------------------
The evolution of CBIS is shown in the figure below.
----------------------
To
TPS ----------------------
To
OAS
----------------------
To To
1950 EIS GDSS ----------------------
1960
1970
----------------------
1980
To
----------------------
To To 1990
MIS DSS To
ES
AI ----------------------
----------------------
Fig. 1.5 : Evolution of CBIS
----------------------
EDP Focus on Data
OAS Focus on Communication ----------------------
MIS Focus on Information ----------------------
DSS Focus on Decision Support for a specific business problem
----------------------
EIS Focus on Decision Support for Top Management
----------------------
ES Focus on Consultation
AI Focus on self-learning/thinking systems ----------------------
----------------------
----------------------
----------------------
----------------------

Notes
AI
KS/ES
Artificial
Knowledge/
---------------------- Expert
Intelligence
ESS System
---------------------- Excutive
Support
System
----------------------
DSS
---------------------- Decision
Support
System
----------------------
---------------------- MIS
Management
Information
---------------------- System
---------------------- OAS
Office
---------------------- Automation
System
----------------------
---------------------- TPS
Transaction
Processing
---------------------- System
----------------------
1950s 21st Century
----------------------
Fig. 1.6 : Evolution of MIS
----------------------
Consequently, the users and the characteristics of MIS have also undergone
---------------------- changes over the years as can be seen from the Table 1.4.
---------------------- Table 1.4 Changes in MIS
Type of Information Processing Information Users
---------------------- System Inputs Outputs
ESS/EIS Aggregate data, Graphics, Projections, response Senior managers
---------------------- external, internal simulations, to queries
interactive
DSS Low volume Interactive, Special reports, Professionals, staff
---------------------- data, analytic simulations, decision analysis, managers
models analysis response to queries
---------------------- MIS Summary Routine reports, Summary and Middle managers
transaction data, simple models, low exception reports
---------------------- high volume level analysis
data, simple
models
---------------------- KWS Design Modelling, Models, graphics Professionals,
specifications, simulations technical staff
---------------------- knowledge base
OAS Documents, Document Document, Clerical workers
---------------------- schedules management, schedules, mail
scheduling,
communication
---------------------- TPS Transactions, Sorting, listing, Detailed reports, Operations
events merging, updating lists, summaries personnel,
---------------------- supervisors

1.4.1 Pre-requisites of MIS Notes
The pre-requisites of MIS are as follows: ----------------------
1. Should be a unified system.
----------------------
2. Should support/facilitate decisions.
----------------------
3. Should be compatible with the organisation’s structure and culture.
4. Should have user-involvement and user-orientation. ----------------------
5. Should be cost-effective/beneficial. ----------------------

6. Should use the principle of selectivity and control by exception. ----------------------
7. Should be responsive to changes around and within the organisation.
----------------------
8. Should be speedy and accurate.
----------------------
9. Should provide validated and valid information.
10. Should be “Management” and not “Manipulated” Information System. ----------------------
----------------------
Check your Progress 3
----------------------
Match the following. ----------------------
a. Clerical i. Information for analysis, assistance with ----------------------
Personnel analysis, planning and reporting
b. First-level ii. Regular reports, Ad hoc retrieval requests, ----------------------
Managers ad hoc analyses, ad hoc reports, Assistance
in identifying problems and opportunities, ----------------------
assistance in decision-making analysis ----------------------
c. Staff Specialists iii. Obtain operations data. Assistance with
planning, scheduling, identify out-of-control ----------------------
situations, and making decisions
d. Management iv. Handle transactions, process input data and ----------------------
answer inquiries ----------------------
----------------------
Activity 3 ----------------------
How would the implementation of MIS facilitate the working of any ----------------------
organisation? Prepare a report for the same by visiting an organisation.
----------------------
1.5 CONTEMPORARY APPROACHES TO MIS ----------------------
----------------------
Systems development has ceased to be a purely technical activity. While
developing information systems due attention is given to the related aspects like ----------------------
organisational structure, organisational culture, human behaviour, etc., along
with the technical aspects. ----------------------

Notes The contemporary approaches to information systems development can
be broadly categorised into the following:
----------------------
1. Technical approach: This approach is centered around mathematical
---------------------- and normative models to study information systems. It also relies heavily
on the technology and the capabilities of these systems. As such, the
---------------------- disciplines of Computer Science, Management Science and Operations
Research contribute significantly to the technical approach.
----------------------
2. Behavioural approach: While Information Technology may heavily
---------------------- depend upon the technical aspects/disciplines, the developer has to
consider the behavioural impact/response of people in the organisations
----------------------
where information systems would be implemented. Indeed, motivational
---------------------- feasibility is considered to be of critical importance while developing
information systems.
----------------------
As an information system has to address and take cognisance of behavioural
---------------------- problems and issues (system utilisation and system implementation to
mention a few), it is imperative that behavioural factors are taken into
---------------------- consideration.
---------------------- The behavioural approach, therefore, borrows heavily from the principles
of Political Science, Psychology, Sociology and Organisational Behaviour,
---------------------- among others. This approach, according to R. Kling and W. H. Dutton,
---------------------- focuses not on the technical solutions but on the changes in attitudes,
management and organisational policy.
---------------------- 3. Socio-technical approach: It is realized that the problems faced while
---------------------- developing and implementing information systems are neither purely
technical nor behavioural. It, therefore, becomes important to understand
---------------------- the perspectives of both technical as well as behavioural disciplines.
Perspectives from other disciplines would also be immensely helpful.
----------------------
The socio-technical approach does not opt for purely technical/
---------------------- technological or behavioural approach, but it does attempt to borrow heavily
from both the approaches and synthesise them to optimise the performance of
---------------------- the information system as a whole. This approach is now being increasingly
---------------------- accepted and implemented.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
Multiple Choice Multiple Response. ----------------------
1. The pre-requisites of MIS are as follows:
----------------------
i. Should support/facilitate decisions.
----------------------
ii. Should use the principle of selectivity and control by exception.
iii. Should be non-responsive to changes around and within the ----------------------
organisation. ----------------------
iv. Should be “Management” and not “Manipulated” Information
System. ----------------------
Fill in the blanks. ----------------------

1. Systems development has ceased to be a purely ___________. ----------------------
----------------------
Activity 4
----------------------
Surfing the Internet, find out more about the technical approach to MIS. ----------------------
----------------------
1.6 INFORMATION AS A STRATEGIC RESOURCE ----------------------
With globalization, competition is increasing and becoming more global, ----------------------
relentless and fierce. Global competition has increased performance standards in
many dimensions covering the whole gamut of cost, price, quality, technology, ----------------------
productivity, product launch/ introduction time and operations. Moreover, these
standards are not static. They are exacting, requiring continuous improvement ----------------------
from the organisations. ----------------------
Hence, to survive, succeed and prosper in the present competitive
environment, strategic competitiveness would have to be achieved by the ----------------------
corporate not only by meeting but also by exceeding the prevailing global ----------------------
standards.
----------------------
However, to exceed the global standards, an organisation must first know
what they are and then only attempt first to reach and then better them. Like, ----------------------
if one has not even heard of the Six Sigma, the question of being a zero-defect
company simply would not arise. ----------------------
This leads to a series of actions and reactions, initiatives and responses ----------------------
among the firms competing within a particular industry/sector. It also further
leads to competitive interaction, which often shapes the competitive position of ----------------------
firms, undertaking the corporate strategies.
----------------------
----------------------

Notes This process, in its turn, gives rise to the phenomenon known as
“competitive dynamics”. As a result of competitive dynamics, the effectiveness
---------------------- of any corporate strategy (“what an organisation is today and what it ought to
be tomorrow”) is determined not only by the initial move, but also by how well
---------------------- the firm anticipates and addresses the moves and countermoves of competitors
---------------------- and the shifts occurring in customer demands over a period of time.
The competitive dynamics also has to consider the fact that earlier the
----------------------
competitor’s research and development efforts and product decisions could be
---------------------- known in a few months time and then acted upon. However, in today’s highly
globalised and information-based economy, any idea that works can sometimes
---------------------- be imitated in a matter of few days, if not hours!
---------------------- In this connection, it would be interesting to note that, as reported, many
firms competing in the electronics industry often do not apply for patents to
---------------------- prevent competitors from gaining access to the technological knowledge
included in the patent application!
----------------------
It is in this context that information has emerged as a strategic resource
---------------------- − resource that is scarce, has significant cost and has alternative uses − giving
competitive edge to the organisation which possesses it. Hence, in the present
----------------------
competitive environment information/knowledge has become a critical
---------------------- organisational resource and is increasingly being considered as a valuable
strategic resource or as an invaluable asset for competitive advantage.
----------------------
The probability of achieving strategic competitiveness in the present
---------------------- competitive environment could increase for an organisation that realises that its
survival, success and prosperity depends on the ability to capture information,
---------------------- transform it into usable knowledge and disseminate it rapidly throughout the
---------------------- organisation. Organisations that accept this challenge, shift their focus from
merely obtaining information to exploiting the information gain a strategic
---------------------- competitive advantage over competing firms.
---------------------- Access to and availability of information yields strategic opportunities and

results in an unbelievably large array of strategic implications and possibilities.
---------------------- To be able to grab and retain the strategic competitive edge, it is imperative for
the organisations to be able to raise and answer questions such as the following:
----------------------
1. What business the organisation should be in?
----------------------
2. What existing business activities should be spun off?
---------------------- 3. What new activities should be undertaken?
---------------------- 4. How to protect/insure the organisation from business cycles/business
swings?
----------------------
5. What are the competitors doing and can do, as revealed by their current
---------------------- strategy?
---------------------- 6. What drives the competitors, as shown by their future objectives?

7. What do the competitors believe about themselves and the industry, as
----------------------
shown by their assumptions?

8. What are the competitors’ capabilities? Notes
Information about the aforesaid issues would help an organisation prepare
----------------------
an anticipated “response profile” of each competitor, covering the following
aspects: ----------------------
1. What will the competitors do in the future?
----------------------
2. Where does the organisation hold an advantage over its competitors?
----------------------
3. How will this change the organisation’s relationship with its competitors?
All these questions can be answered by undertaking competitor analysis ----------------------
or resorting to competitive intelligence or business intelligence. ----------------------
It has to be noted that critical to business intelligence or competitive
intelligence or competitor analysis is the gathering of data and information. ----------------------
Data and information can help the firm understand competitors’ intentions and ----------------------
strategic implications resulting from them.
----------------------
The data and information should cover not only the competitors but also
the public policies from countries across the world. Such data and information ----------------------
not only enables the recipient of such information to better understand and better
anticipate competitors’ objectives, strategies, assumptions and capabilities, but ----------------------
also provides an early warning of threats and opportunities emerging from the
----------------------
global public policy environment, and analyse how it will affect the achievement
of the company’s strategy. ----------------------
The information, collected through business/competitive intelligence
----------------------
or competitor analysis, enables the organisation to gain insights it requires to
help create a competitive advantage and to increase the quality of strategic ----------------------
decisions it makes when choosing how to compete against its major/emerging
competitors. ----------------------
To survive, succeed and prosper in this fiercely competitive environment, ----------------------
organisations should have cost/price/technology/quality advantage. They
also have to be more profitable, be able to respond quickly and offer better ----------------------
quality products/services ahead of the competitors and at prices lower than the ----------------------
competitors.
No doubt, this is a tall order. However, if organisations do not respond in ----------------------
a pro-active manner using information, the market forces will correct the same. ----------------------
Such organisations would lose market share and suffer serious consequences,
such as they might have to wind up the business. ----------------------
Those organisations that will have information would gain competitive ----------------------
edge and emerge winners. Those organisations that do not possess information
would be left behind and branded as “also-ran” and would be left to struggle for ----------------------
survival.
----------------------
Today, the corporates are thinking in terms of volumes and “Business @
Speed of Thought”. These corporates are in a hurry to penetrate and capture ----------------------
markets world-wide. Most of them must also be thinking the same way Eckhard
----------------------

Notes Pfeiffer, the former CEO of Compaq, had once thought. Pfeiffer once stated:
“We want to do it all, and we want to do it now.”
----------------------
If this is the aspiration, information is the real enabler as a strategic
---------------------- resource.
In the last few years, MIS as a function in a business enterprise has seen a
----------------------
gradual shift from a back-office support function to a front-end mission-critical
---------------------- area of business.
----------------------
Dramatic changes have occurred in Information Technology over the last
---------------------- few years. These changes, in turn, have ushered in an information revolution,
---------------------- which is sweeping the organisations worldwide.
The corporate business environment has resultantly become intensely
---------------------- competitive, increasingly globalised and highly information based. In such a
---------------------- highly competitive environment, it is imperative for an organisation to strive
to seek and seize competitive advantage to emerge winner. Ability to access
---------------------- and use information effectively has been an important source of competitive
advantage for a number of organisations.
----------------------
Competitive Advantage
----------------------
Competitive advantage is about changing the balance of power between
---------------------- a firm and its competitors in the industry, in the firm’s favour. Alternatively,
competitive advantage could be usually embodied in either a product or a
---------------------- service that has the most benefit to customers and that is unavailable from the
competition. It can also be seen as an internal system that delivers benefits to a
----------------------
firm, not enjoyed by its competition.
----------------------
----------------------
---------------------- Fill in the blanks.
---------------------- 1. ______________ is the gathering of data and information.

2. Ability to access and use _____________ effectively has been an
----------------------
important source of _____________ for a number of organisations.
----------------------
---------------------- Activity 5
---------------------- Visit an organisation and find out how information plays an important role
---------------------- and why it is considered a strategic resource.
----------------------
----------------------
----------------------

1.7 PORTER-MILLAR POSTULATES Notes
According to Michael E. Porter and Victor E. Millar, Information ----------------------
Technology affects competition in three vital ways:
----------------------
1. It changes industry structure, and in so doing, alters the rule of competitions.
2. It spawns whole new business, often from within the company’s existing ----------------------
operations. ----------------------
3. It creates competitive advantage by giving companies new ways to
----------------------
outperform their rivals.
1. Changes in industry structure: According to Porter and Millar, the ----------------------
structure of an industry is embodied in five competitive forces that
----------------------
collectively determine the industry profitability. They are:
a. Bargaining power of customers ----------------------
b. Bargaining power of suppliers ----------------------
c. Threat of new entrants in the firm’s market ----------------------
d. Pressure from substitute products or services
----------------------
e. Positioning of traditional industry competitor/s
----------------------
Information and Information Technology can alter each of the five
competitive forces and thereby help the firm gain competitive advantage. ----------------------
2. Spawning of new business: Information, IT and the resultant information
----------------------
revolution are giving birth to completely new industries in three distinct
ways: ----------------------
a. The information revolution makes new business technologically ----------------------
feasible.
b. Information and IT also spawn new business by creating derived ----------------------
demand for new products. ----------------------
c. Information and IT help create/spawn business within old ones.
----------------------
By enabling a firm to spawn a new business, information confers
competitive advantage to the firm as it can offer a bundle of goods/ ----------------------
services.
----------------------
3. New ways of doing things: Information and IT facilitate evolution/
development of new ways of doing old things. This difference makes the ----------------------
difference and gives competitive advantage to a firm.
----------------------
In order to understand the specific use of information for competitive
advantage we would consider the uses under two types: ----------------------
a. Functional Uses ----------------------
1. Information helps to lower cost in any/all parts of the value chain. Value ----------------------
chain is a system of interdependent activities, which are connected by
linkages. Information not only affects how individual activities are ----------------------

Notes performed, but flow of new information also greatly enhances a company’s
ability to exploit linkages between activities, both within and outside the
---------------------- company.
---------------------- 2. Information and information systems help in:
i. Facilitating product delivery
----------------------
ii. Adding value to quality
----------------------
iii. Improving product quality
---------------------- 3. Information helps to transform the physical processing component of
---------------------- activities into information component leading to value addition.
4. Information provides organisations with speed and the ability to move
---------------------- quickly into the market, thereby giving the organisation the first mover’s
---------------------- competitive advantage. It also enables organisations to command a
competitive premium.
----------------------
5. Information helps organisations to enhance:
---------------------- i. Quality of their operations
---------------------- ii. Quality of their products
---------------------- iii. Quality of their services

6. Information can help simplify:
----------------------
i. Products
----------------------
ii. Product processes
---------------------- iii. Production cycle time
---------------------- 7. Information helps organisation to:
---------------------- i. Meet benchmarking standards

ii. Improve customer service
----------------------
iii. Improve quality and precision of design and product
----------------------
b. Strategic Uses
---------------------- 1. Information gives organisations new ways to outperform their rivals.
---------------------- 2. A firm can use four basic competitive strategies to deal with the competitive
forces. They are:
----------------------
i. Product differentiation
----------------------
ii. Focused differentiation
---------------------- iii. Developing right linkages with customers and suppliers
iv. Becoming a low-cost product
----------------------
A firm may/can achieve competitive advantage by pursuing one or more
---------------------- of these strategies simultaneously. It is here where information helps an
organisation in gaining a competitive advantage.
----------------------

3. Information makes it possible for organizations to make more precise Notes
development of strategies, planning, forecasting and monitoring.
4. Information facilitates the availability of extensive data, both internal and ----------------------
external, thereby facilitating a more comprehensive analysis and adding
----------------------
value to problem-solving strategies and decision-making.
5. Information and IT help improve an organisation’s abilities to coordinate ----------------------
its activities regionally, nationally and globally. This, in turn, helps
----------------------
unlock the powers of broader geographical scope to create competitive
advantage. ----------------------
6. Information enables organisations to think globally and act locally.
----------------------
7. Information yields strategic opportunities and enables to change the rules
of the competition very fast, almost overnight, and gives competitive ----------------------
advantage.
8. Information and IT help organisations become more flexible and ----------------------
responsive, eliminate management layers, separate work from location ----------------------
and restructure work flows, giving additional competitive advantage to
organisations. ----------------------
9. Information and IT help organisations acquire strategic flexibility.
----------------------
Strategic flexibility is a set of capabilities firms use to respond to various
demands and opportunities that are a part of dynamic and uncertain ----------------------
competitive environment.
----------------------

1. A firm can use four basic competitive strategies to deal with the ----------------------
competitive forces:
----------------------
i) Product differentiation
ii) Focused differentiation ----------------------
iii) Non-development of right linkages with customers and ----------------------
suppliers
iv) Becoming a low-cost product ----------------------
1. Information and IT help organisations to acquire _______________. ----------------------
----------------------
Activity 6 ----------------------
Visit an organisation and find out the competitive forces, which determine ----------------------
profitability as per Porter and Millar.
----------------------
----------------------

Notes Summary
---------------------- ●● The increased complexities of business can be broadly categorised into
business complexities and management complexities.
----------------------
●● As information is so critical, crucial and pivotal for managers and
---------------------- organisations, Management Information System (MIS) has been
developed to facilitate effective and efficient decision-making.
----------------------
●● MIS is the system, which makes available the right information to the
---------------------- right person, at the right place, at the right time, in the right form and at
the right cost.
----------------------
●● MIS is required to enable managers to take qualitative decisions and
---------------------- ensure success for their respective organisations. MIS also enables the
managers to minimise the element of surprise.
----------------------
●● MIS creates an information-based work culture in an organisation. Since
---------------------- MIS plays a very important role in the organisation, it creates an impact
on the organisational functioning, performance and productivity.
----------------------
●● Originally, MIS was envisioned as a single, highly integrated system,
---------------------- bringing together data processing of all organisational functions.
However, MIS is now viewed as a federation of subsystems developed/
---------------------- implemented as needed, but conforming to an overall plan.
---------------------- ●● Ability to access and use information effectively has been an important
source of competitive advantage for a number of organisations.
----------------------
●● Competitive advantage is about changing the balance of power between a
---------------------- firm and its competitors in the industry, in the firm’s favour.
●● According to Porter and Millar, the structure of an industry is embodied
----------------------
in five competitive forces that collectively determine the industry
---------------------- profitability.
----------------------
Keywords
----------------------
●● Resource: Material or other asset that is transformed to produce benefit
---------------------- and in the process may be consumed or made unavailable.
●● Decision-making: The mental process (cognitive process) resulting in
----------------------
the selection of a course of action among several alternative scenarios.
---------------------- ●● Decision support system: A computer-based information system that
supports business or organisational decision-making activities.
----------------------
●● Data: Data in computing are often represented by a combination of items
---------------------- organized in rows and multiple variables organized in columns.
---------------------- ●● Data Processing: Any process that a computer program does to enter data
and summarise, analyse or otherwise convert data into usable information.
---------------------- ●● Information: A sequence of symbols that can be interpreted as a message.
----------------------

Notes
----------------------
1. State the difference between typical data processing and management
information system. ----------------------
2. “Business complexities led to development of MIS.” Do you agree with
this statement? Justify your answer. ----------------------
3. What is MIS? Explain its role and impact. ----------------------
4. “MIS is a multidisciplinary subject.” Explain.
----------------------
6. What are the contemporary approaches to MIS?
7. Explain the role and impact of MIS on an organisation. ----------------------
8. How does MIS confer competitive advantage? Illustrate with real-life ----------------------
corporate examples.
----------------------
Answers to Check Your Progress
----------------------
Fill in the blanks.
1. MIS is a set of organised procedures, which when executed provide ----------------------
information to support decision-making. ----------------------
1. A formal system should be able to take care of: ----------------------
i. Mass storage ----------------------
ii. Handling of voluminous data
----------------------
iii. Confirmation of the validity of data and transaction
1. MIS creates an information-based work culture in an organisation.
----------------------
i. – d. ----------------------
ii. – c. ----------------------
iii. – a.
iv. – b. ----------------------

1. The pre-requisites of MIS are as follows:
----------------------
i. Should support/facilitate decisions.
----------------------
----------------------

Notes ii. Should use the principle of selectivity and control by exception.
iv. Should be “Management” and not “Manipulated” Information
---------------------- System.
1. Systems development has ceased to be a purely technical activity.
----------------------
----------------------
Fill in the blanks.
---------------------- 1. Competitor analysis is the gathering of data and information.
---------------------- 2. Ability to access and use information effectively has been an important
source of competitive advantage for a number of organisations.
----------------------
----------------------
---------------------- 1. A firm can use four basic competitive strategies to deal with the competitive
---------------------- forces:
i) Product differentiation
----------------------
ii) Focused differentiation
---------------------- iv) Becoming a low-cost product
1. Information and IT help organisations to acquire strategic flexibility.
----------------------
---------------------- Suggested Reading
---------------------- 1. Davis, G and M. Olson. 1985. Management Information Systems. New

York: McGraw Hill)
----------------------
2. Jawadekar, Waman. 2009. Management Information Systems: Text &
---------------------- Cases. New Delhi: Tata McGraw Hill.
3. Prasad, L.M. and Usha Prasad. 2003. Management Information Systems.
----------------------
New Delhi. Sultan Chand & Sons.
---------------------- 4. Sadagopan, S. 1998. Management Information Systems. New Delhi:
---------------------- Prentice Hall India.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Information Technology
UNIT
2
Structure:
2.1 Introduction
2.2 Impact of Information Technology
2.3 Understanding a Computer
2.4 Generations of Computer
2.5 Categories of Computer
Summary
Keywords
Suggested Reading
Information Technology 25
Notes
Objectives
----------------------
----------------------
●● Discuss Information Technology and its impact
---------------------- ●● Define a computer, its hardware and software
---------------------- ●● Identify the generations of computer
---------------------- ●● Describe various categories of computer
---------------------- 2.1 INTRODUCTION

----------------------
The term Information Technology (IT) brings up different images for
---------------------- different people. While for some it is the supercomputer, for others, it means
laptop or palmtop. While for some it means the electronic gadgetry, for others,
---------------------- it means the efficiency in communication channels.
---------------------- As stated by Porter and Millar, Information Technology must be conceived
of broadly to encompass the information that business create and use as well as a
---------------------- wide spectrum of increasingly convergent and linked technologies that process
the information. In addition to computers, then, data recognition equipment,
----------------------
communications technologies, factory automation and other hardware and
---------------------- services are included.
---------------------- According to the United Kingdom’s Department of Trade and

Industry, “Information Technology is the acquisition, processing, storage
---------------------- and dissemination of vocal, pictorial, textual and numeric information by a
microelectronics based combination of computing and telecommunications.”
----------------------
Information Technology is the term used to describe technologies,
---------------------- which enable the users to record, store, process, retrieve, transmit and receive
information. Information Technology encompasses modern technologies such
---------------------- as computers, facsimile transmission, micrographics, telecommunications and
---------------------- microelectronics.
Today, we are all aware that Information Technology has provided new
---------------------- ways of recording, storing, processing, retrieving, transmitting and receiving
---------------------- information enabling us—the users—to build more effective and more efficient
information systems.
----------------------
----------------------
2.2 IMPACT OF INFORMATION TECHNOLOGY
---------------------- IT has changed the way business organisations function and carry out their
activities. People like Bill Gates today talk and write about “Business @
---------------------- Speed of Thought” and information. Most of us today routinely talk about and
some of us actually deal in e-business, e-commerce, etc.. IT has transactional,
---------------------- geographical, automational, analytical, informational, sequential, knowledge
---------------------- management, tracking and disintermediation capabilities.

The IT capabilities and their organisational impacts are briefly illustrated in Notes
Table 2.1.
----------------------
Table 2.1 IT Capabilities and their Organisational Impacts
Capability Organizational Impact / Benefit ----------------------
Transactional IT can transform unstructured processes into routines transactions ----------------------
Geographical IT can transform information with rapidity and ease across large ----------------------
distance, making process independent of geography.
----------------------
Automational IT can replace or reduce human labor in a process.
----------------------
Analytical IT can bring complex analytical method to bear on a process.
----------------------
Informational IT can bring vast amounts of detailed information into a process.
----------------------
Sequential IT can enable changes in the sequence of tasks in a process, often
allowing multiple tasks to be worked on simultaneously. ----------------------
Knowledge IT allows the capture and dissemination of knowledge and expertise ----------------------
to improve the process.
----------------------
Tracking IT allows the detailed tracking of task status, inputs and outputs.
----------------------
Disintermediation IT can be used to connect two parties within a process that would
otherwise communicate through an intermediary (internal or external) ----------------------
[Source: Davenport, Thomas H. and James E. Short. 1990. “The New industrial ----------------------
Engineering: Information Technology and Business Process Redesign.” Sloan
Management Review II.] ----------------------
These capabilities, however, can be exploited/made use of, if and only if, ----------------------
the business organisations/managers understand and implement Information
Technology. Computer and telecommunications provide the two main pillars of ----------------------
Information Technology. ----------------------
----------------------
Fill in the blanks.
----------------------
1. _______________ is the term used to describe technologies, which
enable the users to record, store, process, retrieve, transmit and ----------------------
receive information.
----------------------
2. IT has changed the way _________________ function and carry out
their activities. ----------------------
----------------------
----------------------
----------------------
Notes
Activity 1
----------------------
Visit a manufacturing company and analyse the impact of Information
----------------------
Technology on the company.
----------------------
2.3 UNDERSTANDING A COMPUTER
----------------------
According to the Information Technology Act, 2002, “Computer means any
----------------------
electronic, magnetic, optical or other high speed data processing device or system
---------------------- which performs logical, arithmetical and memory functions by manipulation
of electronic, magnetic or optical impulses, and includes all inputs, output,
---------------------- processing, storage, computer software or communication facilities which
are connected or related to the computer in a computer system or computer
----------------------
network.”
---------------------- A computer is an electronic device, which accepts input, processes it according
---------------------- to a set of instructions provided and generates the desired output. It operates on
data. It can store, process and retrieve data as and when desired. A computer
---------------------- system is a combination of the following different elements:
---------------------- ●● Hardware: All physical devices that the computer is made of.
●● Software: Instructions that tell the hardware what and how to perform.
----------------------
●● Data/Information: Data is facts collected and given as input to the
---------------------- computer and information is processed data, i.e, data is processed into
useful information.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 2.1 A Computer System
----------------------
Characteristics of a computer
----------------------
1. Automatic: Computers are automatic machines because once a job
---------------------- starts, it continues until the job is finished, normally without any human
assistance.
----------------------

2. Speed: Computers can work at a very high speed of milliseconds, Notes
microseconds and nanoseconds A powerful computer is capable of
performing millions of instructions per second. The speed is measured in ----------------------
megahertz (MHz) and gigahertz (GHz).
----------------------
3. Accuracy: The accuracy of a computer is consistently high. Every
calculation is done with the same accuracy. If errors do occur, they are ----------------------
mainly due to fault in instructions given to the computer or faulty data.
----------------------
Computer follows the rule of garbage in, garbage out (GIGO).
4. Diligence: Diligence is the ability of a computer to perform repetitive ----------------------
tasks with the same accuracy consistently with tiredness, i.e., it is free
----------------------
from monotony, tiredness and lack of concentration.
5. Versatility: A computer can perform a variety of tasks ranging from very ----------------------
simple to very complex.
----------------------
6. Reliability: Computers consistently produce accurate results and hence
are very reliable. All information stored in a computer remains there till ----------------------
the users want it to be there, even if recalled after years the information ----------------------
remains intact and accurate. There is no deterioration of data stored/
information. ----------------------
7. Storage: Computers can store large amount of data, which can be accessed ----------------------
as and when required and at a high speed.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 2.2 Basic Organisation of a Computer System
The computer hardware consists of: ----------------------
1. Central Processing Unit (CPU): The CPU consists of the Arithmetic ----------------------
Logic Unit and the Control Unit. It is at the CPU that the manipulation of
----------------------
symbols, numbers and letters takes place. The CPU also controls the other
parts of the computer system. It is like the human brain. ----------------------
i. Arithmetic Logic Unit (ALU): The ALU in the CPU performs
----------------------
both arithmetic and logical operations. On the arithmetic side, the
ALU adds, subtracts, multiplies and divides, determining whether ----------------------
Notes a number is positive, negative or zero. On the logical side, it
distinguishes between letters as well as numbers logically, and also
---------------------- determines whether a given quantity is greater than or less than or
equal to another quantity. The type and number of arithmetic and
---------------------- logical operations, which a computer can perform, is determined
---------------------- by the engineering design of the ALU. Most ALU’s are designed to
perform the four basic arithmetic operations (add, subtract, multiply
---------------------- and divide) and logical operations or comparisons.
---------------------- ii. Control Unit (CU): The CU selects and interprets program
instructions and then checks their execution. It has some special-
---------------------- purpose registers and a decoder to perform these activities. The
special-purpose registers help the control unit in instruction
----------------------
selection, namely the instruction register and the program control
---------------------- register, which hold the current instruction and the next instruction
to be executed respectively.
----------------------
The decoder has the necessary circuitry to decode and interpret the
---------------------- meaning of ever instruction supported by the CPU. Each instruction is
accompanied by microcode (very basic direction), which tells the CPU
---------------------- how to execute the instruction.
---------------------- In spite of the fact that the control unit does not perform any actual
processing of the data, it still acts as the central nervous system for the
---------------------- other components of the computer by managing and coordinating the
entire computer system including the input and output units. The control
----------------------
unit receives instructions from the program stored in the main memory,
---------------------- interprets the instructions and issues signals, which cause other units of
the system to execute them.
----------------------
2. Input unit: Data and instructions must be entered into the computer
---------------------- system before any computation can be performed. This task is performed
by the input unit, which links the external environment with the computer
---------------------- system.
---------------------- Data and instructions enter input units in various forms, which depend
upon the particular input device used. Regardless of the form in which
---------------------- input is received, all input devices must transform the input data into
---------------------- binary codes, which the primary memory of a computer is designed
to accept. This transformation is accomplished by units called input
---------------------- interfaces. The functions performed by an input unit are:
---------------------- ●● It accepts/reads the instructions and data from the outside world.
●● It converts these instructions and data in computer acceptable form.
----------------------
●● I t supplies the converted instructions and data to the computer
---------------------- system for further processing.
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig 2.3 Input Units ----------------------

3. Output unit: As the name suggests, it is reverse of the input unit. It ----------------------
supplies the information obtained after data processing to the user. Since
a computer works with binary code, the results produced are also in the ----------------------
binary form, hence before supplying the results to the user, it must be
converted to human acceptable/readable form. This task is accomplished ----------------------
by units called output interfaces. ----------------------
Output interfaces are designed to match the unique physical or electrical
----------------------
characteristics of output devices. The functions performed by the output
unit are: ----------------------
●● I t accepts the results produced by the computer, which are in coded
----------------------
form.
●● It converts these coded results to human acceptable/readable form. ----------------------
●● It supplies the converted results to the user. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig 2.4 Output Units ----------------------
Notes 4. Storage device: The storage devices are used to store data. The various
types of storage devices are discussed below.
----------------------
i. Primary storage: Also referred to as the main/core memory,
---------------------- primary storage is where data and storage instructions are
stored for a temporary period till the processing is completed.
---------------------- There are three different types of primary storage, viz.,
the Register (in ALU or CU), the Cache and the RAM.
----------------------
The linkage between CPU, primary storage and the other
---------------------- devices is provided by three buses, viz., Data Bus, Address
Bus and Control Bus. The Data Bus moves data to and
---------------------- from primary storage. The Address Bus transmits signals for
locating a given address in primary storage. The Control Bus
----------------------
transmits signals specifying whether to read or write data to/from a
---------------------- given primary storage address, input device or output device.
ii. Secondary storage: This device is used for relatively long-term,
----------------------
non-volatile storage of data outside the CPU and primary storage.
---------------------- Also called auxiliary memory (supplementary, backup), it is low in
cost and can store large volume of data on permanent basis. Hard
---------------------- disk, high-density diskette, magnetic tape, optical disk are some of
the secondary storage devices used.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
---------------------- Fig 2.5 Secondary Storage Devices
----------------------

5. Physical media to link various devices Notes
There are various physical media, which are used to link various devices
----------------------
together. It is shown in the figure below.
CPU ----------------------
----------------------
Arithmetic Logic
Unit Primary ----------------------
Storage ----------------------
Control Unit
----------------------
----------------------
DATA BUS ----------------------
ADDRESS BUS
CONTROL BUS
----------------------
----------------------
INPUT DEVICES OUTPUT DEVICES SECONDARY ----------------------

 Keyboard  Printers STORAGE
 Computer Mouse  Video Display  Magnetic Tape
----------------------
 Touch Screen Unit / Monitor  Magnetic Disk
 Source  Plotters
----------------------
 Magnetic Drum
Data  Audio Output
Automation  Optical Disk ----------------------
----------------------
Fig. 2.6 Physical Media to link Various Devices
----------------------
----------------------

i. Hardware a. Facts collected and given as input to the computer ----------------------
and information is processed data, i.e, data is
processed into useful information. ----------------------
ii. Software b. All physical devices that the computer is made of.
----------------------
iii. Data/Information c. Instructions that tell the hardware what and how
to perform. ----------------------
Fill in the blanks.
1. ________________is the ability of a computer to perform repetitive ----------------------
tasks with the same accuracy consistently without tiredness.
----------------------
2. The CPU consists of the _____________ and the __________________.
3. _________________ are designed to match the unique physical or ----------------------
electrical characteristics of output devices.
4. _____________ devices are used for relatively long-term, non- ----------------------
volatile storage of data outside the CPU and primary storage.
----------------------
Notes
Activity 2
----------------------
List down the configuration of your computer along with the operating
----------------------
system and other software installed on your machine.
----------------------
2.4 GENERATIONS OF COMPUTER
----------------------
Related to development of various types of computers, the different
----------------------
generations of computers have been identified which are discussed below:
---------------------- 1. First generation: The first generation of computer refers to those
---------------------- computers, which relied on and used vacuum tubes for storing and
processing data.
---------------------- The computers were very big in size, could be located in a large room and
---------------------- had limited memory and processing capability. The Electronic Numerical
Integrator and Calculator (ENIAC), for example, had only 20 storage
---------------------- registers and could accomplish 5000 additions per second.
The vacuum tubes generated lot of heat, consumed great deal of power
----------------------
and had a very short span of life. Resultantly, the Mean Time between
---------------------- Failures (MTBF) was low − of the order of an hour.
The computers were used by technical people mainly for scientific and
----------------------
engineering work. The maximum main memory size was reported to
---------------------- be around 2KB (2024 bytes) and the speed of about 10,000 instructions
per second. Computer programming was mainly carried out in Machine
---------------------- Language and later in Assembly Language.
---------------------- Table 2.2 First-Generation Computers
Computer Characteristics Trends and Development in
---------------------- and Capabilities Computer Hardware
---------------------- Room (Size) Vacuum Tubes
---------------------- One Component per circuit (Density) Magnetic Drum (Main Memory)
Hundreds instructions per second Magnetic Drum, Magnetic Tape

---------------------- (Speed) (Secondary Storage)
---------------------- Failure of circuits in hours Punched Cards, Paper Tape
(Reliability) (Input media)
----------------------
Thousands capacity in characters Punched cards. Printed reports
---------------------- (Memory) (Output Media)
---------------------- Cost very high
---------------------- 2. Second generation: The second-generation computer used transistors

made of germanium semi-conductor material instead of the vacuum
---------------------- tubes, for storing and processing data.
----------------------

Transistors were more compact in size and more reliable. Transistors Notes
consumed less power and consequently the MTBF became longer. It is
said that the transistors were about 10 times more reliable, 10 times faster, ----------------------
consumed one-tenth of power, occupied about one-tenth of space and
were 10 times cheaper than the first-generation computers. The memory ----------------------
size and processing speed/capability also went up simultaneously. ----------------------
A typical second-generation computer could have up to 32 KB of RAM
----------------------
and speed up to 2,00,000 to 3,00,000 instructions per seconds. The years
1956−63 also witnessed the emergence of magnetic core memory and ----------------------
development of high- level language like ALGOL, COBOL, FORTRAN
and SNOBOL. ----------------------
Resultantly, computers became more widely accepted and used. ----------------------
Computers, which were earlier used for technical/scientific work, were
now accepted by the industry and business. During this period, the ----------------------
business and applications of computers were mainly in the areas of
----------------------
payroll, inventory, production planning, marketing and accounting.
Table 2.3 Second-Generation Computers ----------------------
Computer Characteristics Trends and Development in ----------------------
and Capabilities Computer Hardware
Closet (Size) Transistors

----------------------
Hundreds components per circuit Magnetic Core (Main Memory) ----------------------

(Density)
----------------------
Thousands instructions per second Magnetic tape, magnetic disk
(Speed) (Secondary storage) ----------------------
Failure of circuits in days (Reliability) Punched Cards (Input Media)
----------------------
Tens of thousands capacity in Punched cards, Printed reports (Output
----------------------
characters (Memory) Media)
----------------------
Cost slightly lower than the first generation.
----------------------
3. Third generation: The third-generation computers emerged with the
introduction of a newer technology—the integrated circuits/chips. The ----------------------
third generation of computers witnessed transistors being replaced by
silicon chips—more popularly known as the integrated circuits/chips. ----------------------
The ICs were circuits consisting of transistors, resistors and capacitors ----------------------
grown on a single chip of silicon. The integrated circuits/chips were made
by printing hundreds, and later thousands, of tiny transistors on small ----------------------
silicon chips called semi-conductors.
----------------------
The integrated circuits/chips further revolutionised computer processing.
Switching speed of transistors went up by a factor of 10, reliability ----------------------
increased by a factor of 10, power dissipation declined by a factor of 10
----------------------
and size reduced by a factor of 10.
----------------------
Notes The cumulative effect was the emergence of extremely compact, yet
powerful, computers. Computer memories expanded to 2 MB of RAM
---------------------- and processing speed of CPU went up to 5 Million Instructions per Second
(MIPS).
----------------------
The improved/increased CPU capabilities led to development of time-
---------------------- shared operating systems, made online systems feasible and led to the
emergence of Integrated Database Management Systems.
----------------------
There were further improvements in high-level languages. It was
---------------------- during this period/generation that it became possible for people without
extensive technical training to make use of computers, making it possible
----------------------
for computers to enlarge their role in business, thanks to newly developed
---------------------- systems like dynamic production control systems, airlines reservation
systems, interactive query systems, etc.
----------------------
Table 2.4 Third-Generation Computers
---------------------- Computer Characteristics Trends and Development in
----------------------
Disk size mini computer Integrated semi-conductor circuits
----------------------
Thousands components per circuit Magnetic core
----------------------
Millions instructions per second Magnetic Drum, Magnetic Tape
----------------------
Failure of circuits in weeks Key to tape and disk (input media)
----------------------
Hundreds of thousands capacities Printed reports/video displays (output media)
----------------------
Cost lower than second generation
----------------------
4. Fourth generation: The computers, which we handle today, belong to
---------------------- fourth generation, which extends from 1980 to the present. The fourth
---------------------- generation computers are characterised by the use of Very Large Scale
Integrated Circuits (VLSICs) which are packed with as many as 2,00,000
---------------------- to over 3 million circuits per chip.
---------------------- As a result, the power of a computer that once took up a large room, now
became as small as a desktop/tower top/laptop and even palmtop.
----------------------
The VLSIC technology has fuelled a growing movement towards micro-
---------------------- processors and micro-miniaturisation − the proliferation of computers
that are so small, fast and cheap that they have become ubiquitous.
----------------------
Computer memory size has accelerated/gone up to over 2 gigabytes in
---------------------- large commercial machines, processing speeds having exceeded 200
MIPS.
----------------------
The fourth-generation computers have been instrumental in:
---------------------- ●● Making possible/available extremely powerful Personal Computers (PCs)
---------------------- at relatively lower costs.

●● Spreading computers from offices to homes. Notes
●● Decentralising computer organisations.
----------------------
●● Making networks and distributed data processing a reality.
●● Developing interactive graphic devices and language interfaces for ----------------------
graphic system. ----------------------
●● Providing impetus to CAD/CAM.
----------------------
●● Ushering in the “Computer Culture”.
Table 2.5 Fourth-Generation Computers ----------------------
Computer Characteristics Trends and Development in ----------------------
----------------------
Typewriter size micro computer Large Scale Integrated (LSI) semi
conductor circuits ----------------------
Hundreds of thousands of Magnetic disk, Floppy disk, Magnetic
----------------------
components per circuit bubble optical disk.
Tens of millions instructions Keyboard data entry, Direct input

----------------------
per second devices optical scanning.
----------------------
Failure of code in months. Video displays, audio responses,
printed reports.
----------------------
Hundreds of thousands capacity in ----------------------

characters.
----------------------
Cost lower than third generation
----------------------
5. Fifth generation: Fifth-generation computers are expected to use parallel ----------------------
processing and massively parallel processing. They will be using artificial
intelligence and intricate mathematical models. They will be able to blend ----------------------
voice, images and massive data from various sources.
----------------------
Table 2.6 Fifth-Generation Computers
Computer Characteristics Trends and Development
----------------------
and Capabilities in Computer Hardware
----------------------
Credit card sized micro-processor. Very Large Scale Integrated (VLSI)
semiconductor circuits. ----------------------
Millions of components per circuit Use of Artificial Intelligence ----------------------
Billions/Trillions instructions per second. Speech input, tactical input ----------------------

Failure of code in years. Graphics displays, voice responses. ----------------------
Billions capacity in characters. Parallel and massively parallel ----------------------
Cost very low. ----------------------
----------------------
Notes
----------------------

1. The ______________ generation of computers refer to those
---------------------- computers, which relied on and used vacuum tubes for storing and
_____________ data.
----------------------
2. The full form of ENIAC is ____________.
---------------------- 3. The full form of MIPS is ____________.
4. Fifth-generation computers are expected to use ____________ and
---------------------- massively parallel processing.
---------------------- State True or False.
1. The first-generation computers used transistors.
---------------------- 2. The size of computers in the second generation was that of a room.
3. The fourth-generation machines used credit card-sized microprocessor.
----------------------
4. The third-generation computers used integrated semi-conductor
---------------------- circuits.
5. The fifth-generation machines will use VLSI semiconductor circuits.
----------------------
---------------------- Activity 3
----------------------
By surfing the Internet, collect more information about the various
---------------------- generations of computers and prepare a report on the same.
----------------------
2.5 CATEGORIES OF COMPUTER
----------------------
As seen earlier, each generation of computer is characterised/distinguished
---------------------- by application of a new technology related with the processing speed,
processing capability, memory and utilities among others. Just as computers
---------------------- differ in technology, computers also differ in terms of size and processing
---------------------- speed/capability. It is based on these aspects that computers are divided into the
following four categories:
----------------------
1. Supercomputer: A supercomputer is a highly expensive, sophisticated
---------------------- and powerful machine with huge primary storage. It is designed
for applications requiring very high speed, extremely rapid and
---------------------- complex computations involving hundreds or thousands of variables.
Supercomputers process instructions not one at a time in sequential mode,
----------------------
but in the parallel processing mode.
---------------------- The use of supercomputers has been traditionally confined to scientific/
military research, weather forecasting and engineering applications,
----------------------
where complex mathematical models and simulations have to be used.
---------------------- With the increasing complexity of business due to globalisation and
competition, supercomputers are now being increasingly used in business
---------------------- organisations as well. India has joined the select league of Supercomputer

Nations with launching and commissioning of PARAM Supercomputer Notes
developed by C-DAC under the able leadership of Padmashri Dr. Vijay
Bhatkar. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
2. Mainframe computer: A mainframe computer has very powerful CPU,
----------------------
highly sophisticated operating system and very large secondary storage
capabilities. “It is a powerhouse with massive memory and extremely ----------------------
rapid processing speed/ability. It is used for very large commercial,
scientific or military applications where a computer must handle massive ----------------------
amounts of data or many complicated processes. A mainframe can support
----------------------
multiple jobs being executed concurrently and online processing from
many remote locations at once.” ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 2.7 A Mainframe Computer ----------------------
3. Minicomputer: A minicomputer is a middle-range computer, less than
----------------------
the size of an office desk and relatively less expensive. It may support
online processing from multiple remote locations. It is often used in major ----------------------
academic institutions, universities, factories or research laboratories.
Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 2.8 A Minicomputer
---------------------- 4. Microcomputer: A microcomputer, often termed as, or considered
---------------------- synonymous with a Personal Computer (PC), is a very compact and small
computing machine. A microcomputer could be easily carried from one
---------------------- place to another and is used as a personal machine as well as in office/
workplace and business.
----------------------
A microcomputer was originally conceived as and intended to be, primarily
---------------------- a personal and single-user machine. As such, it had a simple operating
system, small primary storage, mostly one input unit (visual display unit
---------------------- − terminal or monitor), an output unit − mostly a small printer and limited
---------------------- secondary storage by way of diskettes or cassettes.
Today, however, a microcomputer need not be a “stand-alone” machine.
----------------------
Today, it can be used either as a stand-alone machine or can be hooked
---------------------- into/linked to other micros, telecommunications devices or larger
computers. Microcomputer can also be integrated into, and made a part
---------------------- of, organisation-wide network which shares hardware, software and data
resources.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 2.9 A Microcomputer
----------------------
----------------------

Notes
----------------------
1. Each generation of computer is characterised/distinguished by
----------------------
application of a new technology, related with the ___________,
processing capability, _______________ and utilities among others. ----------------------
2. A ____________ has very powerful CPU, highly sophisticated
----------------------
operating system and very large secondary storage capabilities.
3. A microcomputer could be easily carried from one place to another ----------------------
and is used as a __________ machine as well as in office/workplace ----------------------
and _______________.
4. The use of supercomputers has been traditionally confined to ----------------------
_____________, ______________ and ___________________. ----------------------
----------------------
Activity 4
----------------------
Gather more information about the various categories of computer systems ----------------------
and write the characteristics and distinctive features of each of them in your
own words. ----------------------
----------------------
Summary
----------------------
●● Information Technology is the acquisition, processing, storage and
dissemination of vocal, pictorial, textual and numeric information by a ----------------------
microelectronics based combination of computing and telecommunications.
----------------------
●● Information Technology is the term used to describe technologies,
which enable the users to record, store, process, retrieve, transmit and ----------------------
receive information. It has transactional, geographical, automational,
analytical, informational, sequential, knowledge management, tracking ----------------------
and disintermediation capabilities.
----------------------
●● A computer is an electronic device, which accepts input, processes it
according to a set of instructions provided and generates the desired ----------------------
output.
----------------------
●● The CPU consists of the Arithmetic Logic Unit and the Control Unit.
●● The CU selects and interprets program instructions and then checks their ----------------------
execution. ----------------------
●● The first generation of computer refers to those computers, which relied
on and used vacuum tubes for storing and processing data. ----------------------
●● The second-generation computers used transistors made of germanium ----------------------
semi-conductor material instead of the vacuum tubes, for storing and
processing data. ----------------------
Notes ●● The third-generation computers emerged with the introduction of a newer
technology—the integrated circuits/chips.
---------------------- ●● The fourth-generation computers are characterised by the use of Very
---------------------- Large Scale Integrated Circuits (VLSICs) which are packed with as many
as 2,00,000 to over 3 million circuits per chip.
---------------------- ●● Fifth-generation computers are expected to use artificial intelligence.
---------------------- ●● A supercomputer is a highly expensive, sophisticated and powerful
machine with huge primary storage.
----------------------
●● A mainframe computer has very powerful CPU, highly sophisticated
---------------------- operating system and very large secondary storage capabilities.
●● A minicomputer is a middle-range computer, less than the size of an office
----------------------
desk and relatively less expensive.
---------------------- ●● A microcomputer, often termed as, or considered synonymous with a
Personal Computer (PC), is a very compact and small computing machine.
----------------------
Keywords
----------------------
---------------------- ●● Information technology: It deals with the use of computers and

telecommunications equipment to store, retrieve, transmit and manipulate
---------------------- data
●● Computer generations: The history of computer development is often
----------------------
referred to in reference to the different generations of computing devices.
---------------------- A generation refers to the state of improvement in the product development
process.
----------------------
●● Hardware: It is the collection of physical elements that comprise a
---------------------- computer system.
●● Software: It is a collection of computer programs and related data that
----------------------
provides the instructions for telling a computer what to do and how to do
---------------------- it.
●● Diligence: The ability of a computer to perform repetitive tasks with the
----------------------
same accuracy consistently without tiredness.
---------------------- ●● Input device: Any peripheral (piece of computer hardware equipment)
used to provide data and control signals to an information processing
---------------------- system such as a computer or other information appliance.
---------------------- ●● Output device: Any piece of computer hardware equipment used to
communicate the results of data processing carried out by an information
---------------------- processing system (such as a computer) which converts the electronically
---------------------- generated information into human-readable form.
---------------------- Self-Assessment Questions

---------------------- 1. What do you mean by Information Technology?
---------------------- 2. Explain the impact of Information Technology on an organisation.

3. What is a computer? Explain its characteristics. Notes
4. What is computer hardware? Explain the various components of hardware.
----------------------
5. Briefly explain generations of computers along with their comparisons.
----------------------
6. Explain the different categories of computers.
----------------------
----------------------
----------------------
Fill in the blanks.
----------------------
1. Information Technology is the term used to describe technologies, which
enable the users to record, store, process, retrieve, transmit and receive ----------------------
information.
----------------------
2. IT has changed the way business organisations function and carry out
their activities. ----------------------
Match the following.
----------------------
i. − b.
----------------------
ii. – c.
iii. – a. ----------------------

1. Diligence is the ability of a computer to perform repetitive tasks with the ----------------------
same accuracy consistently without tiredness.
----------------------
2. The CPU consists of the ALU and the CU.
3. Output interfaces are designed to match the unique physical or electrical ----------------------
characteristics of output devices.
----------------------
4. Secondary storage devices are used for relatively long-term, non-volatile
storage of data outside the CPU and primary storage. ----------------------

1. The first generation of computers refers to those computers, which relied
----------------------
on and used vacuum tubes for storing and processing data.
2. The full form of ENIAC is Electronic Numerical Integrator and Calculator. ----------------------
3. The full form of MIPS is Million Instructions per Second. ----------------------
4. Fifth-generation computers are expected to use parallel processing and ----------------------
massively parallel processing.
----------------------
----------------------
Notes State True or False.
1. False
----------------------
2. False
----------------------
3. True
---------------------- 4. True
---------------------- 5. False
---------------------- Check your Progress 4
Fill in the blanks.
----------------------
1. Each generation of computer is characterised/distinguished by application
---------------------- of a new technology, related with the processing speed, processing
capability, memory and utilities among others.
----------------------
2. A mainframe computer has very powerful CPU, highly sophisticated
---------------------- operating system and very large secondary storage capabilities.
---------------------- 3. A microcomputer could be easily carried from one place to another and is
used as a personal machine as well as in office/workplace and business.
----------------------
4. The use of supercomputers has been traditionally confined to scientific/
---------------------- military research, weather forecasting and engineering applications.
----------------------
Suggested Reading
----------------------
1. Davis, G and M. Olson. 1985. Management Information Systems. New
---------------------- York: McGraw Hill)
---------------------- 2. Jawadekar, Waman. 2009. Management Information Systems: Text &
Cases. New Delhi: Tata McGraw Hill.
----------------------
3. Prasad, L.M. and Usha Prasad. 2003. Management Information Systems.
---------------------- New Delhi. Sultan Chand & Sons.
---------------------- 4. Sadagopan, S. 1998. Management Information Systems. New Delhi:
Prentice Hall India.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Data Communication and IT Enabled Services
UNIT
3
Structure:
3.1 Introduction
3.2 Functions and Categories of Software
3.2.1 Software Categories
3.2.2 Leading Microcomputer Operating Systems
3.3 Data Communication
3.4 Data Processing Modes
3.4.1 Other Data Processing Modes
3.5 Data Transmission
3.6 Network
3.6.2 Types of Network
3.7 Internet
3.8 IT Enabled Services
Summary
Keywords
Suggested Reading
Data Communication and IT Enabled Services 45

Notes
Objectives
----------------------
----------------------
●● Identify various types of software
---------------------- ●● Discuss data communication, data processing and transactions
---------------------- ●● Explain the various data processing modes
---------------------- ●● Analyse data transmission processes and channels
●● Classify different types of networks and network topologies
----------------------
●● Differentiate among Internet, intranet, extranet and ISDN
---------------------- ●● Describe IT enabled services
----------------------
3.1 INTRODUCTION
----------------------
A computer cannot do anything on its own. It must be instructed to do a
---------------------- desired job. Hence, it is necessary to specify a sequence of instructions, which
a computer must perform to solve a problem/perform a task. Such a sequence
---------------------- of instructions, written in a language, which can be understood by a computer,
---------------------- is called a computer program.
For the computer to function and deliver the processing results, there has
----------------------
to be appropriate software. Software is a broad term given to “the instructions
---------------------- that direct the operation of the hardware”. Software could also be described as
“the detailed instructions that control the operation of a computer system”.
----------------------
A set of instructions for a specific task is called a “routine” and a complete
---------------------- set of instructions to execute a related set of tasks is termed as “program”.
Software instructions are also referred to as “code”.
----------------------
In this unit, you will learn about data communication and IT enabled
---------------------- services. To understand this, we first need to have an idea about software.
---------------------- 3.2 FUNCTIONS AND CATEGORIES OF SOFTWARE

----------------------
We have discussed above the concept of software, now we will discuss
---------------------- the various software functions.
The various software functions are as follows:
----------------------
1. It manages the computer resources of the organisation.
----------------------
2. It provides tools for human beings to take advantage of these resources.
---------------------- 3. It acts as an intermediary between organisations and stored information.
---------------------- 3.2.1 Software Categories
---------------------- Computer software could be broadly divided into two major categories:
System software and application software.
----------------------

1. System software: System software is a set of generalised programs that Notes
manage the resources of the computers, such as the central processor,
communication links and peripheral devices. The system software ----------------------
is instrumental in coordinating with the various parts of the computer
system and mediating between application software(s/w) and computer ----------------------
hardware (h/w). ----------------------
System software consists of:
----------------------
a. Operating systems
b. Language translators ----------------------
c. Utility programs ----------------------
d. Communication software
----------------------
System software, being generally machine specific, is usually purchased
along with the hardware rather than developed by internal personnel. ----------------------
The system software surrounds and controls access to the hardware as
----------------------
indicated in the following illustration.
a. Operating system: The operating system is like the chief executive. ----------------------
The operating system of software decides which computer resources
----------------------
will be used, which programs will be run and the sequence/order in
which activities will take place. ----------------------
The operating system, as stated earlier, takes care of allocation/ ----------------------
assignment of computer resources, schedules the jobs/events/tasks
and monitors the activities of the computer system. ----------------------
The device on which a complete operating system is stored is called ----------------------
the System Residence Device. The operating system currently
possesses multi-programming, multi-tasking, virtual storage, time ----------------------
sharing and multi-processing capabilities.
----------------------
Programming Languages
Assembly/Machine Language ----------------------
Third/Fourth Generation Languages
----------------------
Application Software
----------------------
----------------------
System Software
----------------------
Hardware
----------------------
----------------------
----------------------
----------------------
System Software
Fig. 3.1 Software Categories ----------------------

Notes b. Language translation: The computer programs are written in higher
level programming languages like COBOL, FORTRAN, C, etc.
---------------------- These “Source Code” programs which are “Human Readable” must
be converted into “Object Code” − computer readable languages.
---------------------- System software includes special programs, which translate the
---------------------- higher level language programs into machine language, which
the computer can execute. This type of system software is called
---------------------- “compiler” or “interpreter”.
---------------------- A compiler translates source code into machine code called object
code all at a time, whereas, an interpreter translates each source
---------------------- code statement, one at a time, into machine code.
---------------------- An assembler is similar to a compiler but is used to translate only
assembly language into machine code.
----------------------
c. Utility programs: Also known as utilities, they help users in system
---------------------- maintenance task and in performing tasks of routine nature like
sorting, listing, etc. and managing data like creating files, merging
---------------------- files, etc.
---------------------- Utility programs are pre-written programs, which are stored so
that they can be shared by all users of a computer system and can
---------------------- be readily used in many different information system applications
---------------------- where so required/requested.
d. Communications software: It enables transfer of data/programs
---------------------- from one computer system to another in a network environment
---------------------- where multiple computers are interconnected.
2. Application software: Application software includes computer
---------------------- programs written for a specific application for an individual organisation.
---------------------- Application software is primarily concerned with accomplishing the tasks
of end-users.
----------------------
Application software is developed by in-house personnel or outside
---------------------- software professionals. As such, many different programming languages
can be used for developing application software. A few examples of
---------------------- application software are word processing software, spreadsheet software,
database software, graphical software, entertainment software, etc.
----------------------
The relation between hardware and software are as follows:
----------------------
1. Both are necessary for the computer to do useful jobs, they are
---------------------- complementary to each other.
---------------------- 2. Same hardware can have different software to make the computer system
perform different types of job.
---------------------- 3. Except for upgrade, hardware is normally one-time cost, whereas software
---------------------- cost can be recurring.
----------------------

3.2.2 Leading Microcomputer Operating Systems Notes
DOS, Windows 10, Windows NT, OS/2, UNIX/XENIX, LINUX, etc are
----------------------
considered the leading microcomputer operating systems.
Table 3.1 Operating Systems and their Features ----------------------
Operating System Brief Details/Features ----------------------

DOS A command-driven operating system for mainly 16-
----------------------
bit microcomputer. PC-DOS for IBM and MS-DOS
for IBM- compatible microcomputer. Most popular ----------------------
operating system. Does not allow multi-tasking. Memory
limitations. ----------------------
Windows 10 32-bit/64-bit operating system, support for universal apps,
incorporates multi-factor authentication technology, ----------------------
automatically compresses system files.
----------------------
Windows NT Provides GUI. Has more powerful multitasking and
memory management capability. ----------------------
32-bit operating system for microcomputer. Not tied to
computer hardware based on Intel microprocessors alone. ----------------------
Can provide mainframe-like computer power for new
applications with massive memory and file management ----------------------
requirements.
----------------------
OS/2 Operating Is robust operating system used with 32-bit IBM
System/2 Personal System/2 microcomputer or IBM-compatible ----------------------
microcomputers. OS/2 supports multi-tasking,
accommodates larger applications, allows applications to ----------------------
be run simultaneously, supports networked multimedia
and pen-computing applications. A macro-protected ----------------------
system has its own GUI. Supports DOS applications and
can run Windows and DOS applications at the same time ----------------------
in its own resizable windows.
----------------------
UNIX Developed by Bell Laboratories in 1969. An interactive,
multi-user, multi-tasking operating system. Highly ----------------------
supportive of communications and networking. Can run
on many different kinds of computers and can be easily ----------------------
customised. Powerful but considered be complex.
LINUX This is a freely available operating system. ----------------------
Windows 2000 It is Microsoft’s operating system launched in 2000. ----------------------
Other operations systems are Windows XP, Windows
Vista. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------

1. The ________________programs, which are “Human Readable”,
----------------------
must be converted into _______________.
---------------------- 2. _____________ enables transfer of data/programs from one computer
system to another in a network environment where multiple computers
----------------------
are interconnected.
----------------------
---------------------- Activity 1
----------------------
In a computer, both hardware and software are essential and they complement
---------------------- each other. Do you agree with this statement? Justify your answer.
---------------------- 3.3 DATA COMMUNICATION

----------------------
Communication is transfer of information from one person to another. It is a
---------------------- way of reachingothers by transmitting ideas/facts/thoughts/feelings/attitudes
and values.
----------------------
Data communication, however, is somewhat different from communication. Data
---------------------- communication is specific in the context of the Computer-based Management
Information System.
----------------------
Data communication consists of:
---------------------- ●● Data processing
---------------------- ●● Data transmission
---------------------- Data Processing
Data is unstructured raw facts in isolation to be used as the raw material
---------------------- of/for the information system. Data is also the glue or mortar of the information
---------------------- system.
Data could be expressed in numeric, alphabetic, alphanumeric, special
----------------------
characters, images, symbols or even voice. The various forms of data expressions
---------------------- are understood by the computer as strings of “0”or “1”. The computer works
with electrical pulse off or on, which state is equivalent to “Off” and “On”
---------------------- representing “0” and “1”. The “0” and “1” are known as Binary Digits or BITS.
The computer uses strings made in combination of “zeros” and “ones” to move,
----------------------
store and compute the data.
---------------------- Data organisation/sequence
---------------------- The data is moved, stored and computed in the unit of bytes. One byte
represents one character. The byte is made of eight bits. The data is structured
---------------------- for processing in a certain sequence and is ultimately stored in file.

●● The Bits form a Byte. Notes
●● The Byte represents Character.
----------------------
●● A number of Characters forms a Field.
●● Fields constitute a Record. ----------------------
●● Records constitute a Block. ----------------------
●● Blocks constitute a File.
----------------------
●● Files constitute a Database.
----------------------
Thus, the data hierarchy can be represented as below.
Database ----------------------
File ----------------------
Blocks ----------------------
Records ----------------------
Fields ----------------------
----------------------
Item
Characters ----------------------
----------------------
Bytes
----------------------
Bits
----------------------
Fig. 3.2 Data Hierarchy
----------------------
Data processing involves a number of operations, similar to those in a
manufacturing unit, to convert the basic raw material − data − into a finished ----------------------
product, i.e., Information. The typical data processing steps would include,
among others, the following activities. ----------------------
Table 3.2 Data Processing Steps ----------------------
Read Sort Collate Compare Store ----------------------
Write Merge Delete Decide Display
----------------------
Print Copy Enter Compute Etc. ----------------------
Plot Transfer Create Perform ----------------------
Data processing also involves carrying out a number of data operations as ----------------------
mentioned in Table 3.3.
----------------------
----------------------
----------------------

Notes Table 3.3 Data Operations
Operation Brief Details
----------------------
Capturing Recording of data from an event/transaction
----------------------
Verifying Checking/validating data for correctness.
---------------------- Classifying Placing data into specific categories.
---------------------- Sorting/Arranging Placing data in a particular sequence.
---------------------- Summarizing Combining/aggregating data elements.
Calculating Arithmetic/logical computations.
----------------------
Storing Placing data to some storage media.
----------------------
Retrieving Searching out and gaining access to specific data
---------------------- elements.
---------------------- Reproducing Duplicating data from one medium to another.

Disseminating/ Transferring data from one place to another (device
---------------------- Communicating to - user)
---------------------- Data Processing can be summarised as shown in the figure below.
---------------------- Data Collection
---------------------- Data Collation
---------------------- Data Conversion
---------------------- Data Written in Documents
---------------------- Data in Machine Readable Form
---------------------- Input Unit
---------------------- Memory CPU
---------------------- Processed Data in Internal Form
---------------------- Output Unit
---------------------- Data Transformed to a readable form
---------------------- Fig. 3.3 Data Processing Steps

Data processing and transactions
----------------------
What data processing basically does, is transaction processing. If there
---------------------- is no transaction, there would not be any data/document generated and hence
---------------------- no need for data processing. Let us, therefore, remember that “transaction is a
fundamental organisational function”.
---------------------- A business is conducted through business transactions, which are recorded
systematically. A sales order accepted by a salesperson, a purchase order
----------------------
issued, a reservation, money being deposited in or withdrawn from bank are

all examples of business transactions, which are recorded and then processed. Notes
If there are no transactions, there would be no data/document and hence there
would be no need for data processing either. ----------------------
Transaction Processing
----------------------
The transaction processing system is vital for organisational operations.
Without it, bills would not be paid, purchase orders would not be issued, sales ----------------------
orders would not be placed, reservations would not be made.
----------------------
However, before processing a transaction, the relative data item has
to be checked, verified and found correct/acceptable as regards to its quality ----------------------
specification. This process is called data validation. This process is effected by
using a set of computer software programs, known as the validation programs, ----------------------
where certain data validation tests are applied to the data items. ----------------------
----------------------
Fill in the blanks.
1. Before processing a transaction, the relative data item has to be ----------------------
________, verified and found _________ as regards to its quality ----------------------
specification. This process is called data ____________.
2. Data processing involves a number of operations, similar to those ----------------------
in a manufacturing unit, to convert the basic raw material, i.e., ----------------------
_______________ into a finished product, i.e., ________________.
----------------------
Activity 2 ----------------------
----------------------
Surf the Internet and read more about data transmission modes and discuss
the same in your own words. ----------------------
----------------------
3.4 DATA PROCESSING MODES
----------------------
As stated earlier, computers are used for the processing of data, analysing
it and getting the necessary information for facilitating decision-making. It is, ----------------------
therefore, imperative that the data be processed in keeping with the specific
needs, demands and requirements of the organisation. ----------------------
It would not be out of place to state that demands of the business determine ----------------------
the type of data processing modes/methods. Broadly, there are four different
methods used for data processing and updating as shown in Figure 3.4. ----------------------
Data Processing ----------------------
----------------------
Batch On Line Real Time Distributed
----------------------
Processing Processing Processing Processing
----------------------
Fig. 3.4 Data Processing Modes

Notes 1. Batch processing system: This was the only method of data processing
until the early 1960s, as technical limitations required that periodic
---------------------- data preparation and periodic batch processing be utilised. This system,
however, continues to be used till date in older systems or in those systems
---------------------- where massive volumes of periodic transactions are involved.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
---------------------- Fig. 3.5 Batch Processing

---------------------- A batch processing system is one where data is collected together in a
batch before processing starts. Data entry for early computers was done
---------------------- by using punched cards, which were handled in batches, and hence the
term batch processing. Each piece of work for a batch processing system
----------------------
is called a job. Batch processing is most suitable for tasks where a large
---------------------- amount of data has to be processed on a regular basis. Examples of batch
processing systems include payroll systems and examination report card
---------------------- systems.
---------------------- Advantages of a batch processing system include:
---------------------- ●● Once the data is submitted for processing, the computer may be left
running without human interaction.
---------------------- ●● The computer is only used for a certain period of time for the batch job.
---------------------- ●● Jobs can be scheduled for a time when the computer is not busy.
Disadvantages of a batch processing system include:
----------------------
●● There is always a delay before work is processed and returned.
----------------------
●● Batch processing usually involves an expensive computer and a large
---------------------- number of trained staff.
●● While batch processing may be useful in enhancing control of transaction
----------------------
processing, it must be remembered that one major disadvantage of
---------------------- periodic batch processing is the delay in detecting and correcting err
2. Online processing system: The online processing system of transactions
----------------------
has now become a way of life. In this system, the user has access to a
---------------------- terminal for input of transactions and output of results. The user enters

transactions into a device that is directly connected to the computer Notes
system. The transaction is taken for processing directly and is validated
immediately before being taken up for further processing. ----------------------
After validation, the data is accepted but processing itself may be ----------------------
performed either immediately or at a subsequent time. For online
processing, the files must be available on direct access storage devices for ----------------------
immediate access to the data, so that records could be added to or deleted
----------------------
from the file. Thus, in online processing, the processing of data, from
input to computation and updation of status on various files is carried out ----------------------
immediately.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 3.6 Online Processing
----------------------
However, a user responsible for processing data in an online system
must ensure proper security protocol. He must sign on properly, enter ----------------------
transactions in the proper laid-down format, respond to error messages
with corrected input, review control information and sign off after the ----------------------
transaction processing is complete, to prevent unauthorised use/access. ----------------------
3. Online real-time processing system: The online real-time processing
system is similar to the online processing system in as much as in both the ----------------------
systems, a transaction is entered directly into the computer and validated ----------------------
immediately.
However, while under the online system, the transaction may be processed ----------------------
later, once a transaction is found to be valid, it is processed immediately ----------------------
and the results are also made available immediately, as the master data is
always up-to-date. ----------------------
Needless to add, the real-time processing concept is used where stored ----------------------
data needs to be updated simultaneously as the transaction takes place.
----------------------
The points to be considered are the higher costs of online processing,
greater computer power and often data communication, as also the ----------------------
extra procedures required to produce adequate control information and
to safeguard the files against accidental or deliberate destruction during ----------------------
online updating.
----------------------
A schematic representation of the two alternatives for online direct entry
is illustrated in Figure 3.7. ----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
Fig. 3.7 Online Entry with Immediate Processing
---------------------- 4. Distributed data processing: The distributed data processing mode
---------------------- became popular during the 1970s, as this period witnessed the growth
of powerful telecommunications networks and also the developments
---------------------- in computer technologies leading to significant decline in computer
hardware prices/costs.
----------------------
Distributed data processing is a computer-networking method in which
---------------------- multiple computers across different locations share computer-processing
capability. This is in contrast to a single, centralised server managing and
----------------------
providing processing capability to all connected systems. Computers that
---------------------- comprise the distributed data processing network are located at different
locations but interconnected by means of wireless or satellite links.
----------------------
The distributed data processing system provides the advantages of
---------------------- increased system availability and quicker systems response time. Systems
availability is increased because when CPU malfunctions or undergoes
---------------------- preventive maintenance, its work may be transferred to another CPU in
the system. The response time is improved because the workload can be
----------------------
distributed evenly among the CPUs to ensure optimum utilisation.
---------------------- 3.4.1 Other Data Processing Modes
---------------------- In addition to batch processing, online processing, real-time processing
and distributed data processing modes, there are some other modes which are/
---------------------- can be used for data processing. These modes are based on the capability of the
---------------------- operating system. Such data processing modes are:
1. Time-sharing: The time-sharing mode of data processing allows several
---------------------- users to simultaneously share the processing capability of the computer
---------------------- system. Under this mode, each user is allotted a certain “time sot” or
“time slice”, during which that particular user has access to the processor.
----------------------
The processor spends this allotted time on one program before
---------------------- moving over to another. This activity is reiterated till the user’s task is
finally completed. The users of the system generally avail the facility of
---------------------- time-sharing a computer system through remote terminals.
---------------------- 2. Multiprocessing: Multiprocessing is a capability of the operating system.
It enables linking together two or more CPUs to work in parallel in a
---------------------- single computer system. The tasks envisaged to be carried out are divided
between the CPUs, leading to simultaneous execution of two or more
----------------------

processing units, which are part of the same system. This is possible as Notes
each processor shares access to its main memory with the other processor.
Thus, multiprocessing uses simultaneous processing with CPUs. ----------------------
3. Multiprogramming: Multiprogramming is one of the most important ----------------------
capability of the operating system, used for sharing computer resources
and facilitating data processing. Multiprogramming allows multiple ----------------------
programs to share a computer system resources at any one time through
----------------------
concurrent use of CPU, thereby also enabling higher CPU utilisation.
Multiprogramming enables a group of programs take turns in using the ----------------------
CPU. To illustrate, in the multiprogramming mode, a number of programs
----------------------
are there in the memory and also, a number of jobs will be in a queue
waiting to be processed. When one of the jobs in memory is finished, ----------------------
another job is taken from the queue of jobs and put into the main memory
for execution. ----------------------
It has, however, to be remembered that multiprogramming and ----------------------
multiprocessing are different in as much as while multiprogramming
uses concurrent processing with the single CPU, multiprocessing uses ----------------------
simultaneous processing with multiple CPUs.
----------------------
----------------------
Fill in the blanks.
----------------------
1. A ___________ system is one where data is collected together in a
batch before processing starts. ----------------------
2. The _____________ of data processingallows several users to
----------------------
simultaneously share the processing capability of the computer
system. ----------------------
3. Multiprogramming is one of the most important capability of the ----------------------
operating system used for sharing computer resources and facilitating
________________. ----------------------
4. When one of the jobs in memory is finished, another job is taken from ----------------------
the __________ of jobs and put into the ___________for execution.
----------------------
----------------------
Activity 3
----------------------
Analyse the examples of online processing and online real-time processing
by visiting relevant sites and prepare a report on the same. ----------------------
----------------------
----------------------
----------------------

Notes 3.5 DATA TRANSMISSION
---------------------- Data transmission uses the data processed for forwarding the same to
the end-user. Data transmission, however, may simply involve forwarding of
----------------------
the data to the end- user. Whatever the case may be, data transmission could
---------------------- not be effected without using the means provided by the advances in the
telecommunication field/ technology.
----------------------
Data communication, which consists of data processing as well as data
---------------------- transmission, generally requires the following:
---------------------- 1. Transmitter (source of information)

2. Converter at transmitting end
---------------------- 3. Transmission channel/carrier
---------------------- 4. Converter at the receiving end
5. Receiver (of transmitted information)
----------------------
Transmission signals
----------------------
The data is transmitted using the telecommunication systems. The data is
---------------------- transmitted in the form of electromagnetic signals. These signals can be of two
types:
----------------------
1. Analog signal: It is a continuous waveform that passes through the
---------------------- communication medium. Analog signals are, rather were, used mainly
to transmit data in the form of voice and to reflect variations in the pitch,
---------------------- across the line. The analog signal is in the form of waves of different
---------------------- frequencies and subject to distortion.
The waveform has three characteristics:
----------------------
1. Amplitude (strength of signal)
----------------------
2. Phase (direction of “flow” of the signal in a cycle time)
---------------------- 3. Frequency (number of times the waveform is repeated during a
specified interval)
----------------------
These characteristics are illustrated in the following figure.
----------------------
----------------------
----------------------
----------------------
---------------------- Fig. 3.8 Analog Signal
---------------------- 2. Digital signal: It is a discrete waveform that transmits data coded into
two discrete states as 1bits and 0 bits, which are represented as on-off
---------------------- electrical pulses. Digital signal is very useful in data communications.
Now we are, indeed, moving into the “Digital Era” using the digital
---------------------- signal.

Digital signal is generated by microprocessor based or controlled device. The Notes
digital signal has identical strength from source to destination. It is clear,
rapid and distortion-free (less prone to noise distortion). ----------------------
1 1 1 1
----------------------
----------------------
0 0 0 0 0
----------------------
Fig 3.9 Digital Signal
----------------------
Modem: Modem is an abbreviation of MOdulation/DEModulation. A
modem is a device that performs the translation from analog to digital ----------------------
or from digital to analog form of signal. The functions of the modem are
illustrated as follows. Refer to Fig. 3.10. ----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 3.10 Modem ----------------------
Communication/Transmission channels
----------------------
Communication channels are the links/means by which data is transmitted
from one device in a network to another. A channel can make use of various ----------------------
media like: ----------------------
1. Physical connection lines
----------------------
i. Twisted pair of copper wires
----------------------
ii. Coaxial cables
iii. Optical fibre ----------------------
2. Microwave lines ----------------------
i. “Line of sight” earth microwave (tower to tower) ----------------------
ii. Radio/wireless transmission waves (AM/FM)
----------------------
iii. Satellite
----------------------
Characteristics of communication channels
The communication channels, mentioned earlier, have the following ----------------------
characteristics:
----------------------
1. Transmission speed: It is the total amount of information that can be
transmitted through any telecommunication channel and is measured in ----------------------
Bits Per Second (BPS). This speed is sometimes also referred to as “baud
----------------------
rate”.
----------------------

Notes 2. Bandwidth: It is the capacity of the communications channel as measured
by the difference between the highest and the lowest frequencies that can
---------------------- be transmitted by that channel.
---------------------- 3. Transmission modes: Transmission could be effected in different modes,
viz., asynchronous transmission and synchronous transmission. In
---------------------- asynchronous transmission, one character is transmitted at a time and is
generally used for low-speed transmission. In synchronous transmission,
----------------------
a group of characters is transmitted simultaneously. It is generally used
---------------------- for high-speed transmission of block of characters.
4. Transmission direction: The data can be transmitted in different
----------------------
direction using smplex, half duplex or full-duplex transmission. While in
---------------------- simplex transmission, data can travel only in one direction at all times, in
half-duplex transmission, data can travel/flow both ways, although it can
---------------------- travel in only one direction at a time. In full-duplex transmission, data can
be directed/sent in either directions, simultaneously.
----------------------
5. Communication processors: Data transmission and reception in a
---------------------- telecommunication network requires various processors. Some of them
are mentioned below.
----------------------
i. Front-end processors: It is a small computer dedicated to
---------------------- communication management and generally attached to the main/
---------------------- host computer. It performs special processing activities like
formatting, editing, routing, etc. related to communication.
---------------------- ii. Concentrator: It is a programmable computer which collects
---------------------- messages from terminals and stores them till a bunch of messages
− an economic size − is available. These messages are then sent
---------------------- together (“burst”) to the host computer.
---------------------- iii. Controller: It is generally a specialised computer which supervises

communication traffic between the CPU and peripheral devices.
----------------------
iv. Multiplexer: It is a device, which enables a single communication
---------------------- channel to carry data transmissions from multiple sources,
simultaneously.
----------------------
v. Telecommunication software: The software resides in the host
---------------------- computer, front-end processor and other processors of a network.
The special software is required to control and support the activities
---------------------- of the telecommunication network.
---------------------- Network control, access control, transmission control, error
detection/correction and security are some of the major functions
---------------------- of the telecommunication software.
----------------------
----------------------
----------------------

Notes
----------------------
1. ____________ uses the data processed for forwarding the same to the
----------------------
end-user.
2. The_______________resides in the host computer, front-end ----------------------
processor and other processors of a network.
----------------------
3. The ___________ is in the form of waves of different frequencies and
subject to distortion. ----------------------
4. Digital signal is generated by __________ based or controlled device. ----------------------

5. _____________ is the total amount of information that can be ----------------------
transmitted through any telecommunication channel and is measured
in _________________. ----------------------
----------------------
Activity 4
----------------------
Using the Internet as your resource, find out the difference between analog ----------------------
and digital signals.
----------------------
3.6 NETWORK ----------------------
The changes and developments in computer science, telecommunications ----------------------
and connectivity, which have been made possible, in turn, gave rise to the
networks, which have now become a routine. ----------------------
Computers and telephone, along with the Industrial Revolution and ----------------------
automobile, have changed and are changing the way business will be done. In
the 20th century, in particular, telecommunication and computers have changed ----------------------
dreams into reality.
----------------------
The development of powerful microprocessors and telecommunication
networks has forced the emergence of a new information architecture based ----------------------
on multi-tasking, multi-programming utilities of computers and digitised
----------------------
communication networks.
The technological advances in computer science and telecommunication, ----------------------
coupled with globalisation of corporate activities, necessitated effective ----------------------
networking facilities for ensuring effective and efficient functioning/
management of organisations. The networks now enable the business ----------------------
organisations to communicate with practically everybody − be it customers or
vendors or competitors or outside database sources − on a global and almost ----------------------
online real-time basis. ----------------------
----------------------

Notes Computer networking is the process of providing connectivity between/
among two or more computers/computer systems to enable users to communicate
---------------------- with each other, share hardware/software resources and not get constricted by
the stand-alone systems.
----------------------
Networks and networking have gained currency as they offer the following
---------------------- advantages:
---------------------- 1. Networks enable users to share resources − hardware, software,
peripherals, etc.
----------------------
2. Networks facilitate simultaneous access to the data file by multiple users,
---------------------- thereby, enabling them to share the data files.
---------------------- 3. Networks facilitate almost instantaneous communication between users.

4. Networks facilitate decentralised data processing.
----------------------
A network is made possible or functional due to the following constituents:
----------------------
1. Node: It is an end point in a computer network.
---------------------- 2. Access path: It is a connection between the two end-users that allows
them to communicate.
----------------------
3. Protocol: The rules established to govern the way that data is transmitted
---------------------- in a computer network.
---------------------- A network typically contains diverse hardware and software components
that need to work together to transmit/receive information. Different
---------------------- components in a network can communicate by adhering to a common
---------------------- set of rules that enable them to “talk” to each other. This set of rules and
procedures governing transmission between two points in a network is
---------------------- called protocol. Each device in a network must be able to interpret the
other device’s protocol.
----------------------
4. File server: lt is a computer in a network that stores various programs and
---------------------- data files for users of network. It also determines access and availability
in the network.
----------------------
5. Network operating system: It is a special software which manages the
---------------------- file server in a network and routes and manages communications on the
network.
----------------------
6. Gateway: It helps connect dissimilar networks by providing the
---------------------- translation from one set of protocols to another and permits the computers
of different design/architectures to communicate with one another.
----------------------
----------------------
Networks are formed from the interconnection of a number of different
---------------------- locations by using telecommunication facilities. These facilities or components
can be organised in various ways to form a network.
----------------------
----------------------

Networks can be classified according to the geographical scope or area Notes
covered by services provided and also by their share or topology.
----------------------
The three most common network topologies are:
1. Star network: This network ties all the units to a central host/hub ----------------------
computer. All communications between units/terminals in the network
----------------------
must necessarily pass through the central computer. The central computer,
thus, acts as a traffic controller for the units/terminals in the star network. ----------------------
The central computer of the star network can be part of the larger
----------------------
hierarchical network where the host/hub can be connected upward,
providing eventual linking to a mainframe computer in the corporate ----------------------
office.
----------------------
The star network, however, is considered to be vulnerable in view of the
fact that if the central host/hub computer goes down (becomes inoperable), ----------------------
the total network/ system would also go down (become inoperable) and
stop functioning. ----------------------
Computer 1 ----------------------
Computer 2 ----------------------
----------------------
Terminal 1 Host ----------------------

CPU
Printer ----------------------
----------------------
----------------------
Terminal 2 ----------------------
Terminal 3
----------------------
Fig. 3.11 Star Network ----------------------
2. Bus network: The bus network is basically a peer-to-peer network. It
links a number of computers by a single circuit. There is no central host/ ----------------------
hub computer to control the network. All the signals are transmitted to ----------------------
the total network, with special software to help in identifying which
components receive messages. ----------------------
As such, the bus network is never affected totally and is not vulnerable ----------------------
like the star network. This is because even if one of the computers in
the bus network becomes inoperable or stops functioning, the remaining ----------------------
network remains unaffected.
----------------------
----------------------
----------------------

Notes Computer 1 Computer 3
----------------------
Printer
----------------------
----------------------
----------------------
----------------------
Computer 2 Terminal Computer 4
----------------------
---------------------- Fig. 3.12 Bus Network

3. Ring network: In the ring network, the computers are arranged
----------------------
in a ring-like structure and data is passed along the ring from one
---------------------- computer to another in a unidirectional manner. Each computer in
the ring network can communicate directly with any other computer
---------------------- and each processes its own applications/tasks independently or on its own.
----------------------
----------------------
---------------------- Computer 2 Computer 1
----------------------
----------------------
Computer with
---------------------- Computer 3
Hard Disk Drive
---------------------- Printer
----------------------
Fig. 3.13 Ring Network
----------------------
Now, a variant of the ring network, known as token ring network, is also
---------------------- available. In this network, a “token” is used by all the computers/devices
connected for communicating. The “token” is a predefined packet of data
---------------------- indicating the sender, receiver and also indicating whether the packet is in use.
---------------------- The token ring network is considered to be more useful for transmitting
large volumes of data between microcomputers or for transmissions between
---------------------- microcomputer and larger computer/s.
----------------------
----------------------
----------------------
----------------------

3.6.2 Types of Network Notes
The various network types are as follows: ----------------------
1. Local Area Network (LAN): The LAN is a logical extension of
----------------------
the emergence of the personal computers. With the onset of LAN,
communication between PC users became a reality. PC users can now ----------------------
transfer files, send electronic mails and share peripherals, thanks to LAN.
----------------------
However, the performance of LAN usually degrades as the area of
coverage becomes large as LANs are typically small, with limited distance ----------------------
transmission and throughput capacity.
----------------------
LANs are used within buildings or campuses and are operated in
geographically specific location. A group of minicomputers or other ----------------------
workstations/terminal devices located in the same general area are
connected by a common cable (communication circuit), so that they ----------------------
can exchange information. This is known as a local areLANs are totally
----------------------
controlled, maintained and operated by the end-users. LANs generally
have higher transmission capabilities and are desirable for organisations ----------------------
requiring high volumes of data and high transmission speed. LANs enable
the organisations to share costly hardware and software and also promote ----------------------
productivity as direct communication among users is possible without
----------------------
their being dependent upon a centralised computer system.
A typical LAN can be illustrated as follows: ----------------------
----------------------
Client Server PC
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 3.14 Local Area Network
----------------------
LANs can also be connected to larger backbone network, which allows
message transmission around the world. ----------------------
2. Backbone Network: It is a large central network in which everything ----------------------
within the organisation is connected. It usually is a network that
interconnects everything on a single company site. It also can be similar ----------------------
to a Metropolitan Area Network (MAN); but for a single organisation
----------------------
such as a company or university only, in which all the terminals, micro-
computers, mainframe, LANs and other communication equipments are ----------------------
connected.
----------------------

Notes 3. Metropolitan Area Network (MAN): A MAN represents LAN
technology optimised for longer distances. It could, indeed, be considered
---------------------- an extension of LAN, as the MAN interconnects various buildings on the
entire campus or other facilities within a city/wide area.
----------------------
MAN is thus, basically, a network capable of providing high-speed switched
---------------------- connectivity across distances typical of those found in metropolitan area
and hence a MAN can be defined as “a network spanning a geographical
----------------------
area that usually encompasses a city or country area”.
---------------------- While, physically, a MAN consists of a transmission medium and nodes
that provide customer access to the medium, the major advantages of
----------------------
MAN are high bandwidth, low delay and high transmission quality.
---------------------- MANs are expected to support several “traffic” types. Typical MAN
traffic is expected to include:
----------------------
l LAN interconnection
----------------------
l Connections between PCs/terminals/workstations to mainframes or
---------------------- hosts
---------------------- l Graphics and digital images

l Bulk data transfer
----------------------
l Digitised voice
----------------------
l Compressed video
---------------------- l Conventional terminal traffic
---------------------- 4. Wide Area Network (WAN): The wide area network is a network
spanning a large geographical area. Its microcomputer (nodes) can span
---------------------- cities, states or even national/continental boundaries. This network
---------------------- interconnects data transmission facilities not only on a nationwide but
worldwide basis.
----------------------
WANs may consist of a combination of switched lines, dedicated lines,
---------------------- microwave links and satellite communications.
5. Value-Added Network (VAN): The value-added network is a new but
----------------------
distinct trend emerging in the networking area. The “value” added is
---------------------- “the extra value added to communications by the telecommunication and
computing services” these networks provide to the user-clients. Clients
---------------------- do not have to invest in network hardware and software. It is also not
necessary for them to perform their own error checking, editing, routing
----------------------
and protocol conversion.
---------------------- VANs are private, multi-path, data-only and third-party managed
networks that can provide economies in the cost of service and in
----------------------
network management. VANs can be used by multiple organisations on a
---------------------- subscription basis and hence, VANs are useful/beneficial for firms which
provide special services, as VANs help in reducing costs and operational
---------------------- problems related to networks.

Notes
----------------------
1. _________________ is the process of providing connectivity
----------------------
between/among two or more computers/computer systems to enable
users to communicate with each other, share ___________ resources ----------------------
and not get constricted by the stand-alone systems.
----------------------
2. ____________ network ties all the units to a central host/hub
computer. ----------------------
3. In ________________, the computers are arranged in a ring-like ----------------------
structure and data is passed along the ring from one computer to
another in a ______________ manner. ----------------------
4. The ___________ is a network spanning a large geographical area. ----------------------
----------------------
Activity 5
----------------------
Visit an organisation and find the type of network topology being used. ----------------------
----------------------
3.7 INTERNET
----------------------
Internet is a collection of networks—literally an inter-network. It is ----------------------
also a collection of servers connected by common protocols and agreed-upon
standards. ----------------------
To put it simply and succinctly, Internet is the global connection between ----------------------
computers that allows individuals to send e-mail, make travel bookings, order
books, etc. between people and companies all around the world. Internet is a ----------------------
worldwide network of computers holding vast quantities of data that the user
can access directly from a personal computer. Internet has emerged as the single ----------------------
largest “Information Superhighway” in the world. ----------------------
Internet is commonly referred to as “the network of the networks”. The
Internet (with the capital “I”) is a public resource. It means that any user or ----------------------
server on the Internet can connect to any other user or server. No one “owns” ----------------------
the Internet, and this feature gives individual and corporate organisations
tremendous capabilities. Internet has proved to be a powerful tool for corporates ----------------------
in particular as it helps, inter alia, bring in customers, generates revenue and
saves money. ----------------------
Internet Capabilities ----------------------

Let us now note the major Internet capabilities and the functions, which ----------------------
they support.
----------------------

Notes Table 3.5 Capabilities of the Internet
Capability Functions Supported
----------------------
E-mail Person-to-person messaging, document sharing
----------------------
Usenet Networking Discussion groups on electronic bulletin boards
----------------------
Chatting Interactive conversation
----------------------
TelNet Log on to one computer system and do work an another
----------------------
Gophers Locate textual information using a hierarchy of menus
----------------------
Archie Search database of documents, software and data files
---------------------- available for downloading
---------------------- WAIS (Wide Area Locate files in databases using keywords

Information Services)
----------------------
World Wide Web Retrieve, format and display information (including
---------------------- text, audio, graphics, video) using hypertext links.
----------------------
---------------------- The Intranet

Over the years, the Internet, which is basically network of networks, has
----------------------
also led to the development of “Intranet”. The intranet is not really the Internet,
---------------------- but the application of Internet technologies to the internal corporate network.
The TCP/IP Internet protocols, as well as the standard systems of the Internet,
---------------------- such as FTP, e-mail, protocols and www system are now increasingly being
used within networks that are commonly referred to as “intranets”.
----------------------
Thus, while the Internet is for public consumption, intranets are for private
---------------------- use, mainly confined to the users only within a given/specific organisation.
---------------------- The Extranet
---------------------- While the Internet is public, and an intranet is private, an extranet is

essentially a hybrid of the two, i.e., it is semi-private!
----------------------
The contents of the extranet server are specifically designed for a very
---------------------- selected group of users/audience. Typically, the users/audience could be a
company’s suppliers, customers or other business associates.
----------------------
Integrated Services Digital Network (ISDN)
---------------------- Prior to 1962, the worldwide telecommunications network was totally
analog. Separate pairs of wires were also required for each service like voice,
----------------------
data and image signal transmission.
---------------------- In 1962, with the onset of T-1 carrier, the worldwide telecommunications
---------------------- network has continued to grow and become more and more digital.
In 1970s, the concept of integrated services − popularly known as the
---------------------- ISDN − was born. ISDN stands for Integrated Services Digital Network and is

considered to be “the final step in which digital data reaches customer premises/ Notes
doorsteps, first on copper and then on “fibre”.
----------------------
ISDN is an international standard for transmitting voice data, image and
video to support a wide range of services over the public telephone lines. ISDN is ----------------------
the result of over a dozen of years of efforts by communication experts, all over
the world. ISDN was developed by the Consultative Committee on International ----------------------
Telegraphy and Telephony (CCITT) in the late 1970s. ISDN endeavours to
----------------------
bring the world into a new age of information by integrating all current and
emerging communications technologies into a single, worldwide network. It is ----------------------
an international push to upgrade business into a single, worldwide network. It is
an international push to upgrade business and human communication, with all ----------------------
the convenience, capability and economy that the current and emerging state-
----------------------
of-the-art technologies permit.
ISDN, being all-digital, allows user to achieve convenience, flexibility ----------------------
and economy by way of reduced costs, lower power consumption and easy
----------------------
maintainability. It also provides a variety of data communication services over
a single telephone line. High utilisation is also achieved due to the integration ----------------------
of multiple connection types, services which are provided on one line from one
source. ISDN, being digital, also offers increased clarity, accuracy and speed. ----------------------
----------------------
----------------------
----------------------
----------------------
Record Record
----------------------
----------------------
----------------------
Fig. 3.15 ISDN Concept ----------------------
ISDN: What does the future hold? ----------------------

ISDN is fast emerging as a strategic weapon in global communication. ISDN ----------------------
has the potential to provide LAN like services to large, multi-site organisations.
----------------------
ISDN is, therefore, expected to emerge as an “enabler” for “enterprise
integration” in that it would enable a business to organise its resources so that ----------------------
it improves its ability to respond quickly, coherently and consistently to the
customers’ demands and thereby be more competitive in worldwide markets. ----------------------
ISDN: The Limitation ----------------------
It must, however, be noted that ISDN is not by itself a service but rather an ----------------------
interface to existing and future services. It promotes innovation and convergence
of information technology and telecommunications in open network structures. ----------------------

Notes
----------------------
---------------------- Match the following.

i. Extranet a. An international standard for transmitting voice
----------------------
data, image and video to support a wide range of
---------------------- services over the public telephone lines
ii. Internet b. Are for private use, mainly confined to the users
---------------------- only within a given/specific organisation.
---------------------- iii. Intranet c. Intended for selected group of users/audience
iv. ISDN d. Collection of networks
----------------------
State True or False.
----------------------
1. Protocols are also called as nodes.
---------------------- 2. Bandwidth means the capacity of the communications channel.
---------------------- 3. “Line Of Sight” is an example of physical connection lines.
4. Network enables users to share resources.
---------------------- 5. Modem is an abbreviation of Model/Demodulation.
----------------------
---------------------- Activity 6
---------------------- Surf the Internet and find out the limitations and future of ISDN and also
give relevant example for the same.
----------------------
---------------------- 3.8 IT ENABLED SERVICES

---------------------- In simple terms, IT Enabled services (ITES) involve the offering of
services from remote locations by harnessing the power of Information
----------------------
Technology through telecommunications/data networks. IT Enabled services,
---------------------- also called Web-enabled services or remote services or teleworking, covers the
entire gamut of operations which exploit Information Technology for improving
---------------------- efficiency of an organisation.
---------------------- Alternatively, ITES could be considered to be business processes and services
performed or provided from a location different from that of their users or beneficiaries
---------------------- and are delivered using Information Technology over telecom networks.
---------------------- ITES could also be considered somewhat like Business Process
Outsourcing (BPO). BPO involves the complete transfer of a business process
---------------------- or function to an external service provider who executes the transferred process
---------------------- or function.
Typically, Information Technology is leveraged extensively in carrying
---------------------- out the function, and more recently, the Offshore Model has been used in
---------------------- providing cost-effective services.

For this reason, BPO is also referred to as an IT enabled service (ITES). Notes
The important points to remember about BPOs are:
----------------------
1. The transfer of ownership of the process to the service provider/s.
2. Control is exercised by defining very clear Service-Level Agreements ----------------------
(SLAs). SLAs often include financial guarantees if the SLAs are not met
----------------------
by the service provider.
Such services could be offered domestically or to companies in other parts ----------------------
of the globe either by a third party (outsourced partner) or a subsidiary of
----------------------
the client company (remote operations or out location).
Although the ITES cover a number of services, the most high profile ----------------------
and most commonly understood/heard services in the ITES area are the ----------------------
call centres, medical transcription services and the Geographic/Global
Information Service (GIS). ----------------------
ITES, however, go much beyond these services and include, inter alia, ----------------------
services such as:
1. Animation ----------------------
2. Business process outsourcing/management ----------------------

3. Back office operations (Credit card, payroll) ----------------------
4. Collection services ----------------------
5. Customer care/Interaction services
----------------------
6. Data digitisation
----------------------
7. Digital content development
8. Legal databases ----------------------
9. Market research ----------------------
10. Remote education ----------------------
11. Transcription and translation services
----------------------
12. Website services
----------------------
Some of these services are briefly described below.
1. Business process outsourcing and management: Over the last few ----------------------
years, there has been a growing trend to outsource back office and data
----------------------
processing operations. Organisations like banks, airlines, financial services
companies, insurance companies require large-scale data processing and ----------------------
availability of data to improve their decision-making capabilities. High-
speed datacom links have made BPO possible and this type of ITES is ----------------------
expected to grow by leaps and bounds in the years to come. Insurance
----------------------
claims processing, credit card processing are typical examples of back
office ITES. ----------------------
----------------------

Notes 2. Call centres − (Customer care/Interaction centres): In India, call
centres have recorded a remarkable growth. GE Capital Services was the
---------------------- early bird to sow seeds of ITES in India in 1996. HSBC, British Airways
and Citigroup are among others who have set up or are setting up call
---------------------- centres in India
---------------------- 3. Medical transcription: Medical transcription facilities enable swift
and accurate transcription of medical records dictated by doctors and
----------------------
other medical/health-care professionals. It actually implies a method of
---------------------- translating the dictation, which forms the basis of providing health care in
most of the Western countries, particularly the USA, into an appropriate
---------------------- format. This format is then included in a medical record.
---------------------- The sound tracks containing the prescription/treatment, dictated by
doctors, are sent through datacom lines to overseas organisations, which
---------------------- employ “medical transcriptionists” who hear these recordings, transcript
them into medical reports and send them back, electronically, through
----------------------
datacom links/lines to the hospitals/clinics.
---------------------- 4. Legal databases: In every judicial system, the lawyers always look for
“precedents”, past rulings/judgments to support and build up the cases on
----------------------
hands. To fulfill this requirement, the job of preparing legal database is
---------------------- outsourced. The job basically involves working closely with the solicitors
firm/s to create a database of their existing records, indexing on the basis
---------------------- of various useful and commonly understood criteria, keeping track of
new documents generated/created and incorporating them into the legal
----------------------
databases as per norms/parameters.
---------------------- 5. Digital content development: The ITES caters to the needs of website
---------------------- management, production of content for new media as compact disk,
digital versatile disk as well as for products of convergent technologies
---------------------- such as Internet-enabled TV.
---------------------- 6. Geographic/Global Information Service (GIS): While the preliminary

work in the field of
---------------------- In simple terms, GIS is a computer system capable of assembling, storing,
---------------------- manipulating and displaying geographically referenced information, i.e.,
data identified according to their locations. GIS can also be considered
---------------------- to be a computer-based information system used to digitally represent
and analyse the geographic features present on the earth’s surface and the
---------------------- events that take place on it.
---------------------- In technical parlance, GIS is an Information System (IS) designed to work
with data referenced by spatial/geographical coordinates. GIS technology
----------------------
integrates common database operations, such as query and statistical
---------------------- analysis with the unique visualisation and geographic analysis benefits
offered by maps.
----------------------
These abilities distinguish GIS from other IS and make it valuable to
---------------------- a wide range of public and private enterprises for explaining events,

predicting outcomes and planning strategies. GIS is, therefore, seen as a Notes
tool to assist in decision-making and management of attributes that need
to be analysed spatially. ----------------------
The four major activities of GIS can be summarised as follows: ----------------------
1. The measurement of natural and man-made phenomenon and processes
----------------------
from
a. spatial perspective, with emphasis on the three following properties : ----------------------
a. Elements ----------------------
b. Attributes ----------------------
c. Relationships
----------------------
2. The storage of measurements in digital form in a computer database with
focus on the following features: ----------------------
a. Points ----------------------
b. Lines ----------------------
c. Areas (polygons)
----------------------
3. The analysis of collected measurements to produce more data and to
discover new relationships by numerically manipulating and modeling ----------------------
different places of data.
----------------------
4. The depiction of the measured or analysed data in some type of display in
any of the following commonly employed forms: ----------------------
a. Maps ----------------------
b. Graphs
----------------------
c. Lists
----------------------
d. Summary statistics
GIS Applications ----------------------
Some of the major GIS applications are in the areas of: ----------------------
a. Advertising ----------------------
b. Archeology ----------------------
c. Education (location of institutes, etc.)
----------------------
d. Cartography (mapmaking)
----------------------
e. Site selection (real estate, optimal railway route, etc.)
f. Election administration (locating booths) ----------------------
g. Insurance ----------------------
h. Routing/distribution network ----------------------
i. Oil, gas and mineral exploration
----------------------

Notes j. Wildlife (endangered species)
k. Government agencies (Police)
----------------------
l. Transportation and logistics
----------------------
m. Urban and regional planning
---------------------- n. Emergency response planning
---------------------- Why outsource ITES?
---------------------- With economic slowdown, the corporates − the MNCs in particular −
were on a look out to be cost-effective globally, to remain competitive and
---------------------- ensure survival. Outsourcing ITES was considered a desirable option as:
---------------------- 1. Outsourcing ITES can help the MNCs save anywhere up to 30−50% of
their costs.
----------------------
2. The increased speed of change, including changes in the regulatory
---------------------- environment, forcing the MNCs to achieve greater efficiencies in their
core processes (telecom/utilities/financial services).
----------------------
3. Rapidly improving telecom infrastructure, declining telecom costs and
---------------------- related developments offered significant connectivity at low cost.
---------------------- In addition to the above-mentioned reasons, some of the other reasons for
outsourcing ITES as indicated by Michael F. Corbett and Associates are:
---------------------- 1. Need to create a variable cost structure.
---------------------- 2. Need to increase revenue.
3. Need to foster innovation.
----------------------
4. Need to conserve capital.
---------------------- 5. Need to improve quality.
---------------------- 6. Need to increase speed to market.
The Snags
----------------------
The ITES in India face certain problems which need to be looked into and
---------------------- set right forthwith on a top priority. Some of the problems are:
---------------------- 1. Relatively poor quality of basic infrastructure including transport, power,
housing and bandwidth (notwithstanding recent improvements).
----------------------
2. Department of Telecommunications (DoT) regulations hampering
---------------------- sufficient/unrestricted interconnectivity.
---------------------- 3. Non-granting of industry status.

4. Insufficient regulations in the area of data protection security.
----------------------
5. Undue emphasis on financial services.
----------------------
While the problems need to be addressed with alacrity, endeavours need
---------------------- also to be initiated to reposition India’s ITES as a destination like Ireland, for
higher value services. It must be realised that low cost skill base advantage, in
---------------------- any case, would not be sustainable in the long run.

India, therefore, needs to address the deficiencies/inadequacies and quickly Notes
improve all-round efficiencies − people, processes and the infrastructure.
----------------------
Appropriate corrective actions, therefore, need to be initiated by all
concerned − the Government, the industry associations/bodies and the IT ----------------------
companies. Discernible impact must be seen/felt in “real time” and sustainable
results must be achieved on the ground. ----------------------
India can ill afford to lose all this. India, therefore, has to make all the right ----------------------
moves. If India makes the right moves, and discernible and sustainable results
are seen and felt, there is a whole new world—not virtual but real world—out ----------------------
there to be conquered.
----------------------
Summary
----------------------
●● A set of instructions for a specific task is called a “routine” and a complete
----------------------
set of instructions to execute a related set of tasks is termed as “program”.
Software instructions are also referred to as “code”. ----------------------
●● System software is a set of generalised programs that manage the resources
----------------------
of the computers, such as the central processor, communication links and
peripheral devices. ----------------------
●● Communications software enables transfer of data/programs from one
----------------------
computer system to another in a network environment where multiple
computers are interconnected. ----------------------
●● Application software includes computer programs written for a specific
application for an individual organisation. ----------------------
●● The transaction processing system is vital for organisational operations. ----------------------

Without it, bills would not be paid, purchase orders would not be issued,
sales orders would not be placed, reservations would not be made. ----------------------
●● A batch processing system is one where data is collected together in a ----------------------
batch before processing starts.
----------------------
●● The online processing system of transactions has now become a way
of life. In this system, the user has access to a terminal for input of ----------------------
transactions and output of results.
----------------------
●● The online real-time processing system is similar to the online processing
system in as much as in both the systems, a transaction is entered directly ----------------------
into the computer and validated immediately.
----------------------
●● Distributed data processing is a computer-networking method in which
multiple computers across different locations share computer-processing ----------------------
capability.
----------------------
●● The time-sharing mode of data processing allows several users to
simultaneously share the processing capability of the computer system. ----------------------
●● Multiprocessing is a capability of the operating system. It enables linking
----------------------
together two or more CPUs to work in parallel in a single computer
system. ----------------------

Notes ●● Multiprogramming allows multiple programs to share a computer system
resources at any one time through concurrent use of CPU, thereby also
---------------------- enabling higher CPU utilisation.
---------------------- ●● Analog signal is a continuous waveform that passes through the
communication medium.
---------------------- ●● Digital signal is a discrete waveform that transmits data coded into two
---------------------- discrete states as 1bits and 0 bits, which are represented as on-off electrical
pulses.
---------------------- ●● A modem is a device that performs the translation from analog to digital
---------------------- or from digital to analog form of signal.
●● Networks can be classified according to the geographical scope or area
---------------------- covered by services provided and also by their share or topology.
---------------------- ●● Internet is a collection of networks—literally an inter-network. It is also
a collection of servers connected by common protocols and agreed-upon
---------------------- standards.
---------------------- ●● IT Enabled services (ITES) involve the offering of services from remote
locations by harnessing the power of Information Technology through
---------------------- telecommunications/data networks.
---------------------- Keywords
---------------------- ●● Internet: A collection of networks.
---------------------- ●● Intranet: A network Confined to users within a specific organization.
●● Extranet: A computer network that allows controlled access from the
----------------------
outside, for specific business or educational purposes.
---------------------- ●● ISDN: Set of communications standards for simultaneous digital
transmission of voice, video, data and other network services over the
----------------------
traditional circuits of the public switched telephone network.
---------------------- ●● Data processing: Process that a computer program does to enter data and
summarise, analyse or otherwise convert data into usable information.
----------------------
●● Data transmission: Physical transfer of data (a digital bit stream) over a
---------------------- point-to-point or point-to-multipoint communication channel.
---------------------- ●● Software: Detailed instructions that control the operation of a computer
system.
---------------------- ●● System software: System software is a set of generalized programs that
---------------------- manage the resources of the computers.
●● Application software: Software designed to help the user to perform
---------------------- specific tasks.
---------------------- ●● Utility programs: Pre-written programs, which are stored so that they
can be shared by all users of a computer system.
----------------------
----------------------

Notes
----------------------
1. What is software? Describe the various types of software.
2. What is data communication? Discuss data processing and data ----------------------
transmission.
----------------------
3. Explain the different modes of data processing.
----------------------
4. Briefly explain analog and digital signals.
5. What is a network? What are the types of network? ----------------------
6. Write short notes on ring, star and bus topologies. ----------------------

7. Explain Internet, Intranet, Extranet and ISDN. ----------------------
8. What do you mean by IT Enabled Services? ----------------------
Answers to Check your Progress ----------------------

1. The Source Code programs, which are “Human Readable” must be ----------------------
converted into Object Code.
2. Communication software enables transfer of data/programs from one ----------------------
computer system to another in a network environment where multiple ----------------------
computers are interconnected.
----------------------
1. Before processing a transaction, the relative data item has to be checked, ----------------------
verified and found correct as regards to its quality specification. This
process is called data validation. ----------------------
2. Data processing involves a number of operations, similar to those in a ----------------------
manufacturing unit to convert the basic raw material, i.e., data into a
finished product, i.e., information. ----------------------

1. A batch processing system is one where data is collected together in a
----------------------
batch before processing starts.
2. The time sharing mode of data processing allows several users to ----------------------
simultaneously share the processing capability of the computer system.
----------------------
3. Multiprogramming is one of the most important capability of the
operating system used for sharing computer resources and facilitating ----------------------
data processing. ----------------------

Notes 4. When one of the jobs in memory is finished, another job is taken from the
queue of jobs and put into the main memory for execution.
----------------------
---------------------- 1. Data transmission uses the data processed for forwarding the same to the
end-user.
----------------------
2. The telecommunication software resides in the host computer, front-end
---------------------- processor and other processors of a network.
---------------------- 3. The analog signal is in the form of waves of different frequencies and
subject to distortion.
---------------------- 4. Digital signal is generated by microprocessor based or controlled device.
---------------------- 5. Transmission speed is the total amount of information that can be
transmitted through any telecommunication channel and is measured in
----------------------
Bits per Second.
---------------------- 1. Computer networking is the process of providing connectivity between/

among two or more computers/computer systems to enable users to
---------------------- communicate with each other, share hardware/software resources and not
get constricted by the stand-alone systems.
----------------------
2. Star network ties all the units to a central host/hub computer.
----------------------
3. In ring network, the computers are arranged in a ring-like structure and data
---------------------- is passed along the ring from one computer to another in a unidirectional
manner.
----------------------
4. The wide area network is a network spanning a large geographical area.
---------------------- i. - c.
ii. - d.
---------------------- iii. - b.
---------------------- iv. - a.

1. False
----------------------
2. True
----------------------
3. False
---------------------- 4. True
---------------------- 5. False

Notes
Suggested Reading
----------------------
York: McGraw Hill) ----------------------
----------------------
3. Prasad, L.M. and Usha Prasad. 2003. Management Information Systems. ----------------------
New Delhi. Sultan Chand & Sons. ----------------------
4. Sadagopan, S. 1998. Management Information Systems. New Delhi:
Prentice Hall India. ----------------------
----------------------
----------------------
----------------------
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----------------------
----------------------
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----------------------
----------------------
----------------------
----------------------
----------------------
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----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
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----------------------

Management and Decision-Making
UNIT
4
Structure:
4.1 Introduction
4.2 Management
4.3 Decision-Making
4.4 Decision-Making Process
4.5 Decision-Making Tools
4.6 Principles for Decision-Making
4.7 Decision-Making Models
Summary
Keywords
Suggested Reading
Management and Decision-Making 81

Notes
Objectives
----------------------
----------------------
●● Define management
---------------------- ●● Analyse the process of decision-making and various types of decisions
---------------------- ●● Explain the styles of decision-making and tools used for decision-
making
----------------------
●● State the principle of rationality
---------------------- ●● Discuss the Herbert Simon Model
----------------------
4.1 INTRODUCTION
----------------------
A decision is a choice made from available alternatives. MIS is crucial
---------------------- for decision- making as it facilitates effective and efficient decision-making. All
managers/ management have to take decisions for good and efficient functioning
---------------------- of an organisation.
---------------------- Decisions are taken at all levels of management. Decision taken at the
lower level of management is structured (routine or repetitive), decisions taken
----------------------
at the middle level of management are both structured and unstructured whereas
---------------------- decision taken at the top level of management is unstructured (innovative,
strategic, long term). A decision-maker makes use of various tools for decision-
---------------------- making.
----------------------
4.2 MANAGEMENT
----------------------
Management is “the art of getting things done through people”. A manager
---------------------- is defined as a person who achieves the organisational goals by motivating
others to perform and not only by performing himself. Modern management in
---------------------- the environment of technology is becoming more of science than an art.
---------------------- Management, which is defined as “the process of planning, leading,
organising and controlling the resources of an organisation in the effective and
----------------------
efficient pursuit of specified organisational goals”, is responsible for survival,
---------------------- success and prosperity of organisations. However, in discharging its functions,
it faces lot of problems in today’s dynamic and fiercely competitive world.
----------------------
Modern management system relies and depends on MIS. The complexity
---------------------- of business management and competitive nature of business requires handling
of business operations with skills and foresight to avoid crisis. Modern business
---------------------- management requires shift from the traditional controls to managerial controls.
The manager becomes more efficient if he is well informed, has a knowledge
----------------------
base, experience and analytical skills and is able to face the uncertainties or
---------------------- risks of business. All this is possible only if the management is supported by
MIS.
----------------------

The management has to utilise the resources—human, financial and physical— Notes
effectively, by doing things rightly and efficiently, so that, at the end, it is able to
get the things “done” and “deliver goods/results”. This involves managing the ----------------------
work, managing the people and managing the operations optimally.
----------------------
Optimal utilisation of resources, in turn, involves exercising choices and hence
the basic job of the management could be considered to be decision-making in ----------------------
discharging various functions assigned to it.
----------------------
Managers, therefore, have to develop decision-making skills as managers are
evaluated/ rewarded based on the importance, numbers and results of their ----------------------
decisions. Quality of managerial decisions’ reach is the yardstick of their
----------------------
effectiveness and their value to the organisation.
----------------------
----------------------

1. Quality of managerial decisions’ reach is the _________ of their ----------------------
effectiveness and of their value to the ____________.
----------------------
2. Modern management system ___________ and depends on
____________. ----------------------
----------------------
Activity 1
----------------------
Visit any organisation and try to find out the role of managers there. ----------------------
----------------------
4.3 DECISION-MAKING
----------------------
A decision is the choice out of several options made by the decision-
maker to achieve some objective in a given situation. ----------------------
A number of experts consider decision-making as the single-most ----------------------
important managerial function. Decisions are made at different levels in the
organisation structure. The decisions made at different levels vary in their ----------------------
content, risks involved, complexity and the implications.
----------------------
The information support required for the decision-making process also
varies according to the type of decision and the level within the organisation at ----------------------
which such decision is being made.
----------------------
The major characteristics of business decision-making are:
----------------------
a. Sequential in nature
b. Exceedingly complex due to risks and trade offs ----------------------
c. Influenced by personal value ----------------------

d. Made in institutional settings and business environment context ----------------------
Notes Decision-making environment
Decisions could be made under different types of environment, viz.,
----------------------
ambiguity, certainty, uncertainty and risk. An environment is ambiguous when
---------------------- the problem is not clear, the goal is not clear and hence the outcome also is not
clear.
----------------------
A certain environment is one where the relationship between inputs and
---------------------- outputs is known and hence the result is also known. The element of uncertainty
is there when there is unawareness about resources, input/output relations and
---------------------- the outcome is uncertain or unpredictable. The risk environment is one where
the result is unknown − it might result in profits, but it might lead to incurring
----------------------
losses as well.
---------------------- Decision types
---------------------- Decisions could be divided into two categories − programmed decisions
and non-programmed decisions.
----------------------
1. Programmed decisions: The major characteristics of the programmed
---------------------- decisions are:
---------------------- l They are routine/structured.

l They are repetitive/short-term.
----------------------
l Definite procedure is to be followed.
---------------------- l There are laid-down norms.
l The situations are known
----------------------
l They are taken at the lower/operating levels in an organisation
----------------------
The techniques used for taking programmed decisions are:
---------------------- l Habit
---------------------- l Standard Operating Procedure (SOP)

l Organisational Hierarchy/Structure
----------------------
l Operational Research
---------------------- l Computers
---------------------- 2. Non-programmed decisions: The major characteristics of the non-

programmed decisions are:
---------------------- l Novel − not cut and dried
---------------------- l Innovative
l New/complex situations
----------------------
l Important and critical
---------------------- l Strategic
---------------------- l Long term

The techniques used for taking non-programmed decisions are:
----------------------
l Judgment
---------------------- l Intuition

l Business acumen Notes
l Creativity
----------------------
l Complex/specially designed computer programs
l Training executives ----------------------
Figure 4.1 illustrates decisions taken at the lower level are programmed, ----------------------
while decision taken at higher level are non-programmed.
Management Non-Programmed ----------------------
TOP Broad. Unstructured, Infrequent ----------------------
MIDDLE
Both Structured & Unstructured
----------------------
LOWER Routine, Structured, Frequent
----------------------
Programmed
Fig. 4.1 Levels of Management and Types of Decisions ----------------------
This can also be illustrated by looking at the decision-making process ----------------------
from the organisational pyramidal point of view.
----------------------
Unstructured ----------------------
Policy
Planning ----------------------
(Strategic)
----------------------
Tactical ----------------------
Planning
----------------------
Operational Planning
----------------------
----------------------
Transaction Planning Structured
----------------------
----------------------
Fig. 4.2 Decision-Making at Different Levels of Organisation ----------------------
----------------------
Fill in the blanks.
----------------------
1. The certainty environment is one where the relationship between
inputs and outputs is _______________ and hence the result is also ----------------------
____________.
----------------------
2. Decisions are made at different ______________ in the organisation
structure. ----------------------
----------------------

Notes
Activity 2
----------------------
Visit any organisation and find out how the decisions are made at different
----------------------
levels of the organisation.
----------------------
4.4 DECISION-MAKING PROCESS
----------------------
The decision-making process involves the following steps:
----------------------
l Determining the existence of problems and/or opportunities.
----------------------
l Generating alternative courses of action.
---------------------- l Analysing/choosing/selecting a course of action.
---------------------- l Implementing the course of action.
---------------------- l Monitoring, following up and initiating course-corrective action.
Table 4.1 Steps in Decision-Making Process
----------------------
Step Detail
----------------------
1 Recognizing and Some stimulus indicates that a decision must be
---------------------- defining the situation made. The stimulus may be positive or negative.
---------------------- 2 Identifying alternatives Both obvious and creative alternatives are desired.
In general, the more significant the decision, the
---------------------- more alternatives should be generated.
3 Evaluating alternatives Each alternative is evaluated to determine its
---------------------- feasibility, its satisfactoriness and its consequences.
---------------------- 4 Selecting the best Consider all situational factors and choose the
alternative alternative that best fits the manager’s situation.
----------------------
5 Implementing the The chosen alternative is implemented into
---------------------- chosen alternative organizational system.
6 Follow up and At sometime in the future, the manager should
---------------------- evaluation ascertain the extent to which the alternative
chosen in step 4 and implemented in step 5 has
----------------------
worked.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

The decision-making process could be represented as shown in the flow Notes
chart.
Identify & Define the problem
----------------------
Revise
----------------------
Develop alternative solutions
----------------------
Evaluate alternative solutions
Revise ----------------------
----------------------
----------------------
Certainty Risk Uncertainty
Conditions Conditions Conditions ----------------------
----------------------
Select Alternative
Revise ----------------------
Implement Decision
----------------------
Evaluate & Control ----------------------
Fig. 4.3 The Process of Decision-Making ----------------------

Decision-making styles ----------------------
Decision could be taken by various functional executives. The decisions ----------------------
could be:
----------------------
1. Taken by the individual manager.
2. Consultative decisions − either formal or informal consultations. ----------------------
3. Group decisions by: ----------------------
l Co-actions
----------------------
l Task groups
l Interacting groups ----------------------
l Brainstorming ----------------------
l Delphi techniques
----------------------
l Nominal grouping technique Consensus mapping
----------------------
----------------------

1. Decision could be taken by various _________ executives. ----------------------
2. Consultative decisions can be either _____________ or ___________ ----------------------
consultations.
----------------------

Notes
Activity 3
----------------------
Visit an organisation and discuss with the management the decision-making
----------------------
styles followed in that organisation.
----------------------
---------------------- 4.5 DECISION-MAKING TOOLS

---------------------- There are various decision-making tools as listed below.
---------------------- 1. Payoff matrix
2. Decision tree and decision tables
----------------------
3. Queuing models
----------------------
4. Distribution models
----------------------
5. Inventory models
---------------------- 6. Game theory
---------------------- 7. Devil’s advocate
---------------------- 8. Multiple advocacy

9. Dialectic inquiry
----------------------
We will discuss some of the decision-making tools in the following paragraphs.
----------------------
1. Payoff matrix: Payoff matrix is one of the more commonly used
---------------------- and essential quantitative technique of decision-making. It helps in
summarising the interactions of various alternative actions and events.
---------------------- The payoff matrix takes into account the “probability” (i.e., the degree
of likelihood that a particular event would occur). Probabilities range in
----------------------
value from 0 (no chance of occurring) to 1 (certain chance of occurring).
---------------------- The probabilities are usually expressed in terms of percentages, or as the
number of times the event is can occur in a hundred trials.
----------------------
By using probabilities, a payoff matrix is prepared, which provides the
---------------------- decision- maker with quantitative measures of the payoff for each possible
consequences and for each alternative under consideration. This is known
---------------------- as Expected Value (EV).
---------------------- Positive payoff implies profit and negative payoff implies loss. Let us
illustrate the use of payoff by the following example:
----------------------
A businessman wants to invest Rs. 1,00,000 in a new business. He has
---------------------- identified three alternatives − Activity A, B and C. The businessman has
worked out the probabilities of his return on investment. He has estimated
---------------------- that there is a probability of 0.40 that sales will be high and a probability
---------------------- of 0.60 that the sales will be low.
The payoff matrix based on the data available with the businessman is
---------------------- shown in Table 4.2.

Table 4.2 The Payoff Matrix Notes
Alternative High Sales Low Sales ----------------------
(Probability : 0.40) (Probability : 0.60)
----------------------
Activity A + Rs. 45,000 - Rs. 10,000
----------------------
Activity B + Rs. 80,000 - Rs. 25,000
----------------------
Activity C + Rs. 30,000 - Rs. 5,000
----------------------
From the Payoff Matrix, the Expected Value of the investment in Activity
“A” will be as follows: ----------------------
EV = 0.40 (45,000) + 0.60 (-10,000) ----------------------
= 18,000 - 6,000
----------------------
= 12,000
----------------------
The Expected Value for Activity ‘B’ will be
EV = 0.40 (80,000) + 0.60 (-25,000) ----------------------
= 32,000 - 15,000 ----------------------

= 17,000 ----------------------
The Expected Value for Activity ‘C’ will be
----------------------
EV = 0.40 (30,000+0.60 (-5,000)
----------------------
= 12,000 - 3,000
= 9,000 ----------------------
The payoff matrix shows that the Activity “B” can give him the best ----------------------
possible return among the three alternatives.
----------------------
It must, however, be remembered that the payoff matrix has an obvious
weakness. It is dependent on the decision-maker’s judgement of the ----------------------
possible outcomes for each alternative and also the values the decision-
----------------------
maker assigns to each.
At the same time, it must also be remembered that the payoff matrix ----------------------
forces the decision-maker to make a firm judgment about what he thinks
----------------------
may happen and the worth to him of those outcomes.
The payoff matrix does not make a decision but it does force the decision- ----------------------
maker to be more realistic about possible outcomes. ----------------------
2. Decision tree: The decision tree technique is basically an extension
of the probability theory to decision-making. It is a simple technique, ----------------------
which mathematically factors the degree of risk into a business decision. ----------------------
It allows the decision-maker to work out the options, after taking into
account the “odds”, and then make a reasonably precise comparison ----------------------
among alternative courses of action.
----------------------

Notes It is a useful technique for presenting analysis when the decision-maker
has to make a sequence of decisions. It is referred to as decision tree as
---------------------- different alternatives form branches from an initial decision point (known
as decision node) and then moves on to various options emanating from
---------------------- different points (called chance nodes).
---------------------- The steps involved are:
---------------------- l Build the tree, starting with decision points.
l Add branches for external states of events, which are likely to occur.
----------------------
l Include probability of each state.
----------------------
l Assign a value of each unique branch.
---------------------- l Work backwards to analyse the consequences at each “node” of the
---------------------- tree.
Thus, to summarise, the decision tree is a means of representing the
----------------------
sequential multistage logic of a decision problem. The decision tree
---------------------- technique is oriented to show decision paths that may be taken rather than
the criteria for selecting a given path. It is convenient for showing the
---------------------- probabilities for outcomes.
---------------------- Decision trees could be represented in different ways.
----------------------
----------------------
----------------------
----------------------
----------------------
---------------------- Fig. 4.4 Bottom to Top

----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 4.5 Left to Right
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
Fig. 4.6 Top to Bottom ----------------------
The standard presentation of decision tree is as follows:
----------------------
----------------------
----------------------
Chance Node
----------------------
----------------------
2nd Decision Point
----------------------
----------------------
Initial Point ----------------------
(Decision Node)
----------------------
Fig. 4.7 Standard Presentation
----------------------
3. Decision rules: Decision rules and decision tables are used together.
Decision rules enable decisions to be made better and more economically. ----------------------
Decisions could also be faster and more accurate. Decision rules/tables
are to be used for programmable or routine/ operating decision. It is, ----------------------
therefore, imperative that decision rules are documented.
----------------------
4. Decision table: Decision table documents rules that select one or more
actions based on one or more conditions from a set of possible conditions. ----------------------
It is precise and compact. Decision table may include both qualitative and ----------------------
quantitative bases for decision-making.
Decision tables are in the form of “IF” listings and “THEN” listings. The ----------------------
“IF” listings stipulate the required conditions and the “THEN” listings ----------------------
provide the actions to be taken if the conditions exist.
----------------------
The “IF” LISTINGS form the ‘CONDITION STUB’ and the “THEN”
LISTINGS form the ‘ACTION STUB’. ----------------------
The decision table helps the analyst consider all options, conditions,
----------------------
variables and alternatives. It must, however, be remembered that this
technique has to be used in conjunction with other techniques. ----------------------
----------------------

Notes
----------------------

i. Payoff matrix a. Used for programmable or routine/operating
----------------------
decision.
---------------------- ii. Decision tree b. It helps in summarising the interactions of
various alternative actions and events.
----------------------
iii. Decision rules c. Selects one or more actions based on one or
---------------------- more conditions from a set of possible
---------------------- conditions.
iv. Decision table d. It is a simple technique, which mathematically
---------------------- factors the degree of risk into a business
---------------------- decision.
----------------------
Activity 4
----------------------
---------------------- Draw a decision tree to show the fixed deposits schemes offered to customers
in a bank.
----------------------
4.6 PRINCIPLES FOR DECISION-MAKING
----------------------
---------------------- Apart from the various tools and techniques used for decision-making,
the following principles are also used in/for decision-making.
---------------------- 1. Principle of bounded rationality: While the decisions should normally
---------------------- be based on rationality, what is observed is that our rationality, in reality,
is conditioned by various factors/constraints like financial, technical,
---------------------- administrative, etc.
---------------------- In view of this reality of situation, the principle of bounded rationality
comes into existence. It implies that it is practically difficult, almost
---------------------- impossible, to take a completely rational decision. The principle of
bounded rationality, therefore, highlights the fact that as it is not possible
----------------------
to arrive at a scientific solution, it is worthwhile to carry on and arrive at
---------------------- workable decisions which fit into the principle of bounded rationality.
If a scientific decision either cannot be taken or cannot be implemented,
----------------------
it would remain only an ideal, hypothetical yet impracticable decision.
---------------------- Under these circumstances, a workable solution should be worked out
while still continuing to work on developing the scientific solution.
----------------------
In other words, workable decision is the starting point of a scientific
---------------------- solution, which is the ultimate goal that one must strive to achieve.
----------------------

2. Principle of logic and intuition: The principle of logic and intuition Notes
refers to taking a number of decisions based on logic and intuition/hunch.
However, today’s professional managers are more keen to take decisions ----------------------
based on data, facts and figures.
----------------------
Decisions based on intuitions are those where logical explanation is not
possible though the decision-makers themselves will believe, and like ----------------------
others to believe that their approach/decision is and would be the right
----------------------
one.
It must be remembered that in today’ environment, where so much ----------------------
information is available, it would not at all be desirable to ignore it while
----------------------
arriving at a decision. The focus should be to arrive at a decision mainly
based on data/information, while giving due weightage to logic and ----------------------
intuition.
----------------------
1. The principle of ____________ refers to taking a number of decisions ----------------------

based on logic and intuition/hunch.
----------------------
2. The principle of ___________, highlights the fact that it is not possible
to arrive at a scientific solution. ----------------------
----------------------
Activity 5 ----------------------
By visiting different websites, find out how the principles used for decision- ----------------------
making are effective.
----------------------
4.7 DECISION-MAKING MODELS ----------------------
Every manager has to take decisions and, in a way, every manager is a ----------------------
model of decision-making himself. However, in the context of our discussions,
----------------------
we would note the following decision-making models:
1. The classical model: As per the classical model of decision-making, ----------------------
a manager, when confronted with a decision-making situation, would
----------------------
collect all the information that is required for that activity and would take
a decision, which would be in the best interest of the organisation. ----------------------
2. The administrative model: Under the administrative model, the ----------------------
manager is more concerned about himself. As such, when confronted
with a decision-making situation, the manager would collect whatever ----------------------
information could be available and take a decision, which may not be in
the best interests of the organisation but would certainly be in the best ----------------------
interests of the manager. ----------------------

Notes Expediency and opportunism are the hallmarks of the administrative
model.
----------------------
3. The Herbert Simon Model: The Herbert Simon Model is related to the
---------------------- decision-making process. The Simon Model describes the core of the
decision-making process and is generally used as the basis for describing
---------------------- the decision-making process.
---------------------- According to the Herbert Simon Model, the decision-making process
consists of the following three inter-related phases:
----------------------
Intelligence
----------------------
---------------------- Design
----------------------
Choice
----------------------
---------------------- Fig. 4.8 The Herbert Simon Model
---------------------- i. Intelligence phase: It consists of problem-finding activities related to

searching of the operating/business environment for identifying conditions
---------------------- calling for decisions. This is imperative as there cannot be analysis/design/
choice unless the problem is identified or clearly formulated/stated.
----------------------
The intelligence phase requires extensive and comprehensive database.
---------------------- It, therefore, involves searching or scanning of the environment—both
internal as well as external—for conditions, which indicate or suggest
---------------------- problem or opportunity. The activity of search for problem/opportunity
involves a scan of the environment.
----------------------
The environment for the purpose of discussions in the Herbert Simon
---------------------- Model is divided into three broad · Societal environment: The societal
environment would include the economic, legal and social environment
---------------------- in which the organisation operates.
---------------------- l Competitive environment: The competitive environment would
include understanding and analysing the characteristics, trends and
---------------------- behaviour of/at the marketplace and the market players in which the
organisation operates.
----------------------
l Organisational environment: The organisational environment
---------------------- would include the capabilities, strengths, weaknesses, constraints
and other factors affecting the ability of the organisation to
---------------------- discharge/carry out/perform its functions and activities. The search/
---------------------- scanning of the environment leads to identification/recognition of
the problem/opportunity which then leads to the next phase, i.e., the
---------------------- design phase of the decision-making process.
---------------------- ii. Design phase: The design phase involves/includes/consists of inventing,
developing and analysing likely/probable/possible alternatives/courses of
---------------------- action/responses to the problem/opportunity situation.

Generally, the following typical iterative steps are used/resorted to: Notes
l Support in understanding the problem. A correct model of the
----------------------
situation needs to be created/applied and the assumptions of the
model tested. ----------------------
l Support for generating solutions by:
----------------------
§ Manipulating the model to develop insights.
----------------------
§ Creating/using database retrieval system, which may help in
generating solution. ----------------------
l Support for testing feasibility of solutions by analysing it in terms
----------------------
of the environment it affects. The environment would include, as
stated earlier, problem area, organisation itself, competitors and ----------------------
society.
----------------------
The design phase then leads to the third and final phase of the Simon
Model, viz., the choice phase. ----------------------
iii. Choice phase: The choice phase leads to the selection of a specific ----------------------
alternative or course of action from the ones generated and considered
during the design phase. The choice phase requires the application of a ----------------------
choice procedure and the implementation of the chosen alternative.
----------------------
There is a flow of activities from intelligence to design to choice, but at
any phase, there may be a return to a previous phase. For example, the ----------------------
decision- maker in the choice phase may reject all alternatives and return
to the design phase for generation of additional alternatives. ----------------------
Limitations of Simon Model ----------------------

While, undoubtedly, the Simon Model provides the core of the decision- ----------------------
making process, it must be noted that it does not go beyond the choice phase,
The Simon Model thereby excludes or does not take cognizance of the ----------------------
implementation and the feedback aspects, which are inseparable part of the
----------------------
decision-making process in vogue now.
In this context, it would be both relevant and pertinent to keep in mind the ----------------------
following steps of a decision-making process:
----------------------
l Recognition of problem or need for decision.
----------------------
l Analysis and statement of alternatives.
l Choice among the alternatives. ----------------------
l Communication and implementation of decision.
----------------------
l Follow-up and feedback of results of decision.
----------------------
Relevance of Simon Model
Notwithstanding the limitation of the Simon Model, the fact remains that ----------------------
it is relevant to the design of information support for decision-making within
----------------------
the management information system.
----------------------

Notes
----------------------

1. Management is a combination of art, science and commerce.
----------------------
2. A decision is a choice made from available alternatives.
----------------------
3. Decisions are always made under same environment.
---------------------- 4. Uncertain environment means unawareness.
---------------------- 5. Decision-making is one of the single most important managerial
function.
----------------------
----------------------
Activity 6
----------------------
---------------------- By visiting different websites, find out how the Simon Model is effective in
the decision-making process.
----------------------
---------------------- Summary
----------------------
●● A manager is defined as a person who achieves the organisational goals
---------------------- by motivating others to perform and not only by performing himself.
●● Managers, therefore, have to develop decision-making skills as managers
----------------------
are evaluated/ rewarded based on the importance, numbers and results of
---------------------- their decisions.
●● The information support required for the decision-making process
---------------------- also varies according to the type of decision and the level within the
---------------------- organisation at which such decision is being made.
●● Decisions could be made under different types of environment, viz.,
---------------------- ambiguity, certainty, uncertainty and risk. An environment is ambiguous
when the problem is not clear, the goal is not clear and hence the outcome
----------------------
also is not clear.
---------------------- ●● Payoff matrix is one of the more commonly used and essential quantitative
techniques of decision-making.
----------------------
●● The decision tree technique is basically an extension of the probability
---------------------- theory to decision-making. It is a simple technique, which mathematically
factors the degree of risk into a business decision.
---------------------- ●● Decision table documents rules that select one or more actions based on
---------------------- one or more conditions from a set of possible conditions.
●● The principle of bounded rationality highlights the fact that as it is not possible
---------------------- to arrive at a scientific solution, it is worthwhile to carry on and arrive at
---------------------- workable decisions which fit into the principle of bounded rationality.

●● The principle of logic and intuition refers to taking a number of decisions Notes
based on logic and intuition/hunch.
●● Every manager has to take decisions and, in a way, every manager is a ----------------------
model of decision-making himself. ----------------------
●● The Simon Model excludes or does not take cognizance of the
implementation and the feedback aspects, which are inseparable part of ----------------------
the decision-making process in vogue now. ----------------------
Keywords ----------------------
●● Management: Act of getting people together to accomplish desired goals ----------------------

and objectives using available resources efficiently and effectively. ----------------------
●● Decision-making: Cognitive process resulting in the selection of a course
of action among several alternative scenarios. ----------------------
●● Payoff matrix: It helps in summarising the interactions of various ----------------------
alternative actions and events.
●● Decision tree: It is a simple technique, which mathematically factors ----------------------
the degree of risk into a business decision. ----------------------
Self-Assessment Questions ----------------------
1. Modern management is a combination of art and science. Discuss. ----------------------
2. Explain the various models of decision-making. ----------------------

3. Describe the different types of decisions.
----------------------
4. List down the various tools of decision-making and briefly explain each
of them. ----------------------
5. The Herbert Simon Model allows backtracking. Discuss. ----------------------
6. What are the principles used in decision-making?
7. Explain the steps in thedecision-making process. ----------------------
----------------------
----------------------
----------------------
Fill in the blanks.
1. Quality of managerial decisions’ reach is the yardstick of their effectiveness ----------------------
and of their value to the organisation. ----------------------
2. Modern management system relies and depends on MIS.
----------------------
1. The certainty environment is one where the relationship between inputs ----------------------
and outputs is known and hence the result is also known.
----------------------
2. Decisions are made at different levels in the organisation structure.

Notes Check your Progress 3
Fill in the blank.
----------------------
1. Decision could be taken by various functional executives.
---------------------- 2. Consultative decisions can be either formal or informal consultations.
i. – b.
----------------------
ii. – d.
---------------------- iii. – a.
---------------------- iv. – c.
----------------------
Fill in the blanks.
----------------------
1. The principle of logic and intuition refers to taking a number of decisions
---------------------- based on logic and intuition/hunch.
---------------------- 2. The principle of bounded rationality highlights the fact that it is not
possible to arrive at a scientific solution.
----------------------
---------------------- 1. True
2. True
----------------------
3. False
---------------------- 4. True
---------------------- 5. True
----------------------
Suggested Reading
----------------------
---------------------- York: McGraw Hill)
---------------------- 3. Prasad, L.M. and Usha Prasad. 2003. Management Information Systems.
----------------------
----------------------
----------------------
----------------------

Information
UNIT
5
Structure:
5.1 Introduction
5.2 Information Process
5.3 Sources of Information
5.3.2 Classification of Information
5.3.3 Types of Level-Wise Information
5.3.4 Attributes of Information
5.4 Human as Information Processor
5.5 Information Requirement
5.6 Critical Success Factors
5.7 Business System Planning
Summary
Keywords
Suggested Reading
Information 99
Notes
Objectives
----------------------
----------------------
●● Differentiate between data and information
---------------------- ●● Discuss information process and information presentation
---------------------- ●● Assess the importance of relevant information to the decision-maker
---------------------- ●● State the types of information
●● Explain human as an information processor
----------------------
●● Identify information requirement at different levels of management
---------------------- ●● Describe critical success factors and business system planning
----------------------
----------------------
5.1 INTRODUCTION
---------------------- Initially, while discussing about MIS, we have said that MIS is a system,
which provides information to the management. We have also said that we are
---------------------- living in an Information Age. Information is of critical importance for setting
up, running, survival and prosperity of a business organisation. Information is
---------------------- also imperative today as it enables an organisation to gain and retain competitive
---------------------- edge and emerge winner.
We will now discuss the concepts of information in more details as MIS
---------------------- is centred around information. So, what is information?
---------------------- Information is derived from data. Data is nothing but a random,
unorganised collection of indications or measurements of certain qualities
----------------------
or attributes relating to an entity, recorded either in alphabetical, numerical,
---------------------- alphanumerical, voice, image, text or any other form.
Data could also be described as unstructured raw facts, observations or
----------------------
unevaluated messages in isolation. Data, per se, does not convey much or is
---------------------- not of much use. It is like a material, which is simply available in an unfinished
form. Data means facts and figures, which are not currently being used in a
---------------------- decision process and usually takes the form of office/historical records that are
recorded and filed without immediate intent to retrieve for decision-making.
----------------------
---------------------- 5.2 INFORMATION PROCESS

---------------------- Information is like a finished product. Information, therefore, is defined
as data that is collected, collated, processed, logically organised and analysed
----------------------
so as to be of use to the decision-maker.
---------------------- Information, according to Davis and Olson, is “data that has been processed
into a form that is meaningful to the recipient and is of real or perceived value
----------------------
in current or prospective actions or decisions”.
----------------------

Information brings clarity and creates an intelligent human response in Notes
the mind.
----------------------
Characteristics of information are:
●● It improves representation of an entity. ----------------------
●● It updates the level of knowledge. ----------------------
●● It has a surprise value.
----------------------
●● It reduces uncertainly.
●● It aids in decision-making. ----------------------
It will, thus, be observed that for data to be converted into information, it ----------------------
has to undergo processing as illustrated hereunder.
----------------------
Stored Data
----------------------
Processing (Processor) Output (Information) ----------------------

Input (Data)
----------------------
Fig. 5.1 Data Processing
As stated, data has to be processed before information could be available. Hence, ----------------------
various operations have to be carried out in converting data into meaningful ----------------------
information.
----------------------
Table 5.1 Information Process
Capturing Data from an event/transaction has to be recorded ----------------------
Verifying Data has to be checked/validated for correctness ----------------------
Classifying Data has to be placed in specific categories ----------------------
Arranging/Sorting Data has to be placed in a particular order/sequence ----------------------
Summarizing Data elements have to be combined / aggregated
----------------------
Calculating Arithmetical/Logical calculations / computations have to be
carried out ----------------------
Storing Data has to be placed in some storage media ----------------------

Retrieving Specific data elements have to be searched for and accessed ----------------------
Reproducing Data has to be duplicated from one medium to another ----------------------
Dissemination/ Data has to be transmitted from one place (device) to another
----------------------
Communication (user).
----------------------
Information presentation and decision-maker
----------------------
Presentation of the information is an art. The data may be collected in the
best possible manner and processed analytically, brining lot of value in the ----------------------
information; however, if it is not presented properly, it may fail to communicate
anything of value to the receiver. ----------------------
Information 101
Notes The degree of communication is affected by the methods of transmission,
the manner of information handling and the limitations and constraints of a
---------------------- receiver as the information processor and the organisation as the information
user.
----------------------
Information should be summarised. The principle behind summarisation
---------------------- is that too much information causes confusion, misunderstanding and misses
the purpose.
----------------------
Another method of improving the degree of communication is through
---------------------- message routing. The aim here is to distribute information to all those who are
accountable for the subsequent actions or decisions in any manner.
----------------------
Information is not only relevant but also critical for the decision-maker as
---------------------- the quality of decision-making is dependent on the quality of information. More
specifically, information is useful for the decision-maker as:
----------------------
1. Information helps in minimising, if not eliminating altogether, the
---------------------- elements of risk and uncertainty in decision-making.
---------------------- 2. Information minimises the element of “surprise” and uncertainty in
decision- making.
----------------------
3. Information improves the quality of decision-making.
----------------------
4. Information helps to achieve the most optimum results within given
---------------------- constraints.
5. Information affects the decision-making behaviour and makes the
----------------------
difference.
----------------------
----------------------

---------------------- 1. Information, is like a finished ___________.
2. Information brings _____________ and creates an _____________
----------------------
human response in the mind.
---------------------- i. Summarising a. Arithmetical/logical calculations/computations
have to be carried out.
----------------------
ii. Calculating b. Data has to be placed in some storage media.
---------------------- iii. Storing c. Data elements have to be combined/aggregated.
iv. Retrieving d. Data has to be duplicated from one medium to
----------------------
another.
---------------------- v. Reproducing e. Specific data elements have to be searched for
and accessed.
----------------------
----------------------

Notes
Activity 1
----------------------
By visiting relevant websites, find out how does information updates level
----------------------
of knowledge.
----------------------
5.3 SOURCES OF INFORMATION
----------------------
Data is the foundation of all information. A few aspects of data, sources
----------------------
of data and methods of collecting the data for the purposes of converting them
into information are described in the paragraphs below. ----------------------
Data is the raw material used for obtaining information. Data is derived
----------------------
from a number of sources, both internal as well as external. If the data is
collected for the first time by the researcher, it is classified as primary data. If, ----------------------
however, data is borrowed by the researcher from other sources, it is referred to
as secondary data. ----------------------
Primary data could be gathered directly from the respondent. Different ----------------------
techniques like observations, questionnaires, interviews, etc. can be used for
obtaining primary data, which can then be converted into information. ----------------------
Secondary sources of data/information include internal records as well ----------------------
as external records. Sources like newspapers, magazines, trade journals,
government publications, government policy documents, research reports, ----------------------
websites, etc. are included under secondary sources. ----------------------
----------------------
MIS should provide the information which has a surprise value and which
reduces the uncertainty. It should simultaneously build the knowledge base. ----------------------
While designing MIS, due regard should be given to the communication theory
----------------------
of transmitting the information from the sources of the destination. MIS should
use the redundancy of data and information as a measure to control the error in ----------------------
communication.
----------------------
Information is a quality product for organisation. The quality can be
ensured if the inputs to the MIS are controlled on the factors of impartiality, ----------------------
validity, reliability, consistency and age. MIS should give regard to the
information used for planning, performance control and knowledge database. ----------------------
Recognising that the information may be misused if it falls into ----------------------
wrong hands, the MIS design should have the features of filtering, blocking,
suppressions and delay delivery. ----------------------
5.3.2 Classification of Information ----------------------
1. Action information: The information, which induces action is called ----------------------
an action information. For example, when the attendance of students for
a particular subject suddenly falls down to 40%, it calls for immediate ----------------------
action.
----------------------
Information 103
Notes 2. Non-action information: The information, which communicates only
the status of a situation is a no-action information. For example, while
---------------------- watching a live cricket match you understand that India’s current run rate
is four per over whereas its required run rate is seven per over. You have
---------------------- this information but this a non-action information.
---------------------- 3. Recurring information: This information is generated at regular
intervals, for example,the monthly sales reports, accounts statement, etc.
----------------------
4. Non-recurring information: This information is non-repetitive in nature,
---------------------- for example, the financial analysis or the report on the market research.
---------------------- 5. Internal information: This information is generated through the internal
sources of the organisation.
----------------------
6. External information: This information is generated through external
---------------------- sources, for example, Government reports ,etc.
---------------------- 5.3.3 Types of Level-Wise Information

Information is used for decision-making. The process of decision-making
---------------------- is generally divided into three types:
---------------------- 1. Strategic level: For strategic decision-making, one needs strategic
information, which is wholistic, unstructured and draws heavily from the
----------------------
external environment. It would also require more futuristic inputs like
---------------------- the emerging technologies, competition, consumer preferences, socio-
economic, political changes, etc. as these inputs would be used for long-
---------------------- term planning.
---------------------- 2. Tactical level: Tactical information would be used for medium/short-
term planning by the middle management. Budgets, forecasts, analysis,
---------------------- cash/funds flow projections are part of the tactical information. Such
information is mostly from internal environment and partly from external
----------------------
environment like customer perceptions, competitors’ strategy, pricing,
---------------------- etc. It has medium-term impact.
3. Operational level: Operational information is mainly for/from people
----------------------
involved in the operations ranging from a “shift” to a day or a week
---------------------- or a month. It is about what is currently happening around within the
organisation and is mainly drawn from internal sources. It also covers a
---------------------- specific product, specific activity and a smaller group/number of people.
---------------------- Apart from the three types stated above, we could also divide information
into planning information and control information. The planning and
---------------------- control information could be differentiated as below.
----------------------
----------------------
----------------------
----------------------

Table 5.2 Difference between Planning and Control Information Notes
Planning Information Control Information
----------------------
It covers the whole organization It is concerned with small, specific part
of organization. ----------------------
It has a longer time span It has a shorter time span ----------------------
It looks for and analyses It looks for specific details for functional ----------------------
trends/patterns activity.
----------------------
Used for working futuristic Used for assessing actual performance
trends/forecast. vis-à-vis budgeted. ----------------------
5.3.4 Attributes of Information ----------------------

Information, to be of use to the decision-maker, has to possess certain ----------------------
attributes as stated below.
----------------------
●● Timely availability
●● Accuracy ----------------------
●● Reliability ----------------------
●● Periodicity/frequency ----------------------
●● Verifiability
----------------------
●● Pertinent/relevant
----------------------
●● Completeness
●● Comprehensibility ----------------------
●● Clarity ----------------------
●● Consistency ----------------------
●● Brevity
----------------------
●● Cost-effectiveness
----------------------
Needless to add, more attributes the “information” possesses, better
the quality it would have, leading to higher value of such information for the ----------------------
organisation and the decision-maker.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Information 105
Notes
----------------------

1. Information is a quality ______________ for organisations.
----------------------
2. Secondary sources of data/information include ___________ as well
---------------------- as ______________.
3. _______________ is concerned with small, specific part of the
---------------------- organisation.
4. ____________level covers a specific product, specific activity and a
----------------------
smaller group/number of people.
i. Action information a. The information that is generated at
----------------------
regular intervals.
---------------------- ii. Recurring information b. The information generated through the
internal sources of the organisation.
---------------------- iii. Internal Information c. The information which induces action.
iv. External Information d. The information generated through
----------------------
external sources.
----------------------
---------------------- Activity 2
----------------------
1. Information minimises risk. Do you agree with this statement? Justify
---------------------- your answer with the help of examples.
---------------------- 2. Visiting some websites and find out the differences between the
various types of information levels.
----------------------
---------------------- 5.4 HUMAN AS INFORMATION PROCESSOR

---------------------- A human being can hear, see, touch, feel and smell. These senses are
then transmitted to the brain, which analyses them and then comes out with
---------------------- appropriate response. This human behaviour could be seen/explained in terms
of information processing.
----------------------
The sensory receptors (ears, eyes, nose, etc.) pick up/receive signals, which
---------------------- are then transmitted to the brain The signals are then processed by the brain
---------------------- and appropriate responses are communicated. Thus, the signals from sensory
receptors become inputs. These signals are transmitted through the nervous
---------------------- system, which acts as a channel or medium. These signals are communicated
to the brain where, while processing the signals, the brain acts as the central
---------------------- processing unit. The processing leads to responses, which can be considered as
---------------------- outputs.
----------------------

The above-mentioned details could be referred to as “Model of Human as Notes
Information Processor”.
Memory ----------------------
----------------------
Input From Mental Output ----------------------
Sensory Recep- Channel Processing Channel Response
tors
Filter ----------------------
----------------------
Fig. 5.2 Human as Information Processor
However, human beings cannot go on accepting unlimited inputs and ----------------------
keep coming up with unlimited outputs, as the human capacity to accept inputs
----------------------
and offer outputs is rather limited. If there is too much of input, the human
capacity will simply be unable to accept the input and correspondingly, the ----------------------
output will also be reduced/restricted. This “too much of inputs” affecting the
output is considered as “overloading”. ----------------------
To avoid this eventuality, humans restrict input to a manageable quantity ----------------------
by being selective in accepting some inputs and blocking other inputs. This
process leads to creation of filters resulting from: ----------------------
i. Frame of reference of the person concerned, based on prior knowledge ----------------------
and experience.
----------------------
ii. Normal decision procedure.
----------------------
iii. Decision-making under stress.
This process of filtering is illustrated in Figure 5.3 and Figure 5.4. ----------------------
Input Mental Pro- ----------------------

Filter
Stimuli cessing
----------------------
Fig. 5.3 Filtering under Normal Decision-Making Conditions ----------------------
----------------------
Input Mental Pro- ----------------------
Filter
Stimuli cessing
----------------------
Fig. 5.4 Filtering under Stress
----------------------
It may be noted that, filtering, apart from blocking unwanted data, may
also block data, which is not considered to be consistent with the established ----------------------
frame of reference. This, in turn, may result in errors of perception like omission, ----------------------
distortion, inferences, etc. These errors of perception may reduce information
content. ----------------------
----------------------
----------------------
Information 107
Notes Data Stored Frames
Storage of Reference
----------------------
----------------------
Input Data Mental Processing Decisions
----------------------
Fig. 5.5 Human Information Processing Mechanism and Decision-Making Process
----------------------
----------------------
Allele Newell and Herbert Simon have proposed a model of human
---------------------- problem-solving and human information processing system. According to
---------------------- the model, the human information processing system consists of a processor,
sensory inputs, motor output and three different memories − Long-Term
---------------------- Memory (LTM), Short-Term Memory (STM) and External Memory (EM) as
illustrated hereafter.
----------------------
Long Term Memory
----------------------
Processor
----------------------
---------------------- Short Term Memory

---------------------- Input Elementary Processor Output
---------------------- Interpreter
----------------------
---------------------- Fig. 5.6 LTM, STM and EM

---------------------- The human memory can perform only one information processing task at
a time (known as serial processing) rather than processing number of tasks at a
---------------------- time (known as parallel processing).
---------------------- In view of our earlier discussions, the comparative presentation of the
Newell−Simon Model and Computer System Model can be shown as follows:
----------------------
---------------------- Receptors
----------------------
Environment Processor
Memory
----------------------
---------------------- Effectors
----------------------
Fig. 5.7 Human Information Processing System
----------------------
----------------------

Notes
Storage
----------------------
Input Processor Output ----------------------
----------------------
Fig. 5.8 Computer Information Processing System
----------------------
----------------------
Fill in the blanks.
1. Allele Newell and Herbert Simon have proposed a model of ----------------------
__________ and _____________.
----------------------
2. The computer information processing system consists of _________,
_________, _________ and _____________. ----------------------
----------------------
Activity 3 ----------------------
Visit an organisation and discuss with them regarding the importance of ----------------------
Computer Information Processing System.
----------------------
5.5 INFORMATION REQUIREMENT ----------------------
----------------------
As discussed earlier, information today has become a strategic tool for
organisations. Information is now also considered as a resource, much like capital ----------------------
and labour. As such, it becomes imperative to analyse and assess the information
requirement/needs of business organisations activity-wise, function-wise, level- ----------------------
wise as well as for organisation as a whole, as the information required at each
----------------------
level is different.
Obviously, then, defining the specific information requirements becomes ----------------------
the most critical—and therefore the most difficult—task for the Systems
----------------------
Analyst. This is one area where many large system efforts could go wrong,
bringing the edifice of the organisational information system crumbling down ----------------------
as faulty requirements analysis is a leading cause of systems failure and high
systems development costs. ----------------------
Analysing and assessing information requirements/needs, therefore, must ----------------------
be given the attention and importance it deserves.
----------------------
----------------------
----------------------
----------------------
Information 109
Notes The information requirements within an organisation, hierarchy level-
wise, activity-wise and function-wise, could be presented as follows:
----------------------
Strategic Senior Man-
---------------------- Level agers
---------------------- Management Middle Man-

Level agers
----------------------
Knowledge Knowledge &
---------------------- Level Data Workers
---------------------- Operational
Operational
Level Managers
----------------------
Manufacturing
Accounting
Resources
Human
Marketing
Sales &
Finance
----------------------
----------------------
---------------------- Fig. 5.9 Hierarchy Level/Activity/Function-Wise Information Requirements
---------------------- There are four reasons, which make it difficult to obtain a correct and
complete set of information requirements:
----------------------
1. The constraints on humans as information processors and problem-
---------------------- solvers.
2. The variety and complexity of information requirements.
----------------------
3. The complex patterns of interaction among users and analyst in defining
---------------------- requirements.
4. Unwillingness of some users to provide requirements.
----------------------
Information requirement is a detailed statement of the information needs
---------------------- that a new system must satisfy. It involves identifying who needs what
information, where, when and how.
----------------------
Information requirement analysis carefully defines the objectives of
---------------------- the new or modified system and develops a detailed description of the
functions that the new system is expected to perform. Requirements must
---------------------- consider economic, technical and time constraints as well as the goals,
procedures and decision processes of the organisation.
----------------------
----------------------
Information requirements need to be established at three levels for the
---------------------- purpose of developing/implementing organisational information system. The
three levels are as follows:
---------------------- ●● Organisational information requirements.
---------------------- ●● The requirements for each database defined by data models and other
specifications.
---------------------- ●● The detailed information requirements for an application.
---------------------- 1. Organisational-level information requirement: Information requirements

are required at the organisational level for information system planning, Notes
identifying applications and planning information architecture. It is,
however, imperative that the organisation has a clear understanding ----------------------
of both its long-term and short-term information requirements. The
process of organisation-level information requirement determination ----------------------
obtains, organises and documents a complete set of high-level strategic ----------------------
requirements. These requirements are then factored into databases and
subsystems, which can be scheduled for development. ----------------------
Obtaining organisational information requirements would mainly consist
----------------------
of the following steps:
a. Defining underlying subsystems: Every organisation, viewed ----------------------
as a system, would consist of a number of subsystems. These
----------------------
subsystems could be obtained by an interactive process of
discussing all the organisational functions/activities and arriving at ----------------------
the broad classification of the subsystems. This activity enables the
systems person to subdivide requirements determination by major ----------------------
organisational activity and make the process more
----------------------
b. Relating managers by subsystem matrix:After defining the underlying
organisational subsystems, the next step is to relate specific managers to ----------------------
organisational subsystems using a matrix format. The matrix can be
prepared by reviewing the major decision responsibilities of each ----------------------
manager − middle to top − and associating decision-making with ----------------------
specific subsystem. Thus, one gets a clear picture of the decision-
making responsibility, subsystem-wise, which, in turn, helps clarify ----------------------
responsibilities and identify those managers to be interviewed
relative to each subsystem. ----------------------
----------------------
Advertising
Accounting
Personnel/
Inspection
Marketing
Corporate
Corporate
Reporting
Market &
Inventory
Insurance
Appraisal
Recovery
Planning
Analysis
Product
Admin
----------------------
Credit
Client
Audit
Legal
Sales
----------------------
Mgrs
Mgr A ----------------------
Mgr B ----------------------
Mgr C
----------------------
Mgr D
----------------------
.
. ----------------------
. ----------------------
Mgr N
----------------------
----------------------
Fig. 5.10 Subsystem Matrix
----------------------
Information 111
Notes c. Defining and evaluating information requirements for organisational
subsystem: At this stage, the information requirements of each
---------------------- subsystem of the organisation are obtained by conducting group
interviews of those managers having major decision-making
---------------------- responsibility for the subsystems.
---------------------- While conducting interviews, three sets of questions are asked to
improve the chances of obtaining a complete set of requirements.
----------------------
The three sets of questions are:
---------------------- 1. What problem do the managers have and what information
is needed for solving them? What decisions do the managers
----------------------
make and what information do they need for decision-making?
---------------------- 2. What factors are critical to the success of the managers’
activity and what information do they need to achieve success
---------------------- in them or monitor progress?
---------------------- 3. What are the outputs (ends) from managerial activities and
what information do they need to measure effectiveness in
---------------------- achieving the outputs? What resources are used in producing
the outputs and what information is needed to measure
----------------------
efficiency in using the resources?
---------------------- (These questions are derived from three approaches, viz.,
business system planning, critical success factors and means-
----------------------
end analysis, which are discussed later).
---------------------- 2. Database requirements: Database requirements arise both from applications
and ad hoc queries. The overall architecture for the database to meet
---------------------- these requirements is defined as part of the organisational information
---------------------- requirement. Major classes of data are then defined and associated with
organisational processes that require them.
---------------------- The process of obtaining and organising a more detailed database
requirements can be divided into defining data requirement as perceived by
----------------------
the users (conceptual or logical requirements) and defining requirements
---------------------- for physical design of the database.
3. Application-level information requirement: An application, basically
---------------------- a subsystem of the overall information system, provides information
---------------------- processing for a specific organisational unit/function/activity. The process
for the determination of information requirement at the application level
---------------------- defines and documents specific information content as also design and
implementation requirements.
----------------------
Application-level information requirement are mainly of two types:
---------------------- ●● Social or behavioural requirements
---------------------- ●● Technical requirements
The social/behavioural requirements, based on job design, specify
----------------------
objectives and assumptions like:
----------------------

●● Individual role assumptions Notes
●● Responsibility assumptions
----------------------
●● Organisation design objectives
●● Organisational policies ----------------------
The technical requirements, based on information needed for performing ----------------------
task/job, specify inputs, outputs, stored data and information processes. The
structure and format of data are important in arriving at technical requirement. ----------------------
The technical requirement also includes interface requirements between ----------------------
the user system and the applications system. The interface requirements include
data presentation format, screen design, user language structure, feedback and ----------------------
assistance provisions, error control and response time.
----------------------
----------------------
Some of the major ways/tools/methods/techniques for assessing
information requirement/needs are: ----------------------
1. Asking questions: It is one of the more frequently used mode of assessing
----------------------
information requirement. Questions are asked to persons associated with
use of system/application to obtain their requirements. ----------------------
Some “asking” methods are mentioned in Table 5.3 with comments on
----------------------
conditions that suggest their use.
Table 5.3 Techniques for assessing Information Requirement ----------------------
Asking Method Description Conditions Suggesting Use ----------------------

Closed Each question has a defined set of When set of factual responses
Questions possible answers from are known not be able to recall all know all ----------------------
or respondent may which the possible responses. possibilities.
respondent selects. Analyst must ----------------------
Open Questions No answers provided. When feelings or opinions are
Respondent is allowed to formulate important or when respondent has ----------------------
responses. knowledge and ability to formulate
responses ----------------------
Brainstorming Group method for eliciting wide Used to extend boundaries of
variety of suggestions by open flow problem spaces of participants and ----------------------
of ideas. elicit non- conventional solutions.
Guided Participants are asked to define Used to guide brainstorming ----------------------
Brainstroming ideal solutions and then select the to ‘ideal’ solutions. Useful
best feasible ideal solution. where participants have system ----------------------
knowledge, but may be locked into
anchoring and adjustment behavior. ----------------------
Group The participants are asked for their Used to arrive at ‘best’ judgmental
Consensus estimates or expectations regarding estimate of variables that are ----------------------
significant variables Delphi difficult or impossible to estimate
Method and Group Forming are quantitatively.
examples ----------------------
One or more asking methods can be used either alone or in conjunction ----------------------
with other tools to assess information requirement.
----------------------
----------------------
Information 113
Notes 2. Deriving from an existing information system: Information systems,
currently in operation or having an operational history, can be used to
---------------------- arrive at information requirement for a proposed information system.
The types of existing information systems, which could be useful in this
---------------------- regards are:
---------------------- i. Existing system to be replaced by new system.
---------------------- ii. Existing system in another or similar organisation.
iii. Information available from handbooks, industry, specific studies or
----------------------
subject textbooks
---------------------- 3. Means-end analysis: The means-end analysis is a technique used
---------------------- for determining information requirements of the organisation at the
department and/or individual manager’s level.
---------------------- The technique separates the definition of ends (or outputs) generated by
---------------------- an organisational process, from the means (inputs) used to accomplish them. As
the end/output from one process is the input for next/some other process, the
---------------------- ends-means analysis brings out information requirement effectively.
---------------------- The ends-means analysis is based on the Systems Theory. A model of the
ends-means analysis is provided hereunder.
----------------------
Inputs
---------------------- Outputs
----------------------
----------------------
----------------------
Feedback - Effeciency
----------------------
Fig. 5.11 A Model of the Means-End Analysis
----------------------

----------------------
Fill in the blanks.
---------------------- 1. Information requirement is a detailed statement of the ___________
needs that a new system must ___________.
----------------------
2. Database requirements arise both from ___________ and
---------------------- ___________.
---------------------- 3. The ___________ is a technique used for determining information
requirements of the organisation at the department and/or individual
---------------------- manager’s level.
---------------------- 4. Asking questions is one of the more frequently used modes of
assessing ___________.
----------------------

Notes
Activity 4
----------------------
Visit an organisation and find out its various levels of information
----------------------
requirements.
----------------------
5.6 CRITICAL SUCCESS FACTORS ----------------------
Critical Success Factors (CSFs) are a small number of easily identifiable ----------------------
operational goals shaped by the industry, the firm, the manager and the broader
environment that are believed to assure the success of an organisation. If these ----------------------
goals are achieved, then the organisation’s success is assured. The CSFs are,
----------------------
therefore, used to determine the information requirements of an organisation.
The CSF technique involves a two-step process of eliciting the critical ----------------------
factors and then deriving information requirements. This can be used at both the ----------------------
organisation as well as the application level.
For arriving at the CSFs, the personal interview technique is generally ----------------------
used. The interviews are generally confined to the top/senior executives. The ----------------------
personal CSFs are then aggregated to arrive at the organisational CSFs, which
in turn bring out the information requirements. ----------------------
Table 5.4 Critical Success Factors: The Pros and Cons ----------------------
Pros Cons ----------------------
• It produces a smaller data set to • The data may be simply aggre-
----------------------
analyze. gated without any rigor / analy-
sis. ----------------------
• There is a clear focus. • There could be, generally, con-
----------------------
fusion between individual and
organizational CSFs. ----------------------
• It can be customized and tailor- • It may be biased towards Top
----------------------
made to suit specific industry/ Manager.
organization. ----------------------
• It takes into account the changing • It may not necessarily overcome
----------------------
environment. the impact of a changing envi-
ronment or changes in manager. ----------------------
• It may help bring about consensus • Undue emphasis on higher level
----------------------
among the Top Management. of hierarchy at the cost of lower
level functionaries. ----------------------
----------------------
----------------------
----------------------
Information 115
Notes
----------------------

1. The CSFs are used to determine the __________ of an organisation.
----------------------
2. CSF can be used at both the ____________ as well as the
---------------------- _________________level.
----------------------
---------------------- Activity 5
----------------------
Visit an organisation and discuss its critical success factors. Analyse the
---------------------- same and write it in your own words.
----------------------
5.7 BUSINESS SYSTEM PLANNING
----------------------
The Business System Planning (BSP) method, also called enterprise analysis,
---------------------- is a comprehensive methodology developed by IBM in the 1960s explicitly for
---------------------- establishing the relationship among large system development projects.
This method encompasses an analysis of organisation-wise information
---------------------- requirements by looking at the entire organisation in terms of organisation’s
---------------------- units’ functions, processes and data elements. It helps identify the key entities
and attributes in the organisation’s data. The BSP is typically a top-down,
---------------------- process-based method of determining information requirements as also
information architectures.
----------------------
Table 5.5 Business Systems Planning: The Pros and Cons
----------------------
Pros Cons
----------------------  It gives a comprehensive view of  It produces an enormous
the organization and of systems/ amount of data
---------------------- data uses/gaps.
----------------------  It is especially suitable for start-  The data collection is
up or massive change situations. expensive
----------------------
 It helps to produce an organiza-  It is difficult to use/
---------------------- tion-wideconsensus by involving analyze all the data col-
a large number of managers and lected.
----------------------
users of data
----------------------  It helps managers think about  Focus on use of existing/
information and its users available information
----------------------
rather than on critical
---------------------- objectives of manage-
ment.
----------------------

The various steps involved in the business system planning or enterprise Notes
analysis method are:
----------------------
●● Gaining the commitment
●● Preparing for the study ----------------------
●● Starting the study ----------------------
●● Defining business processes
----------------------
●● Defining data classes
●● Analysing current systems support ----------------------
●● Determining the executive perspective ----------------------
●● Defining findings and conclusions
----------------------
●● Developing recommendations and action plan
----------------------
●● Reporting results
Gaining the Commitment ----------------------
Preparing for the Study

----------------------
----------------------
Starting the Study
----------------------
Defining Business Processes
----------------------
Defining Data Classes
----------------------
Analysing current systems support ----------------------
Determining the Executive perspective ----------------------
----------------------
Defining findings and conclusions
----------------------
Reviewing Information Re- Defining Information Architecture ----------------------
source Management
Defining Architecture Priorities ----------------------
----------------------
Developing recommendations & action plan ----------------------
Reporting Results ----------------------
----------------------
Fig. 5.12 Steps in defining a Proposed Information Architecture in
Business Systems Planning ----------------------
[Source: Business Systems Planning - Information Systems Planning Guide, ----------------------
Third Edition, GE20- 0527, IBM Corporation, 983, p. 25]
----------------------
Information 117
Notes In addition to the major methods discussed earlier, there are certain other
methods for determining information requirement as follows:
----------------------
●● Normative analysis
---------------------- ●● Decision analysis
---------------------- ●● Strategy set transformation
●● Socio-technical analysis
----------------------
●● Process analysis
---------------------- ●● Input-Process-Output Analysis
----------------------
----------------------

1. Business systems planning is also called _________________.
----------------------
2. The BSP is typically a top-down, ______________ method of
---------------------- determining ___________ as also information architectures.
----------------------
---------------------- Summary
---------------------- ●● Data could also be described as unstructured raw facts, observations or
unevaluated messages in isolation. Data, per se, does not convey much or
---------------------- is not of much use.
---------------------- ●● Information, according to Davis and Olson, is “data that has been
processed into a form that is meaningful to the recipient and is of real or
---------------------- perceived value in current or prospective actions or decisions”.
---------------------- ●● Information should be summarised. The principle behind summarisation
is that too much information causes confusion, misunderstanding and
---------------------- misses the purpose.
●● Data is the raw material used for obtaining information. Data is derived
----------------------
from a number of sources, both internal as well as external. If the data
---------------------- is collected for the first time by the researcher, it is classified as primary
data.
---------------------- ●● Primary data could be gathered directly from the respondent.
---------------------- ●● Secondary sources of data/information include internal records as well as
external records.
----------------------
●● MIS should provide the information which has a surprise value and which
---------------------- reduces the uncertainty. It should simultaneously build the knowledge
base.
----------------------
●● For strategic decision-making, one needs strategic information, which is
---------------------- wholistic, unstructured and draws heavily from the external environment.
●● Tactical information would be used for medium/short-term planning by
---------------------- the middle management.

●● Operational information is mainly for/from people involved in the Notes
operations ranging from a “shift” to a day or a week or a month.
●● However, human beings cannot go on accepting unlimited inputs and keep ----------------------
coming up with unlimited outputs, as the human capacity to accept inputs ----------------------
and offer outputs is rather limited. If there is too much of input, the human
capacity will simply be unable to accept the input and correspondingly, ----------------------
the output will also be reduced/restricted.
----------------------
●● Allele Newell and Herbert Simon have proposed a model of human
problem-solving and human information processing system. According ----------------------
to the model, the human information processing system consists of a
processor, sensory inputs, motor output and three different memories − ----------------------
Long-Term Memory (LTM), Short-Term Memory (STM) and External ----------------------
Memory (EM).
●● Information requirement is a detailed statement of the information needs ----------------------
that a new system must satisfy. It involves identifying who needs what ----------------------
information, where, when and how.
●● Information requirements need to be established at three levels for the ----------------------
purpose of developing/implementing organisational information system.
----------------------
●● Critical Success Factors (CSFs) are a small number of easily identifiable
operational goals shaped by the industry, the firm, the manager and ----------------------
the broader environment that are believed to assure the success of an
----------------------
organisation.
●● Business System Planning (BSP) method, also called enterprise analysis, ----------------------
is a comprehensive methodology developed by IBM in the 1960s explicitly
----------------------
for establishing the relationship among large system development projects.
----------------------
Keywords
----------------------
●● Information: It is a sequence of symbols that can be interpreted as a
message. ----------------------
●● Primary data: Data observed or collected directly from first-hand
----------------------
experience.
●● Secondary data: Data collected by someone other than the user. ----------------------
●● Strategic decision-making: It describes the process of creating a ----------------------
company’s mission and objectives and deciding upon the courses of
action a company should pursue to achieve those goals. ----------------------
●● Ends-means analysis: A technique used for determining information ----------------------
requirements of the organisation at the department and/or individual
manager’s level. ----------------------
●● Critical success factors: Small number of easily identifiable operational ----------------------
goals shaped by the industry, the firm, the manager and the broader
environment that are believed to assure the success of an organisation. ----------------------
----------------------
Information 119
Notes
----------------------
1. Explain information and its characteristics.
---------------------- 2. Why is presentation of information important?
---------------------- 3. Explain the relationship between information and decision-maker.
---------------------- 4. What are the various sub-activities involved in information processing?

5. Discuss the information requirement at various levels.
----------------------
6. What are the different types of information?
----------------------
7. What are the different techniques used for assessing information
---------------------- requirement?
---------------------- 8. “Human is a information processor.” Explain.

9. What is a critical success factor?
----------------------
10. What is business system planning?
----------------------
----------------------
----------------------
Fill in the blanks.
---------------------- 1. Information, is like a finished product.
---------------------- 2. Information brings clarity and creates an intelligent human response in
the mind.
----------------------
---------------------- i. –c.
---------------------- ii. –a.
---------------------- iii. –b.
iv. –e.
----------------------
v. –d.
----------------------
Check your progress 2
---------------------- 1. Information is a quality product for organisations.
---------------------- 2. Secondary sources of data/information include internal records as well as
external records.
----------------------
3. Control information is concerned with small, specific part of the
---------------------- organisation.
---------------------- 4. Operational level covers a specific product, specific activity and a smaller
group/number of people.
----------------------

Match the following. Notes
i. – c.
----------------------
ii. – a.
----------------------
iii. – b.
iv. – d. ----------------------
1. Allele Newell and Herbert Simon have proposed a model of human
----------------------
problem-solving and human information processing system.
2. The computer information processing system consists of input, processor, ----------------------
output and storage.
----------------------
----------------------
Fill in the blanks.
1. Information requirement is a detailed statement of the information needs ----------------------
that a new system must satisfy. ----------------------
2. Database requirements arise both from applications and ad-hoc queries.
----------------------
3. The means-end analysis is a technique used for determining information
requirements of the organisation at the department and/or individual ----------------------
manager’s level.
----------------------
4. Asking questions is one of the more frequently used modes of assessing
information requirement. ----------------------
1. The CSFs are used to determine the information requirements of an
organisation. ----------------------
2. CSF can be used at both the organisation as well as the application level. ----------------------
Fill in the blanks.
----------------------
1. Business systems planning is also called enterprise analysis.
----------------------
2. The BSP is typically a top-down, process based method of determining
requirements as also information architectures. ----------------------
----------------------
----------------------
----------------------
----------------------
Information 121
Notes
Suggested Reading
----------------------
1. Davis, G, and M. Olson. 1985. Management Information Systems. New
---------------------- York: McGraw Hill.
----------------------
---------------------- 3. Prasad, L.M., and Usha Prasad. 2003. Management Information Systems.
---------------------- New Delhi. Sultan Chand & Sons.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Decision Support System
UNIT
6
Structure:
6.1 Introduction
6.2 Components of DSS
6.3 Structure and Types of DSS
6.4 Group Decision Support System
6.5 Executive Information System/Executive Support System
6.6 Expert Systems
6.7 Artificial Intelligence
Summary
Key Words
Suggested Reading
Decision Support System 123

Notes
Objectives
----------------------
----------------------
●● Describe DSS, its characteristics and types
---------------------- ●● Identify the factors responsible for success/failure of DSS
---------------------- ●● Explain executive information system and its characteristics and
components
----------------------
●● Discuss expert system and its components
---------------------- ●● State the characteristics, capabilities, applications and limitations of
---------------------- ES
●● Evaluate artificial intelligence and its applications
----------------------
---------------------- 6.1 INTRODUCTION

---------------------- In the 1970s, a number of business organisations began developing
information systems, which were significantly different from the information
----------------------
systems then in use. The new systems involved spending less resource − both
---------------------- human and financial. The new systems were interactive and were designed
to help specific end-users utilise data and models to discuss and divide—not
---------------------- solve—semi-structured and unstructured problems. These systems were called
the decision support systems and by the end-1980s, were extended to groups
----------------------
and entire organisations.
----------------------
6.2 COMPONENTS OF DSS
----------------------
Decision Support Systems (DSSs) are interactive information systems
----------------------
that rely on an integrated set of user-friendly hardware and software tools to
---------------------- produce and present information that is targeted to support the management in
the decision-making process.
----------------------
The decision support systems assist management decision-making by
---------------------- combining data, sophisticated analytical models and user-friendly software
into a single powerful system that can support semi-structured or unstructured
---------------------- decision-making. The decision support system is under user control, from early
inception to final implementation and daily use. Decision support system helps
----------------------
to close the information gap to enable managers to improve quality of their
---------------------- decisions.
While MIS is considered useful for structured decisions, DSS is considered
----------------------
to be more useful for decisions at the tactical/strategic levels, where decision-
---------------------- makers are often confronted with complex decisions which are beyond their
human abilities to synthesise properly the factors involved.
----------------------
DSS refers to a class of systems, which support in the process of decision-
---------------------- making and does not always give a decision itself. These systems can be used

to validate decision by performing sensitivity analysis on various parameters of Notes
the problem.
----------------------
The DSS has three basic components:
1. Database: The DSS database is a collection of current or historical data ----------------------
from a number of applications or groups. It is organised in such a manner
----------------------
that it provides easy access for a range of applications. Adequate precaution
is taken for ensuring data integrity while controlling the processing that ----------------------
keeps the data current. DSS does not create or update data, but rather uses
live organisational data so that the decisions could be made based upon ----------------------
actual conditions.
----------------------
It would also be imperative to remember that most DSS do not have
direct access to organisational data but usually use data that have been ----------------------
extracted from relevant databases—both internal and external—and
stored specifically for the DSS. ----------------------
2. Model base: A model is an abstract representation that illustrates the ----------------------
components or relationships of a phenomenon. A model can be physical
model, a mathematical model or a verbal model. DSS can and does make ----------------------
use of different types of models. The models could be broadly classified
----------------------
into three types.
Decision Support System ----------------------
----------------------
Behavioural Management Operations ----------------------
Model Science Model Research Model
----------------------
Fig. 6.1 Different Models of DSS ----------------------
i. Behavioural model: The focus of behavioural models of DSS
is on studying/understanding the behaviour/trends amongst the ----------------------
variables. Decision could then be arrived at with due regards to such ----------------------
behavioural relationships. Trend analysis, forecasting, co-relation,
regression are examples of behavioural models of DSS. ----------------------
ii. Management science model: These models are developed based ----------------------
upon the principles of management, management accounting and
econometrics, among others. Budgetary systems, cost accounting, ----------------------
capital budgeting, inventory management, etc. are examples of
management science model of DSS among others. ----------------------
iii. Operations research model: Operations research is basically ----------------------
application of mathematical formulae for arriving at optimum
solutions. As such, operations research models are mainly ----------------------
mathematical models. These models represent real-life problems/
----------------------
situations in terms of variables and parameters expressed in algebraic
equations form. Linear programming, ABC analysis, mathematical ----------------------
programming techniques, material requirement planning are some
of the examples of the operations research model. ----------------------

Notes 3. DSS software system: The DSS software system permits easy interaction
between the users of the system and the DSS database and model base.
---------------------- The DSS software system manages the creation, storage and retrieval of
models in the model base and integrates them with the data in the DSS
---------------------- database. The DSS software system also provides a graphic, easy-to-use,
---------------------- flexible user interface that supports the dialogue between the users and
the DSS.
----------------------
---------------------- While developing DSS, the focus must be on identifying a problem and a
set of capabilities that users consider useful in arriving at decisions about that
----------------------
problem. While developing DSS, therefore, care must be taken to ensure that
---------------------- the DSS possess the following desirable characteristics:
1. Should aid the decision-maker in decision-making.
----------------------
2. Should be able to address semi/un-structured decision-making situations.
----------------------
3. Should support decision-makers particularly at tactical/strategic levels.
---------------------- 4. Should be able to create general-purpose models, simulation capabilities
---------------------- and other analytical tools available to decision-maker.
5. Should enable users to use DSS without assistance from MIS/technical
----------------------
professionals.
---------------------- 6. Should be readily adapted to meet information requirement for any
decision environment.
----------------------
7. Should provide mechanism to enable rapid response to a decision-maker’s
---------------------- request for information.
---------------------- 8. Should have the capability to interface with corporate database.
---------------------- 9. Should be flexible to accommodate variety of management styles.

10. Should facilitate communication between/among various levels of
----------------------
decision-making.
---------------------- 11. Should have in-built flexibility and ability to evolve as user-sophistication
grows.
----------------------
12. Using of interactive methods are better advised.
----------------------
---------------------- DSS lays emphasis on providing capabilities to answer questions, such as
---------------------- what is? why? what if? what is best? what is good enough?
----------------------
----------------------
----------------------
----------------------

Table 6.1 Summarisation of DSS Approach Notes
DSS Provides Answers to questions ----------------------
Raw data and status access What is?
----------------------
General Analysis capabilities What is? or Why?
----------------------
Casual Models i.e. forecasting, diagnosis.) Why? What if ?
Solutions suggestions, evaluation What is best? What is good enough? ----------------------
Solution selection ----------------------
[Source: Tuchan E. Decision Support Systems and Expert Systems, 1995] ----------------------
To be able to provide the answers to questions as mentioned earlier, the DSS
----------------------
requires four core capabilities as mentioned in the Table below.
Table 6.2 Core Capabilities of DSS ----------------------
Representations Conceptualization of information used in making decisions, such as ----------------------
graphs, charts, lists, reports and symbols.
Operations Logical and mathematical manipulations of data such as assigning ----------------------
risks and values, simulating alternatives etc. ----------------------
Memory Aids Data bases, views of data, work space, libraries and other capabilities
to refresh/update memory. ----------------------
Control Aids Capability which allows user to control the DSS activities like software
permitting user control of memory representations, operations, ----------------------
training, tutorials, menus, function keys, help commands etc.
----------------------
----------------------
Fill in the blanks.
1. The DSS software system permits easy interaction between the ----------------------
________ of the system and the DSS database and _________ base.
2. A _____________ is an abstract representation that illustrates the ----------------------
components or relationships of a ____________. ----------------------
3. Decision support system helps to close the ____________ to enable
managers to improve quality of their ____________. ----------------------
4. ______________ is basically application of mathematical formulae
for arriving at optimum solutions. ----------------------
i. Representations a. Logical and mathematical manipulations of data such as
assigning risksand values, simulating alternatives etc. ----------------------
ii. Operations b. Databases, views of data, work space, libraries and
other capabilitiesto refresh/update memory ----------------------
iii. Memory aids c. It allows user to control the DSS activities like
----------------------
software permitting user control of memory
representations, operations, training ----------------------
iv. Control aids d. Conceptualisation of information used in making
decisions, such as graphs, charts, lists, reports and ----------------------
symbols

Notes
Activity 1
----------------------
Visit an organisation and discuss with the manager the importance of
----------------------
decision support system.
----------------------
6.3 STRUCTURE AND TYPES OF DSS
----------------------
The following factors are considered critical for the success/failure of the
----------------------
decision support system:
---------------------- 1. User training/involvement
---------------------- 2. User experience
3. Length of use (familiarity)
----------------------
4. Top management support
---------------------- 5. Orientation toward top management
6. Novelty of application
----------------------
7. Return on investment
----------------------
Table 6.3 Comparison between MIS & DSS
---------------------- MIS DSS
The focus is on structured tasks and Focus is on semi/unstructured tasks,
----------------------
routine decisions. which require managerial judgment.
---------------------- Identifies information requirement. Establishes tools to be used for
decision process.
---------------------- Emphasis is on data storage. Emphasis is on data manipulation.
Delivers system based on frozen Follows iterative process hence
----------------------
requirements current data can be used.
---------------------- Provides only indirect access to data Managers have direct access to data.
by managers
---------------------- Reliance on computer expert. Reliance on managerial judgment
Access to data possibly requiring a Direct access to computer and data.
---------------------- ‘wait’ for manager’s turn. Hence no wait.
---------------------- MIS manager may not completely Manager knowing nature of decision
understand the nature of decision. and decision making environment
---------------------- Emphasis is on efficiency. Emphasis is on effectiveness
---------------------- Structure of DSS
DSS is composed of four major components:
----------------------
1. Database and its management.
---------------------- 2. Model base and its management.
---------------------- 3. Hardware.
4. User system interface.
----------------------
----------------------

Users interface with the Dialogue Management components, which is a Notes
set of programs that manages the user interface and translates the user’s requests
into commands for the other two components. ----------------------
The Model Management component maintains and executes models of ----------------------
business activity. Examples of such models are spreadsheets, financial models
and simulation models. ----------------------
The Data Management component maintains DSS data. Its tasks include ----------------------
managing the DSS database, which contains both intermediary and final results
of DSS studies and managing interfaces to enterprise data, which is external to ----------------------
the DSS and data from external sources.
----------------------
Model
Base
----------------------
----------------------
----------------------
----------------------
Model
Management ----------------------
----------------------
----------------------
Dialogue ----------------------
Management
----------------------
----------------------
Data ----------------------
Management
----------------------
----------------------
----------------------
External
----------------------
DSS Enterprise
Database Data Source
Data
----------------------
Fig. 6.2 Fundamental DSS Program Structure ----------------------
Components of DSS Programs ----------------------
1. Dialogue management: It has three subsystems. The user interface
----------------------
subsystem manages the physical user interface. It controls the appearance
of the screen, accepts input from the user and displays the results. It ----------------------
also checks the user commands for correct syntax. The dialogue control
subsystem maintains a processing context with the user. ----------------------

Notes The request translator is to translate the user command into actions for
the model management or data management components into a format
---------------------- understandable by the user. Since flexibility and ease of use are important
in DSS, GUIs are becoming the standard for DSS applications. Database
---------------------- is normally through SQL.
---------------------- 2. Model management: The command processor receives the commands
from the dialogue management components and delivers those commands
----------------------
from the dialogue management components to either the model base
---------------------- management system or the mode execution system.
b. Model Management
----------------------
Model Base
Model
---------------------- Base
Management
---------------------- Command Model

Processor Execution
----------------------
Database
---------------------- a. Dialogue Management
Interface
----------------------
User Dialogue Request
c. Data Management
---------------------- Interface Control Translator
---------------------- Query/Database
Command
Interpreter
----------------------
Data
---------------------- Local DSS DBMS Dictionary
Management
---------------------- Interface to Data
Services
----------------------
Enterprise
Data
---------------------- External
Data
----------------------
Fig. 6.3 Components of DSS Program
----------------------
3. Database management: It stores and manipulates the database as directed
---------------------- by either the model management component or the dialogue management
---------------------- component. Secondly, it maintains an interface with data sources that are
external to the DSS, viz., TPS database, inter-enterprise systems, external
---------------------- data utilities and other DSS applications.
---------------------- Types of Decision Support Systems

The different types of decision support systems are discussed below.
----------------------
1. Status inquiry systems: The number of decisions in the operational
---------------------- management and some at the middle management are such that they are
based on one or two aspect of decision-making situations. It does not call
----------------------

for any elaborate computation, analysis, choice. If the status is known the Notes
decision is automatic.
2. Data analysis system: Decision systems are based on comparative ----------------------
analysis and make use of formula or an algorithm. These processes are not ----------------------
structured. The use of simple data processing tools and business rules are
required to develop this system. Examples include personnel inventory ----------------------
system, cash flow analysis, etc.
----------------------
3. Information analysis system: Data is analysed and the information
reports are generated. Reports can have exceptions. These reports are used ----------------------
for assessment of situation. Examples include sales analysis, accounts
receivable, etc. ----------------------
4. Accounting system: These systems are not necessarily required for ----------------------
decision-making, but they are desirable to keep track of the major aspects
of the business or a function. These system account items such as cash, ----------------------
inventory, personnel and relate it to a norm or norms developed by the ----------------------
management for control and decision.
5. Model-based system: These systems are simulation models or ----------------------
optimisation models for decision-making. These decisions, generally are
----------------------
one time and infrequent and provide general guidelines for operation or
management. Examples include product mix, job scheduling rules, etc. ----------------------
Table 6.4 Decision and Type of System required
----------------------
Decision Type of system required
Selection of vendor Inquiry System ----------------------
Procurement Inquiry System ----------------------
Pricing Data analysis
----------------------
Selection of vendor based on price, Information analysis system
quality, performance
----------------------
Selection of capital asset Return on investment analysis system
Inventory rationalization Valuation of inventory and accounting ----------------------
system
----------------------
Management of inventory within Inventory optimization model
various financial and stocking ----------------------
constraints
----------------------

1. In ____________, the focus is on structured tasks and routine ----------------------
decisions.
2. ____________ establishes tools to be used for decision process. ----------------------
3. The _______________ component maintains and executes models of
----------------------
business activity.
4. The user interface subsystem manages the ______________. ----------------------

Notes
Activity 2
----------------------
Visit an organisation and find out how implementing a DSS in the organisation
----------------------
would change its working system.
----------------------
---------------------- 6.4 GROUP DECISION SUPPORT SYSTEM
---------------------- We have already discussed the various aspects of decision support system,
where the respective executive/decision-maker arrives at effective decisions by
---------------------- using a DSS. Thus, the DSS is designed for and used more by the individual
decision-maker.
----------------------
It was, however, felt that in the contemporary business environment,
---------------------- decision-makers have to increasingly work in groups as group-working/group
decision-making has certain advantages like:
----------------------
i. More comprehensive consideration of the problems and related issues.
---------------------- ii. Better group understanding of the problem and rationale for the decision.
---------------------- iii. Reduced likelihood of “quibbling” using “20/20 hindsight”.
iv. Greater group commitment to the decision.
----------------------
v. Improved communication to/with the implementers ensuring better
---------------------- implementation.
Hence, the DSS application was suitably extended/expanded to facilitate
----------------------
group decision environment and the DSS for a group came to be known as
---------------------- the Group Decision Support System (GDSS). It is also referred to as a Group
Support System or a Computerised Collaborative Work System (CCWS). We
---------------------- would, however, refer to this extended/expanded form of DSS as the GDSS.
---------------------- Under the GDSS environment, the members of the group utilise the DSS
as a group and the user interface is expanded to include the computers, which
---------------------- are suitably connected/networked. In this way, under the GDSS, members of the
group can communicate using their computers with DSS or with other members
----------------------
of the group to facilitate optimal decision-making.
---------------------- According to De Sanctis and Gallupe, “GDSS is an interactive computer-
---------------------- based system that facilitates the solution of unstructured problems by a set of
decision-makers working together as a group”.
---------------------- GDSS Components
---------------------- The GDSS components are similar to that of the DSS components. The
GDSS has three basic components, viz., the hardware, the software, the people
---------------------- and procedure as mentioned below:
----------------------
----------------------
----------------------

Hardware  Input/Output devices Notes
 Audio Visual Instruments
----------------------
 Electronic Display Board/Screens
 Computer Equipments ----------------------
 Conferencing Infrastructure ----------------------
 Network Systems enabling the linking of different
sites/locations and participants to each other. ----------------------
Software  Database and DBMS ----------------------

(Generally referred  Modeling Capabilities ----------------------
as a “Groupware”  Dialogue Management with multiple-user access.
or “Workgroup ----------------------
Software”)
----------------------
People and  Trained Facilitator/s
----------------------
Procedure  Decision-making participants
 Support Staff ----------------------

 Laid down procedure and modus operandi
----------------------
In addition, communication technology is the most important component
to facilitate participation by the group members from various sites/locations. ----------------------
Care must, however, be taken to ensure that the technology supports the group ----------------------
and does not dominate it.
GDSS Configuration ----------------------
The typical GDSS configuration is illustrated in Figure 6.4. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 6.4 GDSS configuration ----------------------

Notes GDSS Features
As the GDSS is a group decision-facilitator and extension/expansion of
----------------------
DSS, most of the features/characteristics of the GDSS are similar to that of the
---------------------- DSS. In addition, GDSS must provide for:
i. Anonymous inputs without identifying the source of inputs to enable
----------------------
group decision-makers to concentrate on the merits of the input without
---------------------- considering who gave it.
ii. Parallel communication/s to enable every group member to address issues
---------------------- or make comments/suggestions simultaneously.
---------------------- iii. Automated recordkeeping by anonymously recording each comment that
is entered into the PC by the group member for future review and analysis.
----------------------
Factors in GDSS Success
---------------------- The success of GDSS would depend upon the quality of the meetings/
discussions/interface being “productive”, ensuring more effective and efficient
----------------------
use of time and ability of the group members to produce the desired results in
---------------------- fewer meetings/interfaces.
This, in turn, would depend upon the following elements:
----------------------
i. Improved pre-planning.
----------------------
ii. Increased participation.
---------------------- iii. Open, collaborative meeting atmosphere.
iv. Criticism-free idea generation.
----------------------
v. Idea organisation and evaluation.
---------------------- vi. Setting priorities and making decisions accordingly.
---------------------- vii. Documentation/recordkeeping of meetings.
viii. Access to external information, if and when required.
----------------------
ix. Preservation of “organisational memory”.
----------------------
----------------------

---------------------- 1. GDSS is a group ___________ and extension/expansion of
_____________.
----------------------
2. The success of GDSS would depend upon the quality of the
---------------------- _____________ being “productive”.
----------------------
----------------------
Activity 3
---------------------- Visit an organisation and find out how GDSS helps when more than one
decision-maker has to make a decision.
----------------------

6.5 EXECUTIVE INFORMATION SYSTEM/EXECUTIVE Notes
SUPPORT SYSTEM ----------------------
The Executive Information System/Executive Support System (EIS/ ----------------------
ESS) is a relatively new decision-facilitating technology. EIS/ESS has emerged
in response to the emerging dynamic situation where the top executives are ----------------------
bombarded with huge amount of data, effectively leading to “information
----------------------
overload” with the resultant understandable confusions and dilemma.
EIS/ESS emerged, indeed the emergence became imperative, due ----------------------
to various factors, both internal and external, in the corporate operating
----------------------
environment worldwide.
According to Watson and others, EIS/ESS has become imperative due to ----------------------
certain internal and external factors as enumerated below.
----------------------
1. Internal factors
----------------------
l Need for timely information.
l Need for improved communications. ----------------------
l Need for access to operational data. ----------------------
l Need for rapid status updates on various business activities.
----------------------
l Need for access to corporate database.
l Need for more accurate information. ----------------------
l Need for ability to identify historical trends.
----------------------
2. External factors
----------------------
l Increasing and intensifying global competition.
l Rapidly changing business environment. ----------------------
l Need to be more pro-active. ----------------------

l Need to access external database. ----------------------
l Increasing Government regulations (though active Government
----------------------
role is shrinking).
EIS/ESS is developed to support decision-making actions/processes at ----------------------
the top executive/ management level. EIS/ESS is used by the top executives as ----------------------
they require specialised support when/while making strategic decisions. EIS/
ESS is required and used at fairly senior level including members of the board ----------------------
of directors and executives with the titles of Chief Executive Officer (CEO),
Chief Operating/Operations Officer (COO), Chief Finance Officer (CFO) and ----------------------
the like. ----------------------
While, earlier, most of the top executives were reluctant users of
Information Technology, the new generation of tech-savvy top executives is not ----------------------
only open to, but actually expects support from computer-based information ----------------------
systems like EIS/ESS.
----------------------

Notes EIS/ESS is, in a way, specialised DSS that includes all hardware, software,
data, procedures and people used to assist senior/top-level executives within the
---------------------- organisation. The primary goal of EIS/ESS is to obtain data from a variety of
sources, integrate and aggregate that data and display the resulting information
---------------------- in an easy-to-use comprehensibl
---------------------- EIS Definition
---------------------- An EIS is “a computer-based system that serves the information needs of
top executives. It provides rapid access to timely information and direct access
---------------------- to management reports. It is very user-friendly and is supported by graphics,
providing exception reporting and drill-down capabilities. It can also be easily
----------------------
connected with online information services and electronic mail”. (Drill-down
---------------------- capability is an important capability that enables the users to break down data
in details. It enables users to identify both problems and opportunities).
----------------------
An EIS is “a computer-based information system that combines the
---------------------- decision-maker’s imagination and judgment with the computer’s ability to store,
retrieve, manipulate, compute and report internal and external information”.
----------------------
ESS Definition
---------------------- An ESS is “a comprehensive executive support system that goes beyond
---------------------- the EIS to include communications, office automation, analysis support and
intelligence”.
---------------------- EIS/ESS Characteristics
---------------------- Broadly, for the sake of convenience, the characteristics could be divided
into three categories:
----------------------
1. Informational characteristics
----------------------
l Flexibility and ease of use.
---------------------- l Provides timely information with short response time and quick
---------------------- retrieval.
l Produces correct information.
----------------------
l Produces relevant information.
----------------------
l Produces validated information.
---------------------- 2. User interface/orientation characteristics
---------------------- l Contains sophisticated “self-help”, user-friendly interfaces
including Graphic User Interface (GUI).
----------------------
l Facilitates access from many places.
---------------------- l Provides secure, reliable and confidential access and access
---------------------- procedure.
l Customised/tailor-made to suit the management style of individual
----------------------
executives.
----------------------

3. Managerial/executive characteristics Notes
l Provides support for defining overall vision, mission and strategy as
it has a strategic/futuristic orientation. ----------------------
l Provides support for strategic management (strategic planning/ ----------------------

organising/controlling/staffing, etc.).
----------------------
l Can help with situations that have a high degree of risk/uncertainty.
----------------------
l Is linked with value-added business processes.
l Supports the need/access for/to the external data/databases. ----------------------
l Has capabilities like “drill-down”, “exception reporting” and ----------------------
“critical success factors” identification.
----------------------
l Has a high result/performance orientation.
EIS/ESS Capabilities ----------------------
1. It provides access to aggregated/macro/global information. ----------------------
2. It enables the user to use external data extensively. ----------------------
3. It enables to address ad hoc queries/analysis.
----------------------
4. It incorporates graphic and text in the same display to provide better view.
5. It shows trends, ratios and deviations. ----------------------
6. It provides access to historical as also the latest data. ----------------------

7. It highlights problem indicators and supports open-ended problem ----------------------
explanation with written interpretations.
----------------------
8. It is organised around critical success factors and provides “Management
by Exception” Reports. ----------------------
9. The information can be presented in a hierarchical structure, thereby
----------------------
facilitating detailed information at various levels, along with drill-down
capabilities. ----------------------
10. It filters, compresses and tracks critical data and also provides forecasting
----------------------
capability.
11. It can utilise hypertext and hypermedia. ----------------------
12. It provides a generalised computing and telecommunications capacity ----------------------
that can be applied to a changing array of problems.
----------------------
EIS/ESS Benefits
With the type of capabilities, as mentioned earlier, the EIS/ESS confers ----------------------
lots of benefits upon the users − both individual and corporate. The benefits of
----------------------
EIS/ESS can be summarised as follows:
1. Facilitates the attainment of organisational objectives. ----------------------
2. Facilitates access to information by integrating many sources of data and ----------------------
provides broad, highly aggregated information. This, in turn, facilitates
broad, aggregated “perspective” and “context”. ----------------------

Notes 3. Improves the users’ “productivity” by enabling more effective decision-
making.
----------------------
4. Allows the anticipation of problems/opportunities and facilitates pro-
---------------------- active rather than a re-active response.
5. Increases communication capability and quality.
----------------------
6. Facilitates better strategic planning and control.
----------------------
7. Facilitates finding the cause of a problem in a “root-cause analysis” mode
---------------------- rather than “fix-it” mode.
---------------------- 8. Meets the needs of the executives in time-effective and time-efficient

manner.
---------------------- 9. According to Rockart and Treacy, EIS/ESS also helps in providing
---------------------- answers to questions like:
a.
What business the organisation should be in?
----------------------
b.
What are the competitors doing ?
---------------------- c.
What new acquisitions/activities would protect the organisation
from business cycles/business swings?
----------------------
d. Which units should the organisation divest/spin-off to raise cash for
---------------------- further expansion/diversification/acquisition ?
---------------------- 10. The EIS/ESS provides competitive advantage.
11. The most important benefit, of course, is that EIS/ESS encourages the
---------------------- development of a more open and active information culture, as EIS/ESS
---------------------- improves the use of the strategic information resource that are at the
disposal of the organisation for working out both strategic and tactical
---------------------- decisions.
----------------------
----------------------
Fill in the blanks.
----------------------
1. The Executive Information System/Executive Support System is a
---------------------- relatively new _____________ technology.
---------------------- 2. ______________ facilitates the attainment of organisational
objectives.
----------------------
----------------------
Activity 4
----------------------
By visiting an organisation, try to find out how EIS/ESS helps them.
----------------------
----------------------
----------------------

6.6 EXPERT SYSTEMS Notes
Expert systems were among the most exciting computer applications ----------------------
to emerge during the 1980s. The ES technology basically derives from the
----------------------
research discipline of Artificial Intelligence, a branch of computer science
concerned with the design and implementation of programs which are capable ----------------------
of emulating human cognitive skills such as problem-solving, visual perception
and language understanding. An expert system mimics human expertise in a ----------------------
narrow domain to solve specific problems in a well-defined area.
----------------------
Expert System: Definitions
----------------------
An expert system has been defined differently by different people. As
such, there is no precise definition of an expert system that is guaranteed to ----------------------
satisfy everyone.
----------------------
However, while in a narrower perspective, ES technologies make
computer programming easier and more effective, in a broader perspective, ES ----------------------
represents the first step in a process that will transform computing by moving
programming technologies beyond numerical programming into a realm of ----------------------
logical, symbolic programming. ----------------------
More specifically, the following definitions could be noted.
----------------------
According to Peter Jackson, “An expert system is a computer programme
that represents and reasons with knowledge of some subject specialist with a ----------------------
view to solving problems or giving advice”.
----------------------
Robert Bowerman and David Glover have defined expert system as “highly
specialised computer systems capable of simulating that element of a human ----------------------
specialist’s knowledge and reasoning that can be formulated into knowledge
----------------------
chunks, characterised by a set of facts and heuristic rules”. (Heuristic rules are
rules of thumb accumulated by a human expert through intensive problem- ----------------------
solving in the domain of a particular task).
----------------------
According to Bruce Buchanan and Reid Smith, an expert system is a
computer program that − ----------------------
i. Reasons with domain-specific knowledge that is symbolic as well as ----------------------
numerical.
ii. Uses domain-specific methods that are heuristic (plausible) as well as ----------------------
following procedures that are algorithmic (certain). ----------------------
iii. Performs well in the problem area.
----------------------
iv. Explains or makes understandable both what it knows and the reasons for
its answers. ----------------------
v. Retains “flexibility”. ----------------------
Expert system, according to Hossein Bidgoli, “is a series of computer ----------------------
programmes that attempt to mimic human thought, behaviour in a specific area
that has successfully been solved by human experts”. ----------------------

Notes Expert System Components
The various components of the expert system is illustrated in Figure 6.5.
----------------------
---------------------- Description of Inference

new course Engine
----------------------
USER User
Interface
---------------------- Knowledge
Advice and Base
---------------------- explanation
---------------------- Knowledge Acquisition

Base Facility
----------------------
----------------------
----------------------
Experts
----------------------
---------------------- Fig. 6.5: ES Components

Expert Systems: Capabilities
----------------------
To be effective and improve the quality of problem-solving, an expert
---------------------- system should possess the following capabilities:
---------------------- i. Capturing of expertise.
ii. Codifying the expertise.
----------------------
iii. Duplicating and transferring the expertise.
----------------------
iv. Saving the human expert’s time.
---------------------- v. Saving on maintenance and updating of the knowledge base.
---------------------- Expert Systems: Characteristics
---------------------- Ralph Stair and George Reynolds have identified the following
characteristics of the expert system:
----------------------
1. Ability to explain their reasoning or suggested decisions.
---------------------- 2. Ability to display “intelligent” behaviour.
---------------------- 3. Ability to draw conclusions from complex relationship.
4. Ability to provide “portable knowledge”.
---------------------- 5. Ability to deal with certainty.
---------------------- 6. Not widely used or tested, due to difficulty of use.
7. Limited to relatively narrow problems.
----------------------
8. Inability to deal with “mixed knowledge”.
---------------------- 9. Inability to refine own knowledge base.
---------------------- 10. Difficult to maintain.

Expert Systems Applications Notes
Expert systems can be used to solve problems in practically every field
----------------------
and discipline. Such systems can also help in various stages of problem-solving
process. As such, expert systems have been developed for a variety of complex ----------------------
applications. A few illustrative applications of expert systems are:
----------------------
1. Aerospace technology (NASA)
2. Airline/civil aviation (scheduling/routing) ----------------------
3. Banking and finance (credit card limits, etc.) ----------------------
4. Criminology ----------------------
5. Education
----------------------
6. Food industry
----------------------
7. Health-care management (e.g., diagnosing blood infections)
8. Manufacturing design and assembly ----------------------
9. Geological data analysis and interpretation for oil exploration drilling ----------------------
sites
----------------------
10. Personnel management
----------------------
11. Security analysis/portfolio management
12. Tax planning ----------------------
13. Foreign exchange management ----------------------
14. Gene-cloning experiments ----------------------
15. Troubleshooting telephone network
----------------------
16. Configuring computer systems
----------------------
17. Strategic goal setting
18. Quality control and monitoring ----------------------
Expert Systems: Limitations ----------------------
1. Expert systems function in the domain of extracted, cognitive, logical ----------------------
thinking process. As such, ESs are not generally adept at managing highly
sophisticated sensory inputs. ----------------------
2. As ESs are based on a narrow range of codified domain, they may not be ----------------------
able to tackle multi-dimensional problems.
----------------------
3. Due to the narrow range of knowledge incorporated in the ESs, they
typically do not respond well to situations outside their range of expertise. ----------------------
Hence, they remain what they are − Machine Experts!
----------------------
4. A typical ES may not be able to make available common sense knowledge
and broad-ranging contextual information/s. ----------------------
----------------------

Notes 5. ESs typically lack human self-awareness and self-analysis tools.
Introspection is not available as ESs also happen to be “non-self-referral”
---------------------- systems.
---------------------- 6. If a problem is not specific and has not been solved previously by an
expert or a number of experts, then that problem is not considered suitable
---------------------- for the expert systems’ implementation.
---------------------- ESs are capable of performing only within a specific, logical-oriented
realm of expertise, and herein lies the major limitation of the expert
---------------------- systems, as computers basically only have memory and not necessarily,
intelligence!
----------------------
When to go in for expert systems?
----------------------
Expertise, as we all know, has both its price as well as value. No wonder
---------------------- then that it is difficult, expensive and time-consuming to develop sophisticated
expert systems. It would, therefore, be desirable to weigh the following aspects/
---------------------- considerations before an organisation decides to opt for an expert system:
---------------------- 1. Will the system help reduce risk significantly?
---------------------- 2. Will the system provide a high pay-off?
3. Will the system performance be more consistent than human experts?
----------------------
4. Will the system enable the expertise to be made available at multiple
---------------------- locations simultaneously?
---------------------- 5. Is the expertise really rare or expensive?
---------------------- 6. Will the system enable developing the solution faster than human experts?

----------------------
Fill in the blanks.
----------------------
1. The ES technology basically derives from the research discipline of
---------------------- ________________ and can be used for aerospace technology.
---------------------- 2. ESs are capable of performing only within a specific, _____________

realm of expertise.
---------------------- 3. Expert systems function in the domain of ____________, cognitive,
---------------------- ______________ process.
----------------------
Activity 5
----------------------
---------------------- By visiting relevant websites, find out any two examples of expert systems.
----------------------
----------------------

6.7 ARTIFICIAL INTELLIGENCE Notes
Artificial Intelligence (AI) is an area, which has over half a century of ----------------------
history. AI began in earnest with the emergence of the computers during the late
----------------------
1940s. It was the ability of these machines to store large amount of data and
process it into information at very high speed, hitherto unimaginable, that gave ----------------------
researchers the vision of building systems which could imitate/emulate some, if
not all, human abilities. ----------------------
While some groundwork had already been initiated earlier, it was not until ----------------------
the 1980s that AI received popular economic and managerial acclaim. It was
during this period that AI went through the transition from a primary research ----------------------
area to potential commercial applications. It was only then that AI was accepted
as an emerging technology and as such attracted considerable attention. ----------------------
AI system does not replace people. They liberate experts from solving ----------------------
common/simple problems, leaving the experts to solve complex problems.
AI system helps to avoid making same mistakes and to respond quickly and ----------------------
effectively to a new problem situation. ----------------------
Artificial Intelligence: Meaning
Artificial Intelligence is a technology, which helps/facilitates the ----------------------
application of computers to areas that require knowledge, perception, reasoning, ----------------------
understanding and cognitive abilities, which distinguish the human behaviour
from machines like computers. ----------------------
It is the science and engineering of making intelligent machines, especially
----------------------
intelligent computer programs. It is related to the similar task of using computers
to understand human intelligence. ----------------------
Before moving into further discussion about AI, it would be desirable
to compare and understand the attributes of Natural (Human) Intelligence and ----------------------
Artificial (Machine) Intelligence. ----------------------
Table 6.6 Comparison between Natural Intelligence and Artificial Intelligence
----------------------
Attributes Natural Artificial
Intelligence Intelligence
----------------------
Ability to use sensors (eyes, ears, touch, smell) High Low
----------------------
Ability to be creative and imaginative High Low
Ability to learn from past experiences High Low ----------------------
Ability to be adaptive High Low ----------------------
Ability to afford the cost of acquiring intelligence High Low
----------------------
Ability to use a variety of information sources High High
Ability to acquire a large amount of external information High High ----------------------
Ability to make complex calculations Low High
----------------------
Ability to transfer information Low High
Ability to make a series of calculations, rapidly ----------------------
and accurately Low High
----------------------

Notes Pre-Requisites of Artificial Intelligence
To be artificially intelligent and to be able to come out with human-like
----------------------
responses, computer must possess the following requisite features:
---------------------- 1. Understand what “common sense” is.
---------------------- 2. Understand “facts” and relationships among “facts”.
---------------------- 3. Be able to manipulate “qualitative” data.

4. Be able to deal with exceptions and discontinuity.
----------------------
5. Be able to interface with humans in a “free-format” fashion.
----------------------
6. Be able to deal with new situations based on previous learning.
---------------------- AI: Definitions
---------------------- There are several definitions of AI. The following are some of them.
---------------------- According to George Luger and William Stabblefied, “AI is a branch of

computer science that is concerned with the automation of intelligent behavior”.
---------------------- Hussein Bidgoli defines AI as “a series of related technologies that attempt
---------------------- to simulate and reproduce human behaviour, including thinking, speaking,
feeling and reasoning”.
----------------------
According to Dan Patterson, “AI is a branch of computer science
---------------------- concerned with the study and creation of computer systems that exhibit some
form of intelligence: systems that learn new concepts and tasks, systems that
---------------------- can reason and draw useful conclusions about the world around us, systems
that can understand natural languages and perceive and comprehend a visual
----------------------
scene and systems that perform other types of feats that require human types of
---------------------- intelligence”.
The AI Canvas
----------------------
AI today not only focuses on computer science and computers, but
---------------------- encompasses a group of related technologies and specialty areas like:
---------------------- ●● Expert systems
●● Fuzzy logic
----------------------
●● Intelligent agents
----------------------
●● Natural language processing
---------------------- ●● Neural networks
---------------------- ●● Robotics
●● Speech recognition
----------------------
●● Vision-recognised systems
---------------------- ●● Learning systems
---------------------- Nielson, a pioneer in the area of AI, likes to characterise the various areas/
components of AI in terms of what he calls the “Onion Model” as illustrated
---------------------- hereafter.

Notes
Natural Language
Processing
----------------------
----------------------
Modelling and
Heuristic Representation ----------------------
Search of Knowledge
Problem Solving
and Planning
Computer
Vision
----------------------
AI Language Common
and Tools Sense ----------------------
Reasoning
and Logic ----------------------
----------------------
Expert Systems ----------------------
----------------------
Fig. 6.6: The AI Onion Model
----------------------
Artificial Intelligence Applications
While the technology aspects of AI are almost in place by now, initial ----------------------
applications have clearly demonstrated that AI can provide great leverage for ----------------------
corporate organisations.
----------------------
Some of the illustrative AI applications are as follows:
1. Manufacturing/production planning and scheduling. ----------------------
2. Project management. ----------------------
3. Factory management.
4. Sales, distribution and field services. ----------------------
5. Diagnosis and trouble-shooting. ----------------------
6. Financial management.
----------------------
7. Currency/interest rates, SWAPs.
8. Portfolio management. ----------------------
9. Asset liability management. ----------------------
10. Reading/interpreting financials.
----------------------
11. Criminology.
12. Geology (drilling/oil exploration sites). ----------------------
Precautions ----------------------
Notwithstanding the advances in AI, it must be remembered that AI
----------------------
systems are not to replace human decision-making completely. They are meant
to replicate/emulate human decision-making for certain types of clearly and ----------------------
well-defined problems − the chess matches between Gary Kasporov (Natural
Intelligence) and Deep Junior (Artificial Intelligence) being a classic example ----------------------
of AI/ES.
----------------------

Notes Like other computer-based information systems, the overall purpose of AI
systems/applications in business is to help the organisations/managers achieve
---------------------- the goals.
---------------------- Al has, no doubt, started getting acceptance and credibility. The success
of AI as a mass-market technology, however, would depend upon a number of
---------------------- practical factors like:
---------------------- ●● Cost.
●● Personnel with requisite skills.
----------------------
●● Corporate management attributes.
---------------------- ●● The demonstration of a variety of commercial AI success stories to be a
---------------------- role model for others to follow.

----------------------
Fill in the blanks.
----------------------
1. AI liberates experts from solving common/simple problems, leaving
---------------------- the experts to solve _______________.
---------------------- 2. AI is a branch of computer science concerned with the study and

creation of _____________ that exhibit some form of _____________.
----------------------
---------------------- Activity 6
----------------------
Who would perform an operation on a patient better, a doctor in flesh and
---------------------- blood or a robot with AI? Justify you answer.
---------------------- Summary
----------------------
●● Decision Support Systems (DSSs) are interactive information systems
---------------------- that rely on an integrated set of user-friendly hardware and software
tools to produce and present information that is targeted to support the
---------------------- management in the decision-making process.
---------------------- ●● DSS refers to a class of systems, which support in the process of decision-
making and does not always give a decision itself. These systems can be
---------------------- used to validate decision by performing sensitivity analysis on various
parameters of the problem.
----------------------
●● The DSS software system permits easy interaction between the users of
---------------------- the system and the DSS database and model base.
---------------------- ●● The Model Management component maintains and executes models of
business activity. Examples of such models are spreadsheets, financial
---------------------- models and simulation models.
----------------------

●● The DSS application was suitably extended/expanded to facilitate group Notes
decision environment and the DSS for a group came to be known as the
Group Decision Support System (GDSS). It is also referred to as a Group ----------------------
Support System or a Computerised Collaborative Work System (CCWS).
----------------------
●● GDSS is a group decision-facilitator and extension/expansion of DSS.
Most of the features/characteristics of the GDSS are similar to that of the ----------------------
DSS.
----------------------
●● The Executive Information System/Executive Support System (EIS/ESS)
is a relatively new decision-facilitating technology. ----------------------
●● The Expert System technology basically derives from the research ----------------------
discipline of Artificial Intelligence, a branch of computer science
concerned with the design and implementation of programs which are ----------------------
capable of emulating human cognitive skills such as problem-solving,
visual perception and language understanding. ----------------------
●● Expert systems can be used to solve problems in practically every field ----------------------
and discipline.
----------------------
●● Artificial Intelligence (AI) is an area, which has over half a century of
history. AI began in earnest with the emergence of the computers during ----------------------
the late 1940s. It was the ability of these machines to store large amount
of data and process it into information at very high speed, hitherto ----------------------
unimaginable, that gave researchers the vision of building systems which
----------------------
could imitate/emulate some, if not all, human ab· Artificial Intelligence
is a technology, which helps/facilitates the application of computers to ----------------------
areas that require knowledge, perception, reasoning, understanding and
cognitive abilities, which distinguish the human behaviour from machines ----------------------
like computers.
----------------------
Keywords ----------------------
●● Expert system: Computer system that emulates the decision-making ----------------------
ability of a human expert.
●● Artificial intelligence: The intelligence of machines and the branch of ----------------------
computer science that aims to create it. ----------------------
●● Decision support system: An interactive software-based system intended
to help decision-makers compile useful information from a combination ----------------------
of raw data, documents and personal knowledge, or business models to
----------------------
identify and solve problems and make decisions.
●● Executive support system: A software system under control of one of ----------------------
many decision-makers that assists in their activity of decision-making by
----------------------
providing organised set of tools intended to impart structure to portions of
the decision-making situation and to improve the ultimate effectiveness ----------------------
of the decision outcome.
----------------------
----------------------

Notes
----------------------
1. What is a decision support system?
---------------------- 2. Explain in detail the various components and capabilities of DSS.
---------------------- 3. Explain GDSS along with its features.
---------------------- 4. Define EIS and explain its capabilities.

5. What do you mean by an expert system?
----------------------
6. What is artificial intelligence?
----------------------
---------------------- Answers to Check your Progress

Fill in the blanks.
----------------------
1. The DSS software system permits easy interaction between the users of
---------------------- the system and the DSS database and model base.
---------------------- 2. A model is an abstract representation that illustrates the components or
relationships of a phenomenon.
----------------------
3. Decision support system helps to close the information gap to enable
---------------------- managers to improve quality of their decisions.
---------------------- 4. Operations research is basically application of mathematical formulae for

arriving at optimum solutions.
----------------------
---------------------- i. – d.
---------------------- ii. – a.
---------------------- iii. – b.
iv. – c.
----------------------
----------------------
Fill in the blanks.
---------------------- 1. In MIS, the focus is on structured tasks and routine decisions.
---------------------- 2. DSS establishes tools to be used for decision process.
---------------------- 3. The Model Management component maintains and executes models of

business activity.
---------------------- 4. The user interface subsystem manages the physical user interface.
----------------------
----------------------
----------------------

Check your Progress 3 Notes
Fill in the blanks.
----------------------
1. GDSS is a group decision-facilitator and extension/expansion of DSS.
----------------------
2. The success of GDSS would depend upon the quality of the meeting/
discussions/interface being “productive”. ----------------------
Fill in the blanks.
----------------------
1. The Executive Information System/Executive Support System is a
relatively new decision-facilitating technology. ----------------------
2. EIS/ESS facilitates the attainment of organisational objectives. ----------------------
----------------------
Fill in the blanks.
----------------------
1. The ES technology basically derives from the research discipline of
Artificial Intelligence and can be used for aerospace technology. ----------------------
2. ESs are capable of performing only within a specific, logic-oriented realm ----------------------
of expertise.
----------------------
3. Expert systems function in the domain of extracted, cognitive, logical
thinking process. ----------------------
----------------------
Fill in the blanks.
----------------------
1. AI liberates experts from solving common/simple problems, leaving the
experts to solve complex problems. ----------------------
2. AI is a branch of computer science concerned with the study and creation ----------------------
of computer systems that exhibit some form of intelligence.
----------------------
Suggested Reading
----------------------
York: McGraw Hill. ----------------------
2. Jawadekar, Waman. 2009. Management Information Systems: Text & ----------------------

----------------------
3. Prasad, L.M., and Usha Prasad. 2003. Management Information Systems.
New Delhi. Sultan Chand & Sons. ----------------------
4. Sadagopan, S. 1998. Management Information Systems. New Delhi: ----------------------
Prentice Hall India.
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

System Analysis and Design
UNIT
7
Structure:
7.1 Introduction
7.2 Systems
7.3 System Characteristics
7.4 Importance of Systems
7.5 Law of Requisite Variety
Summary
Keywords
Suggested Reading
System Analysis and Design 151

Notes
Objectives
----------------------
----------------------
●● Define a system
---------------------- ●● Identify different types of systems
---------------------- ●● State the various characteristics of a system
---------------------- ●● Explain control and feedback in the context of system
●● Justify the Law of Requisite Variety
----------------------
---------------------- 7.1 INTRODUCTION

---------------------- The concept of “systems” is of pivotal importance in the MIS. The system
concept is basically a way of thinking about managing optimally in a wholistic
----------------------
perspective. It could also be considered as a framework for visualising and
---------------------- analysing both internal and external environments and the factors affecting
these environments in an integrated manner.
----------------------
When we refer to “system”, it generally indicates an arrangement, a way
---------------------- of organising things in an orderly manner, a method or even a well-thought-out
plan. System also means “a regularly interacting interdependent group of items
---------------------- forming a united whole”.
---------------------- A system can also mean “an assemblage or combination of things or parts
forming a complex or unitary whole”. The system is inside the boundary; the
---------------------- environment is outside the boundary. Each system is composed of subsystems,
---------------------- which in turn are made up of other subsystems, each subsystem being defined
by its boundaries. Each subsystem in itself is a system. The interconnections
---------------------- and interactions between the subsystems are termed interfaces. Interfaces occur
at the boundary and take the form of inputs and outputs.
----------------------
Systems exist in all fields of endeavour. There are systems like social
---------------------- system, political system, economic system, educational system, production
system, etc. Apart from these illustrative systems, there are other types of
---------------------- systems as well, some of which are explained hereafter.
----------------------
7.2 SYSTEMS
----------------------
A system is not a randomly arranged set. It is arranged with a certain logic
---------------------- governed by rules, regulations, principles and policies. Such an arrangement is
---------------------- also influenced by the objective the system desires to achieve.
For MIS purposes, let us put it in this way − “A system consists of a set
---------------------- of elements, which can be identified as belonging together because of common
---------------------- purpose, goal or objective”. The elements work/function in an integrated,
coordinated and interdependent manner to achieve objective as well as
---------------------- “synergy”.

A system can also be any group of components − functions, people, Notes
activities, etc. which complement and interface with one another to achieve one
or more predetermined goals. ----------------------
The term “wholistic”, “integrated”, “interdependent” are used frequently. ----------------------
The idea is to emphasise the need for “synergy”, when the numerical total of
individual elements leads to a much higher output/effectiveness, e.g., 1 + 2 + 3 ----------------------
+ 4 + 5 = 15 which is the sum-total of individual elements. However, if these
----------------------
elements become part of the whole, are integrated, then the result becomes 1 x
2 x 3 x 4 x 5 = 120 which is eight times better/higher than earlier. ----------------------
The systems concept is, therefore, important while developing MIS, as it
----------------------
allows us to view individual elements, subsystems in the larger perspective of
the whole system leading to optimal solutions and synergy. ----------------------
1. Conceptual and Empirical Systems: Philosophy, theology are classic
----------------------
examples of conceptual systems. Such systems are theoretical, explanatory
and provide clarification. Conceptual systems provide a theoretical ----------------------
framework for which there may or may not be any real-life counterpart,
e.g., conceptual theory may refer to “Moksha”, “Nirvana”, which cannot ----------------------
really be experienced here and now.
----------------------
The empirical systems, on the other hand, are practical, specific and
operational. They may be based upon conceptual system, but differ ----------------------
from them in as much as one can see/experience the empirical system ----------------------
in operation. Production system, examination system, surgery can be
referred to as examples of the empirical systems. ----------------------
2. Natural and artificial systems: Natural systems exist and abound in ----------------------
nature and are not the result of human endeavours. Rivers, mountains,
minerals are illustrations of natural systems. ----------------------
Artificial systems, on the other hand, are manufactured and hence man- ----------------------
made. Thus, while river or oceans are natural systems, dams, canals,
roads, machines and factories are artificial systems. ----------------------
3. Open and closed systems: Open system is that system which is always ----------------------
interacting with the environment and exchanges information, material or
energy with the environment. Open system is also open, self-organising ----------------------
and adoptive/adaptive to the changing environment as it is flexible.
----------------------
Closed system, of course, is one, which shuns any kind of exchange with
environment. It is rigid and is not amenable to change. It is self-contained ----------------------
and relatively isolated as it has a well-defined boundary. It is also not
----------------------
adaptive.
4. Probabilistic and deterministic systems: This type of systems will be ----------------------
based on the predictability of behaviour or outcome. ----------------------
In a deterministic system, the interaction of elements is known and
hence the outcome predictable. In such a system, the behaviour of elements is ----------------------
predetermined and hence the reaction can be worked out well in advance. ----------------------

Notes Mathematical formulae, chemical formulae are examples of deterministic
system, i.e., there is a specific relationship between the input and the output.
---------------------- This, however, is not applicable to probabilistic system as in case of, say, human
behaviour. In fact, the same person may react in different manner to the same
---------------------- situation on different occasions, or to illustrate further, schedule of examination
---------------------- can be deterministic, but the percentage of result is probabilistic.
Apart from these systems, there are other types of systems like:
----------------------
●● Social and machine systems
----------------------
●● Physical and abstract systems
---------------------- ●● Permanent and temporary systems
---------------------- ●● Stationary and non-stationary systems
All systems must have:
----------------------
1. Goals
----------------------
2. Components/subsystems
---------------------- 3. Structure
---------------------- 4. Behaviour
---------------------- 5. Life cycle

6. Boundaries
----------------------

----------------------
Fill in the blanks.
---------------------- 1. _____________________will be based upon the predictability of
---------------------- behaviour or outcome.
2. Natural systems exist and __________ in nature and are not the result
---------------------- of ______________.
---------------------- 3. A ______________is arranged with a certain logic governed by rules,
regulations, principles and policies.
----------------------
4. ______________ systems are manufactured and hence man-made.
----------------------
----------------------
Activity 1
----------------------
Give examples of any five different types of systems around you and specify
----------------------
their types.
----------------------
----------------------
----------------------

7.3 SYSTEM CHARACTERISTICS Notes
A system should possess the following characteristics: ----------------------
1. System receives inputs by way of information, energy or materials. ----------------------
2. System processes inputs and produces/gives output/results.
----------------------
3. System has a structure, i.e., its elements/components are organised in a
particular way. ----------------------
4. System is interdependent. ----------------------
5. System has objective orientation.
----------------------
System Details
----------------------
A system consists of elements, components and subsystems. Indeed, a
system itself can also be part of a super system. ----------------------
Super System ----------------------
----------------------
----------------------
System 1 System 2 System 3
----------------------
----------------------
Sub-System 1 Sub-System 2 Sub-System 3 ----------------------
----------------------
----------------------
Black Box Black Box Black Box
----------------------
Fig. 7.1 System Details
----------------------
System Facilitating Activities
After studying about the concepts of systems, let’s discuss about some of ----------------------
the system facilitating activities. They are: ----------------------
1. Factoring: A system is organised in a particular manner. The various
----------------------
elements or components have a distinctive role to play, which is assigned
to them. A system for the sake of operational efficiency is divided into ----------------------
subsystems.
----------------------
Each subsystem can then be further divided into lower level of subsystems
until we get a unit, which is considered easy to manage. This process is ----------------------
known as factoring.
----------------------
2. Boundary: A system is divided into subsystems. Each subsystem is
delineated by its boundaries. The environment remains outside the ----------------------
boundary.
----------------------

Notes 3. Interconnections: The interconnections and interactions between the
subsystems are called interfaces. Interface occurs at the boundary and
---------------------- takes the form of input and output (which could be information, energy or
material).
----------------------

----------------------
Fill in the blanks.
---------------------- 1. A ______________ consists of elements, components and subsystems.
---------------------- 2. Each subsystem is delineated by its _______________.
---------------------- 3. The interconnections and _____________between the subsystems
are called ___________.
----------------------
4. System receives inputs by way of _______________, energy or
---------------------- materials.
----------------------
Activity 2
----------------------
---------------------- Find out why should a system be divided into subsystems and on what basis
should this division be done.
----------------------
7.4 IMPORTANCE OF SYSTEMS
----------------------
Systems are put together, directly or indirectly, for the purpose of ensuring
----------------------
control and feedback. Hence, control and feedback are considered the key
---------------------- system concepts as they “pervade and permeate the whole idea of systems”.
What is Control?
----------------------
Control is one of the most important concept, element and process in
---------------------- management. However, in the olden days, control was considered necessary if
---------------------- something went wrong. Control was then also confused with lack of freedom
and “puppet-on-strings” syndrome.
---------------------- Today, it has been realised that control and freedom are fully consistent
---------------------- and interdependent. It has also been realised that the total absence of control is
not freedom but invitation for chaos or anarchy.
---------------------- Today, control is seen as a pro-active response to ensure that things
---------------------- move the way they are expected to. In fact, controlling is one of the four
major functions of management along with planning, organising, directing and
---------------------- leading. According to Koontz and O’Donnell, “Control implies measurement
of accomplishment against the standard and correction of deviation to assure
---------------------- attainment of objectives according to plans”.
----------------------
----------------------

Controlling, can be defined as the process of determining what is to be Notes
accomplished, that is, the standard, what is being accomplished, that is, the
performance, evaluating the performance and, if necessary, applying corrective ----------------------
measures so that performance takes place according to plans, that is, in
conformity with the standard. ----------------------
Control, hence, means bringing/maintaining: ----------------------

●● Performance of group/individual, etc. ----------------------
●● Characteristics of group/individual, etc.
----------------------
●● Characteristics or value of a variable within prescribed limit
Controlling can, therefore, be viewed as: ----------------------
●● Setting standards of performance ----------------------

●● Measuring performance against standards ----------------------
●● Taking corrective action to reduce deviation from standards
----------------------
Control Process
The control process consists of: ----------------------
1. Determining what should be done or expected ----------------------

2. Finding out what is being done ----------------------
3. Comparing results with expectations
----------------------
4. Approving/disapproving results
----------------------
5. Applying necessary corrective actions
----------------------
Control Elements and Analysis of Control
While authority, knowledge, guidance, direction, constraint and restraints ----------------------
are the six elements of control, the real nature of the controlling can be expressed
----------------------
as follows :
1. Planning is the basis of control. ----------------------
2. Action is the essence of control. ----------------------
3. Delegation is the key to control. ----------------------
4. Information is the guide to control.
----------------------
Control Cycle
----------------------
The control process, popularly referred to as “Control Cycle”, has been
represented in Figure 7.2. ----------------------
----------------------
----------------------
----------------------
----------------------

Notes 1. Determine Goals
----------------------
8. Compare goals achieved 2. Plan Programmes
---------------------- with goals desired
----------------------
----------------------
---------------------- 7. Compare actual and 3. Determine work loads

budgeted performance
----------------------
----------------------
----------------------
6. Perform Work 4. Determine required resources
----------------------
----------------------
---------------------- 5. Acquire authority for

using resources
----------------------
---------------------- Fig. 7.2 Control Process Cycle

Requirements of Good Control System
----------------------
The various requirements of good control system are discussed below in
---------------------- Table 7.1.
Table 7.1 Requirements of Good Control System
----------------------
Objective The control system should be definite and determinable.
---------------------- Suitable The control system should be in conformity with the nature
and need of the activity sought to be controlled and the culture/
----------------------
structure of organization.
---------------------- Intelligible The control system should be easily understandable by all concerned.
Flexible The system should be able to work even when the plans change
---------------------- or fail.
Prompt Reporting The system must be able to report deviations from the plan/
---------------------- goals without loss of valuable time.
Forward Looking The system should enable the manager to plan for the future.
----------------------
Economical It should be cost-effective and economical
---------------------- Suggestions of The control system should not only indicate/disclose the
Remedial Action performance, but also show where failures are occurring, who is
---------------------- responsible for them and what should be done about them.
Focus on strategic The system should view the performance in strategic perspective
---------------------- points and disclose the strategic implication.
---------------------- Principle of Critical The system should follow the principle which states “effective
Point Control control requires attention to those factors critical to evaluating
---------------------- against plans”.

Feedback Notes
Feedback is the function that provides information on the deviation
between output and control standard and delivers this information as input into ----------------------
process from which the output is desired. This facilitates corrective action and
----------------------
hence, feedback is an integral part of the Systems Theory as could be evident
from Figure 7.3. ----------------------
INPUT PROCESSOR OUTPUT ----------------------
Recorded,
Information Stored, Decisions ----------------------
To various
Retrieved etc.
Functions ----------------------
Feedback on Effective
Decisions ----------------------
----------------------
Fig. 7.3 Feedback as an Integral Part of a System
The feedback may be positive or negative. Feedback is useful for ----------------------
exercising control in an organisation by the management as illustrated in ----------------------
Figure 7.4.
----------------------
Desired Performance Actual Performance
----------------------
Implement Course Actual Performance ----------------------
Correcting Programme Measurement
----------------------
Programme for Actual Vs Standard ----------------------
Corrective Action Performance Compared
----------------------
Analyse Causes for Identify Deviation ----------------------
Deviation
----------------------
Fig. 7.4 Usefulness of Feedback ----------------------
Control Systems ----------------------
The control systems based on feedback could be categorised into three types as
follows: ----------------------
1. Closed loop system: Under this system, feedback is based on output ----------------------
measurement. Appropriate feedback is passed on to the input so that
suitable corrections could be made at the input stage itself. Control is ----------------------
internalised. Inventory control, cost control, quality control, Inspection ----------------------
can be said to be examples of closed loop system.
----------------------
2. Open loop system: Under the system, control is not internalised. Instead,
it is extended to the system and there is no feedback or feedback loop. ----------------------
Action to initiate control is also not taken automatically.
----------------------

Notes 3. Cybernetic system: The science of communication and control is known
as cybernetics. These systems, however, refer to systems, which are very
---------------------- complex, probabilistic, yet self-regulating.
----------------------
----------------------
Fill in the blanks.
----------------------
1. __________ is one of the most important concepts, elements and
---------------------- processes in management.
---------------------- 2. The science of communication and control is known as ____________.
----------------------
---------------------- Activity 3
---------------------- Control and Feedback improves working standards of an organisation. Do

you agree with this statement? Justify you answer.
----------------------
---------------------- 7.5 LAW OF REQUISITE VARIETY

---------------------- As we have studied earlier, control is one of the integral functions of the
Systems Theory. The Law of Requisite Variety deals with the control mechanism
---------------------- of Systems Theory.
---------------------- However, before we elaborate the Law of Requisite Variety, let us
remember Murphy’s Law, which states that “if a thing can go wrong, it will go
----------------------
wrong and it will go wrong at a time you least expect it to go wrong”.
---------------------- In the context of Systems Theory and Law of Requisite Variety, what it
means is that the elements constituting a system may malfunction and there has
----------------------
to be appropriate mechanism to ensure that their malfunctioning is detected and
---------------------- also corrected.
The Law of Requisite Variety implies that to control each possible state
----------------------
of the system elements, there must be a corresponding control state. To put it
---------------------- another way, there must be at least as many variations of control to be applied as
there are ways for the system to get out of control. The law of requisite variety
---------------------- also means that for a system to be controlled, each controller − human and
machine – must be provided with:
----------------------
1. Enough control responses (what to do in each case) to cover all possible
---------------------- conditions the system may face.
---------------------- 2. Decision rules for generating all possible control responses.
---------------------- 3. The authority to become a self-organising system in order to generate

control responses.
----------------------
These various methods for providing system control responses are
---------------------- presented hereafter. Refer to Table 7.2 and Figures 7.5 and 7.6.

Table 7.2 Enough Control Responses Notes
State of Variable Element Control Response ----------------------

S1 C1 ----------------------
S2 C2
----------------------
S3 C3
: : ----------------------
: :
----------------------
Sn Cn
----------------------
----------------------
S1 S2 S3 .....Sn Decision Rules C1 C2 C3 ...... Cn ----------------------
----------------------
Fig. 7.5 Decision Rules for Control Response ----------------------
----------------------
S1 S2 S3 ......Sn Decision Rules + Judgement C1, C2, C3,..... Cn

----------------------
----------------------
----------------------
Fig. 7.6 Self-organising Control Response
----------------------
Table 7.2 and figures 7.5 and 7.6 show LRV responses.
----------------------
----------------------

1. Murphy’s Law states that “if a thing can go __________, it will go ----------------------
wrong and it will go wrong at a time you least ___________ it to go
wrong”. ----------------------
2. The Law of __________ implies that to control each possible state of ----------------------
the system elements, there must be a corresponding control state.
----------------------
Activity 4 ----------------------
----------------------
Discuss how control is an integral function of Systems Theory. Give
examples. ----------------------
----------------------
----------------------

Notes Summary
---------------------- ●● A system is not a randomly arranged set. It is arranged with a certain
logic governed by rules, regulations, principles and policies. Such an
----------------------
arrangement is also influenced by the objective the system desires to
---------------------- achieve.
●● A system consists of elements, components and subsystems. Indeed, a
----------------------
system itself can also be part of a super system.
---------------------- ●● Control is one of the most important concept, element and process in
management. However, in the olden days, control was considered
----------------------
necessary if something went wrong.
---------------------- ●● The Law of Requisite Variety deals with the control mechanism of
Systems Theory. However, before we elaborate the Law of Requisite
---------------------- Variety, let us remember Murphy’s Law which states that “if a thing can
---------------------- go wrong, it will go wrong and it will go wrong at a time you least expect
it to go wrong”.
----------------------
Keywords
----------------------
●● System: A regularly interacting interdependent group of items forming a
---------------------- united whole.
---------------------- ●● Natural systems: These exist and abound in nature and are not the result
of human endeavours.
----------------------
●● Control: Applying corrective measures so that performance takes place
---------------------- according to plans, that is, in conformity with the standard.

---------------------- 1. What is a system? What is its importance and characteristics?
---------------------- 2. Explain the different types of systems.

3. What are boundaries and environment?
----------------------
4. What is control? State the importance of feedback.
----------------------
5. Explain Law of Requisite Variety.
---------------------- 6. A system is not a randomly arranged set. Do you agree with this statement?
---------------------- Justify your answer.

---------------------- 1. Probabilistic and Deterministic Systems will be based upon the

predictability of behaviour or outcome.
----------------------

2. Natural systems exist and abound in nature and are not the result of human Notes
endeavours.
----------------------
3. A system_is arranged with a certain logic governed by rules, regulations,
principles and policies. ----------------------
4. Artificial systems are manufactured and hence man-made.
----------------------
----------------------
Fill in the blanks.
1. A system consists of elements, components and subsystems. ----------------------
2. Each subsystem is delineated by its boundaries. ----------------------

3. The interconnections and interactions between the subsystems are called ----------------------
interfaces.
----------------------
4. System receives inputs by way of information, energy or materials.
1. Control is one of the most important concepts, elements and processes in ----------------------
management.
----------------------
2. The science of communication and control is known as cybernetics.
1. Murphy’s Law states that “if a thing can go wrong, it will go wrong and ----------------------
it will go wrong at a time you least expect it to go wrong”.
2. The Law of Requisite Variety implies that to control each possible state of ----------------------
the system elements, there must be a corresponding control state. ----------------------
Suggested Reading ----------------------
1. Davis, G, and M. Olson. 1985. Management Information Systems. New ----------------------
York: McGraw Hill.
----------------------
Cases. New Delhi: Tata McGraw Hill. ----------------------
3. Prasad, L.M., and Usha Prasad. 2003. Management Information Systems. ----------------------
----------------------
Prentice Hall India. ----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
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----------------------
----------------------
----------------------
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----------------------
----------------------
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System Development
UNIT
8
Structure:
8.1 Introduction
8.2 Basic Concepts of System Development
8.3 System Development Process
8.4 Rapid System Development Tools
8.5 Object-Oriented Systems
Summary
Keywords
Suggested Reading
System Development 165

Notes
Objectives
----------------------
----------------------
●● Define software development, system development process and SDLC
---------------------- ●● Describe Rapid System Development tools
---------------------- ●● Identify prototyping and various approaches to prototype systems
---------------------- ●● Recognise the advantages and limitations of prototyping
●● Use CASE tools, object-oriented systems
----------------------
●● Analyse the OOP concepts, OOSD approach
---------------------- ●● Discuss object-oriented languages and OOP applications
----------------------
8.1 INTRODUCTION
----------------------
Organisations today are viewed as “systems”. A “Systems Approach” is
----------------------
followed while managing organisation’s information and making it available
---------------------- at the right time and right place to the right person at correct cost. Information
thus plays an important role and is regarded as a critical resource in view of
---------------------- the contemporary, fiercely competitive business environment, both local and
global. It is, therefore, imperative that organisations develop and continue to
----------------------
have “current” and appropriate information systems to ensure organisational
---------------------- effectiveness, efficiency and competitiveness.
Information systems have, therefore, to be developed in the peculiar
----------------------
and specific organisational context. These activities related to development of
---------------------- information system are generally referred to as Systems Development.
Systems Development encompasses all the activities, which go into
----------------------
producing/ providing information systems solution to an organisation’s problems
---------------------- or opportunities. It is a structured problem-solving endeavour consisting of
distinct activities, which generally takes place in sequential and chronological
---------------------- order. As the system is activity-specific, systems development necessitates
interaction with the organisation’s members, units, departments, division, etc.
----------------------
---------------------- 8.2 BASIC CONCEPTS OF SYSTEM DEVELOPMENT

---------------------- Some of the basic concepts associated with systems development are:
---------------------- 1. Systems analysis: Systems analysis is one of the crucial stages in systems
development and serves as a basis for designing and installing the system.
---------------------- Systema analysis is undertaken to acquire a complete understanding
of all important business activities/aspects by dividing “whole into its
----------------------
parts to examine in detail”, in the overall context/perspective. Systems
---------------------- analysis is undertaken to develop an insight into the problems faced,
identify the user requirements from the proposed system so as to help the
---------------------- organisations, solve the problems faced by it and to arrive at an optimum

solution/decision. Systems analysis is thus concerned with investigating, Notes
analysing, designing, implementing and evaluating information system
in an organisation. All these activities enable the systems people to ----------------------
understand the nature, functions and relationship of the parts within
the system, achieve integration of the organisational subsystems and ----------------------
overcome the problems of hierarchical organisational structures. ----------------------
To put it more concisely, systems analysis is the analysis of the problems
----------------------
that an organisation will try to solve using/with the information system.
Systems analysis basically indicates what a system should do to meet ----------------------
information requirements.
----------------------
2. System design: While systems analysis indicates what a system should do
to meet information requirements, system design shows how the system ----------------------
will fulfill this goal. System design is required to ensure that the system
meets organisational objectives, promotes integration of activities and ----------------------
facilitates control as the emphasis in system design is on “accomplishing”
----------------------
and “delivering the goods”.
The major activities involved in system design can be summarised as ----------------------
follows:
----------------------
a. Specify data element, records and files
----------------------
b. Specify input performa and data preparation formats
c. Specify system output ----------------------
d. Develop system/data flow chart ----------------------

e. Develop feedback and control mechanism ----------------------
f. Develop program specification ----------------------
g. Develop operation specifications
----------------------
h. Identify personnel who will complete these activities
----------------------
i. Plan the resources
j. Schedule ----------------------
· Switch over to new system ----------------------
· User training ----------------------
· Parallel operation
----------------------
· System review
----------------------
It may, incidentally, be mentioned that a good system design should
possess six important characteristics: ----------------------
a. Acceptability
----------------------
b. Decision facilitating ability
----------------------
c. Economy
d. Flexibility ----------------------

Notes e. Reliability
f. Simplicity
----------------------
3. System implementation: System implementation involves activities
---------------------- related with testing, conversion and handing over the system to
“production” and in a broader sense, ensuring/providing maintenance and
----------------------
modification as well.
----------------------
----------------------

---------------------- 1. Systems analysis basically indicates what a system should do to meet
_________requirements.
----------------------
---------------------- 1. Systems design is concerned with investigating, analysing, designing,
implementing and evaluating information system in an organisation.
----------------------
----------------------
1. A good system design should possess the following important
---------------------- characteristics:
---------------------- i. Acceptability
ii. Complexity
----------------------
iii. Flexibility
---------------------- iv. Reliability
v. Simplicity
----------------------
---------------------- 8.3 SYSTEM DEVELOPMENT PROCESS

---------------------- The systems development process includes:
---------------------- 1. Systems analysis
---------------------- 2. System design

3. Programming
----------------------
4. Testing/debugging
----------------------
5. Conversion
---------------------- 6. Parallel runs
---------------------- 7. Implementation
---------------------- 8. Maintenance and modifications

The systems development process can be viewed either as Systems
---------------------- Development Life Cycle Model or as Application Development Cycle. While
---------------------- both the models − the Systems Development Life Cycle as presented by Davis

and Olson and the Application Development Cycle as presented by Kanter − are Notes
shown in Figures 8.1 and 8.2 respectively, we will be referring to the Davis and
Olson’s Systems Development Life Cycle Model for our further discussions. ----------------------
DEFINITION STAGE ----------------------
Proposal Definition ----------------------
----------------------
Feasibility Assessment
----------------------
Information Requirement Analysis
----------------------
Conceptual Design ----------------------
Cancellation possible at any stage

DEVELOPMENT STAGE ----------------------
----------------------
Physical System Design
----------------------
Physical Database Design
----------------------
Program Development ----------------------
Procedure Development ----------------------
----------------------
INSTALLATION & OPERATIONS
----------------------
Conversion ----------------------
Operation & Maintenance ----------------------
----------------------
Post Audit
----------------------
Fig. 8.1 Systems Development Life Cycle Model by Davis and Olson ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
Datermine Determine
business
---------------------- Analyze application
objectives Determine
costs risk
versus system
---------------------- beneflts objectives
Establish
study Develop I/O
---------------------- objectives
Feasibility Systems
processing
system spec.
study study
---------------------- Fine tune
program Develop
operation alternate
---------------------- Maintenance Analysis system
Modification solutions
Evaluate
---------------------- organizational
Post
operation
performance ovaluation Systems Select best
Implementation Synthesis
---------------------- design system
design
Operating
Initiale
---------------------- productive
operation
Develop
---------------------- Test and
Programming
and testing document
Resource
debug Utilization disign
computer
---------------------- programs
and system
Code computer Evaluate
---------------------- programs alternate
resources
Develop Select
installation best
---------------------- plan resource
mix
----------------------
---------------------- Fig. 8.2 Application Development Cycle by Kanter

System Development Life Cycle
----------------------
The SDLC Model consists of three stages:
----------------------
1. Definition stage: The definition stage consists of four sub-phases as
---------------------- follows:
a. Proposal definition: It refers to the preparation of a request/proposal
----------------------
for a proposed application. Proposal may be for upgrading/
---------------------- enhancing an existing application or it may be for a totally new
application. The proposal attempts to justify the application and
---------------------- should, therefore, be brief and crisp, rather than long winding and
complex.
----------------------
A proposal should preferably contain specifics as regards
---------------------- organisational needs, likely benefits, organisational support
---------------------- required/expected time span, “schedule” considerations and, of
course, “proprietary” clause.
---------------------- Once the proposal is approved, the process moves on to the next
---------------------- step, viz., the feasibility assessment.
b. Feasibility asssessment: Feasibility is assessed by undertaking the
---------------------- feasibility study. The feasibility phase is a vital underpinning of
---------------------- the SDLC. It helps determine whether the proposed solution is

feasible or achievable, given the organisation’s resources, problems Notes
and constraints. It also helps develop a set of selection criteria, a
selection procedure and an effective decision-making. ----------------------
While assessing feasibility, the following major aspects of feasibility ----------------------
must be looked into:
----------------------
i. Technical feasibility: Here, one asks questions like, “Can the
organisation implement the proposed solution with existing ----------------------
technology?, Can the solution be implemented with the
available hardware, software and technical resources?, Is the ----------------------
technology obsolete, intermediate, state-of-the-art? and Does
----------------------
it involve technology transfer?”
ii. Economic feasibility: Here, the likely savings to be effected ----------------------
and also the cost and benefits are assessed. It mainly assesses
----------------------
whether the benefits of the proposed solution would outweigh
the costs. One can also look into the tangible and intangible ----------------------
benefits.
----------------------
iii. Operational feasibility: It mainly examines whether
the proposed solution is desirable within the available/ ----------------------
contemporary managerial/organisational framework/
resources. Management, non-management and general ----------------------
considerations are also assessed. ----------------------
iv. Schedule feasibility: Here, one examines as to whether the
development process of the application/solution can be ----------------------
completed within the stipulated time. ----------------------
After examining/assessing the feasibilities as mentioned
above, a feasibility report is prepared covering the following ----------------------
aspects: ----------------------
a. Basic information about the proposal
----------------------
b. The expectations as regards development schedule and
resources required ----------------------
c. Highlights as regards expected costs, benefits ----------------------
d. A gist of technical, economical, operational and schedule ----------------------
feasibility assessment
c. Information requirement analysis: This is the most critical part of ----------------------
SDLC as the whole edifice of the information system would depend ----------------------
upon this phase.
----------------------
This phase carefully defines the information objectives of the
system as also carefully identifies who needs what information, ----------------------
where, when and how.
----------------------
----------------------

Notes This phase, therefore, covers the following:
i. Input and output data for reports
----------------------
ii. Routine and ad-hoc queries
----------------------
iii. Functional requirements
---------------------- iv. Conceptual schema
---------------------- v. User interface requirements
---------------------- d. Conceptual design: At this phase, both the systems analyst and the
user are fairly well aware of what is expected from the system/
---------------------- application. This phase, therefore, establishes a more clear and
complete user-oriented design of the application.
----------------------
This phase would broadly include:
----------------------
i. Documenting flow of activities and processing
---------------------- ii. General description/contents of input/output
---------------------- iii. Functions expected to be performed
---------------------- iv. General outlines as regards different manuals (operating/

users/training)
----------------------
v. Follow-up/audit/control procedures
---------------------- As this phase shows what the system solution would be like, the
conceptual design phase is sometimes also referred to as “Logical
----------------------
Design”.
---------------------- 2. Development stage: Once the basic activities related with the SDLC are
completed in the definition stage, we move to the next stage, viz., the
----------------------
development stage, which consists of the following four sub-phases:
---------------------- a. Physical system design: This phase consists of those activities
---------------------- which involve preparation of the detailed technical design for/of
the proposed system. This phase helps in specifying and designing:
---------------------- · Flow of work/programs/user functions
---------------------- · Controls to be implemented
---------------------- · Data communication requirements
· Overall structure of programs
----------------------
· Security and back-up considerations
----------------------
· Quality Assurance plan
---------------------- b. Physical database design: This is based on the existing database
---------------------- and the approach followed for determining database requirements.
However, database design would broadly include:
----------------------
· Logical data relations
---------------------- · Volume and special requirements

· File organisation and design Notes
· Record specification
----------------------
c. Program development: The specifications arrived at the physical
database design phase define the programming tasks and provide ----------------------
direction for program development.
----------------------
Programming is a process of translating the specifications prepared
during the design phase into program code. Program development, ----------------------
therefore, aims at coding and testing the programs required for the
----------------------
application/solution. At this phase, various program development
techniques like modularity, structured programming, applications ----------------------
generators and application packages are used.
----------------------
d. Procedure development: Procedure development refers to
preparation/ development of manuals, instruction sheets, input ----------------------
formats/forms, etc. Procedure development can take place
concurrently, along with program development, as the conceptual ----------------------
and physical design is available. Procedures are required to be ----------------------
developed for all those who will be interacting with the application/
solution. Broadly, procedures would be developed for primary users ----------------------
and secondary users of computer operating personnel. Apart from
pure user-oriented operational procedures, training procedures also ----------------------
have to be developed to facilitate implementation and subsequent ----------------------
follow-up.
It is imperative that both while developing programs and procedures, ----------------------
due attention is paid to documentation. ----------------------
3. Installation and operation stage: This stage consists of the following three
sub-phases: ----------------------
a. Conversion: Conversion is the process of changing from the old ----------------------

system to the new system. While implementing conversion, a
----------------------
conversion plan, which provides a detailed schedule of all activities
required to be carried out for installing a new system, has to be ----------------------
worked out.
----------------------
Actual conversion is possible only after acceptance testing, file
building and user training is completed. While acceptance testing ----------------------
involves testing of the completed application and comparing it
with the specifications, file building refers to the collection and ----------------------
conversion to machine-readable form of all new data required by/for
----------------------
the application/solution. User training should take into account the
degree to which the new application affects existing jobs/personnel ----------------------
and then help in preparing these personnel to take up the jobs with
renewed skills and vigour. ----------------------
While moving over to conversion, different conversion strategies ----------------------
could be employed - the Parallel Strategy, the Direct Cut-Over
Strategy, the Pilot Study Strategy and the Phased Approach Strategy. ----------------------

Notes i. Parallel strategy: This strategy is considered to be the most cautious,
conservative and the safest. Under this strategy, both the current
---------------------- system as well as the proposed system, are run simultaneously till
the correctness and accuracy are tested and assured. This strategy is
---------------------- sometimes also referred to as the “Parallel Run” Approach.
---------------------- ii. Direct cutover strategy: In this strategy, the current system is
replaced with the new system on a “cut off” or “pre-appointed
----------------------
day”. This strategy is considered to be risky as in case of any
---------------------- problem encountered during/after the switchover, no back up may
be available.
----------------------
iii. Pilot study strategy: In this strategy, the system is evolved by first
---------------------- introducing it in a section or department. Once the working is found
to be hassle-free, the system is then expanded and installed in the
---------------------- entire organisation. The installation may be done simultaneously or
in phases/stages.
----------------------
iv. Phased approach: Under this strategy, the new system is made
---------------------- applicable either activity/function wise or level wise. To illustrate,
a system might first be introduced at top level, then at the middle
----------------------
management level and then further down the line on the typical
---------------------- ‘Back Office’ and ‘Front Office’ level.
---------------------- b. Operations and maintenance: Once the system is put through

conversion and appears to be operating without difficulty, the
---------------------- application is handed/turned over for operations. When the
application becomes operational, users and technical specialists
---------------------- determine how well it meets the predefined goals/standards. The
---------------------- application is also reviewed to decide whether any revisions or
modifications are necessary.
---------------------- Any subsequent changes are looked after by the maintenance.
---------------------- Maintenance refers to “changes in hardware, software,
documentation or procedures to an application system to correct
---------------------- errors, meet new requirements, or improve processing efficiency”.
---------------------- c. Post-audit: After the system has been made operational, it is
imperative that a provision for post-installation review/evaluation is
---------------------- available. Post-audit is expected to take care of this post-installation
review to ensure that the system is functioning effectively and
---------------------- efficiently from the “system” and user’s point of view. The audit
---------------------- team may consist of representatives from the users, system
maintenance, operations, etc.
----------------------
Post-audit may look into areas such as information system quality,
---------------------- system control, technical evaluation, operational evaluation,
economic evaluation, evaluation of existing hardware and software,
---------------------- evaluation by use of performance monitors, evaluation of systems
logs, etc.
----------------------

Once system analysis, design and implementation is complete, the Notes
system becomes fully functional.
----------------------

1. Once the proposal is approved, the next step is ___________________. ----------------------
2. _________________is the process of changing from the old system ----------------------
to new system.
1. The database design includes the following: ----------------------

i. Logical data relations ----------------------
ii. Volume and special requirements
iii. Data flow diagrams ----------------------
iv. File organisation and design ----------------------
v. Record specification
----------------------
Multiple Choice Single Response.
----------------------
1. Which of the following is the conversion strategy?
i. Feasibility Study ----------------------
ii. Post Audit ----------------------
iii. Pilot Study Strategy
iv. Maintenance ----------------------
----------------------
Activity 1 ----------------------
Prepare requirements specification for Sales Order System. ----------------------
----------------------
8.4 RAPID SYSTEM DEVELOPMENT TOOLS
----------------------
The System Development Life Cycle (SDLC) Approach or the Product
Life Cycle Approaches are relatively rigorous system development techniques. ----------------------
These techniques necessitate working out the problem identification, information
----------------------
requirements, etc. and hence, could be time-consuming.
However, the aforesaid traditional system development/design ----------------------
methodologies/techniques may not be useful in certain cases in view of the fact
----------------------
that:
●● The problem under investigation may not be always well defined. ----------------------
●● It may also not be possible to fully identify the input-output process. ----------------------
●● The system may be suitable or appropriate in the immediate short span
----------------------

Notes of time. However, it may become redundant or even irrelevant in the
medium or long-term perspective.
---------------------- The corporate organisations always function/operate in a constantly
---------------------- changing and dynamic business environment. Hence, the organisational needs/
requirements may also be changing constantly.
---------------------- The system, therefore, has to keep on evolving in response to the emerging
---------------------- trends/needs of the business organisations.
To take care of such eventualities, there is an urgent need for more dynamic
----------------------
system design tools and techniques for facilitating Rapid System Development.
---------------------- CASE tools, Prototyping and Object-Oriented Programming/Systems are
three such rapid system development tools.
----------------------
Prototyping
----------------------
We have always come across various prototypes in our day-to-day lives.
---------------------- It could be the model of a house one wants to build, it could be the “sample flat”
of a multistoried building, it could be a new car undergoing tests of all aspects
---------------------- of the product’s functionality, before being finally launched in the market.
---------------------- A prototype, thus, is basically a scaled-down model or a working version
of a product.
----------------------
The prototype is put through various tests before it is converted into the
---------------------- polished, sleek product. The prototype, which was earlier being used by the
engineer, manufacturer, architects, is now also used in the development of
----------------------
information systems to facilitate rapid system development.
---------------------- This process of preparing prototype is referred to as prototyping. It
consists of building an experimental system rapidly and inexpensively for the
----------------------
end-user to evaluate. Prototyping is also viewed as a “strategy of experimental
---------------------- assurance in development of information system applications to be achieved by
an evolutionary design method”.
----------------------
Looking at it from purely systems aspects, prototyping can be said to
---------------------- be one of the two functional approaches in systems development, the other
approach involving the up-front specification of user information processing
---------------------- requirements and the use of a systems development methodology (also known
as Pre-specification Approach).
----------------------
While prior to the 1980s, the economic feasibility of prototyping was
---------------------- questionable, with dramatic changes in the price/performance of computing
---------------------- capacity and software development technology since then, prototyping has
become more affordable. As prototyping is found to be more rapid, iterative,
---------------------- interactive and informal than the Systems Life Cycle Method has proved to be,
in fact, prototyping is now becoming Standard Operating Procedure (SOP) for
---------------------- software development.
----------------------
----------------------

Steps in Prototyping Process Notes
The prototyping process basically consists of four steps as discussed
----------------------
below:
Step 1: Identify the user’s requirements ----------------------
At this stage, the systems person works with the user to understand the ----------------------
requirements as regards the output from the systems. The systems person
establishes realistic user expectations, estimates the cost of developing the ----------------------
working prototype, defines data elements required and determines data
----------------------
availability.
Step 2: Develop the initial/working prototype ----------------------
The systems person develops the initial working/interactive prototype, which meets ----------------------
the user’s stated basic requirements. The prototype, performing only the basic
functions, is then handed over to the user. While developing the prototype, ----------------------
the systems person may use the latest software tools available to speed up ----------------------
application development.
Step 3: Use the prototype for further refinements ----------------------
The user has already received the initial prototype, which he now puts to use. ----------------------
This working with the prototype enables the user to gain hands-on experience
----------------------
with the proposed system and helps him to determine to what extent the
prototype meets the user needs/expectations/requirements. The user, rather ----------------------
than the systems person, decides the desired changes for further improving the
prototype. ----------------------
Step 4: Revise and enhance prototype ----------------------
The systems person takes due notice of the changes/modifications suggested
----------------------
by the user and revises, enhances and refines the prototype accordingly. The
prototype is then returned to the user and the process follows steps 3 and 4 in ----------------------
an iterative mode, till the prototype is finally approved by the user and becomes
operational prototype. ----------------------
The four steps are iillustrated in Figure 8.3. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes Step 1 Identify Basic User
Requirements
----------------------
---------------------- Developing Intitial

Step 2
Working Prototype
----------------------
----------------------
Make Use of the
---------------------- Prototype
----------------------
----------------------
Step 3 User Yes
---------------------- Satisfied
----------------------
---------------------- No
---------------------- Revise & Enhance Operational

---------------------- Step 4 Prototype Prototype
---------------------- Fig. 8.3 Stages in Prototyping
---------------------- Approaches to Developing Prototype Systems

Prototype systems could be developed in one of the following ways:
----------------------
a. Non-functional prototype: This approach is also known as “Rapid
---------------------- Prototyping”. It is a faster way to give the user an opportunity to
experiment with the operational aspects of the proposed system. This
----------------------
approach focuses on the following aspects:
---------------------- i. The user interface
---------------------- ii. Data entry displays
---------------------- iii. System outputs

This approach enables the systems person/user to do away with the time-
---------------------- consuming technical intricacies of interfacing with an actual database,
---------------------- while allowing users to familiarise themselves with the proposed user
interface and systems input/output.
----------------------
b. Partially functional prototype: This approach is more sophisticated than
---------------------- the non-functional prototype approach as these prototypes are eventually
expected to be enhanced to the level of fully functional system.
----------------------
The philosophy behind this approach is that the users, especially at the
---------------------- operational level, can work with most of the basic features of the proposed
system during interactive practice session. They will even be able to make
---------------------- routine inquiries to the database.

With suitable modifications and several iterations, the prototype emerges Notes
as a fully functional information system.
----------------------
c. Fully functional prototype: This is considered to be the most ambitious
approach to prototyping. Such prototypes are, typically, created for the ----------------------
purpose of enabling the user to experiment with the system, the focus
being on functionality. Considerations such as system efficiency and ----------------------
volume of work are not of over-riding importance at this stage, as these
----------------------
could be taken care of at a later stage.
It must be remembered that, unlike the partially functional approach, ----------------------
the fully functional approach is not intended to result in an operational
----------------------
system. The results of the fully functional approach are well-defined user
specifications that can be used by the project team to create an information ----------------------
system that uses resources more efficiently and can handle an increased
volume of work. ----------------------
Advantages of Prototyping ----------------------
The major advantages of prototyping could be summarised as follows: ----------------------
a. Ability to “try out” ideas without incurring large/huge costs.
----------------------
b. Lower overall development costs when requirements change frequently.
----------------------
c. The ability to get a functioning system into the hands of the user quickly.
d. Effective division of labour between the user professional and the MIS ----------------------
professional.
----------------------
e. Reduced application development time to achieve a functioning system.
----------------------
f. Effective utilisation of scarce (human) resources.
g. It is possible/practical to test parts/portions of the system. ----------------------
h. It can help reduce maintenance. ----------------------

i. Most useful when there is some uncertainty about requirements or design ----------------------
solutions.
----------------------
Requirements may be difficult to specify in advance or they may change
substantially as implementation progresses. ----------------------
j. It is especially valuable for the design of the end-user interface of an ----------------------
information system as it encourages intense end-user involvement
throughout the Systems Development Life Cycle. ----------------------
k. It enables users to react immediately to the parts of the system they will ----------------------
be dealing with.
l. It promises to eliminate/minimise excess development costs and design ----------------------
flows that occur when requirements are not fully captured the first time ----------------------
around.
----------------------
----------------------

Notes Limitations of prototyping
The limitations of prototyping are:
----------------------
a. Prototyping is better suited for smaller/modular applications.
----------------------
b. Applications that are oriented to simple data manipulation and records
---------------------- management are considered good candidates for prototyping.
---------------------- c. Rapid prototyping can gross over essential steps in systems development.
d. Rapidly developed prototypes may be difficult to maintain and support in
---------------------- a regular production environment.
---------------------- e. The performance may be rather inefficient.
---------------------- f. As the system can be changed easily, documentation may not be kept up-
to-date.
----------------------
g. User must be willing and committed to providing ongoing and meaningful
---------------------- feedback.
h. The interactive nature of prototyping demands that the size of the project
----------------------
team be kept as small as possible. As such, each member may not be
---------------------- familiar with all facets of the system.
---------------------- CASE Tools

What is CASE?
----------------------
CASE is an acronym for Computer Aided Software Engineering or
---------------------- Computer Aided Systems Engineering. Computer Aided Systems Engineering
involves using software packages to accomplish and automate many of
----------------------
the activities of the Information System Development, including software
---------------------- development or programming.
CASE represents a working environment consisting of programs and other
----------------------
development tools that help managers, system analysts, programmers and others to
---------------------- automate the design and procedures for business, engineering and scientific
computer systems.
----------------------
Why CASE?
---------------------- CASE is basically the automation of step-by-step methodologies for
---------------------- software and systems development to reduce the amount of repetitive work the
developer/programmer needs do to. CASE takes away the drudgery of system
---------------------- development by automating many routine software development tasks and
enforcing adherence to design rules/specifications. The use of CASE also helps
---------------------- the programmers to keep pace with the increasing sophistication in programming.
---------------------- The use of CASE revolutionises the development process as it improves the
design, significantly cuts down the time to design a new product and reduces
---------------------- the cost in the process. CASE is also useful in enhancing productivity, ensuring
reliability and improving visibility during the development process.
----------------------
----------------------

Thus, the goal of CASE is to use computer technology to facilitate the Notes
development of Information System by automating the activities involved in the
Systems Development Life Cycle. The activities encompass Strategic System ----------------------
Planning, Systems Analysis, Systems Design, Systems Management, Project
Management, User Interface Design and Database Design, etc. ----------------------
CASE Tools ----------------------

The software packages available in the areas/activities of automating the ----------------------
systems development activities are known as CASE Tools. CASE Tools are
available for varying purposes/activities as illustrated hereafter. ----------------------
----------------------
System Database System
Analysis Design Design ----------------------
Tools Tools Tools
----------------------
----------------------
System
Strategic CASE Construction
Encyclopedia Tool CODE/ ----------------------
Planning FORM/REPORT
Tools Generations
----------------------
----------------------
Process System
Project
Support Management ----------------------
Management Tools
Tools
----------------------
----------------------
Fig. 8.4 CASE Encyclopedia
----------------------
Further in certain quarters, CASE Tools are also referred to as “Toolsets”
and as stated by James O’brein, the Toolsets could be: ----------------------
a. Planning toolset: It helps begin the development process with information ----------------------
strategy planning from a high level business vantage point.
b. Analysis toolset: It focuses on correctly capturing detailed business ----------------------
requirements early in the development process. ----------------------
c. Design toolset: It provides detailed specifications of the system solution.
----------------------
d. Information integrator: It integrates system specifications, checks them for
consistency and correctness and records in local or central repositories. ----------------------
e. Code generation toolset: It produces a higher language programme code ----------------------
based on system specifications.
----------------------
f. Database generation toolset: It generates system control information
needed for data storage and access. ----------------------
g. Public interface: It provides for file transfers and query reporting. ----------------------
----------------------

Notes Capabilities of CASE Tools
Table 8.1 Capabilities of CASE Tools
----------------------
CASE TOOLS CAN CASE TOOLS CAN NOT
---------------------- Automate number of manual tasks Automatically provide a functional,
involved in Systems Development. relevant system.
----------------------
Promote standardization based on Easily interface with databases and
---------------------- a single methodology. fourth-generation languages.
Promote greater consistency and co- Automatically force analysts to use a
---------------------- ordination during a development project. prescribed methodology when one does
not exist.
----------------------
Generate a large portion of documentation Radically transform the Systems Analysis
---------------------- for a system, such as Data Flow Diagram, and Design Process.
Data Models and/or other specifications.
----------------------
(Source : MIS, Laudon)
---------------------- Can CASE do everything?
---------------------- It is obvious that CASE does not and cannot do anything and everything.
It must be remembered that CASE is, at best, only a facilitator. It can certainly
---------------------- accelerate analysis and design and promote iterative design. However, it still
remains a methodology and a set of tools for developing systems with, as
----------------------
stated earlier, enhanced productivity, reliability and visibility. CASE is not
---------------------- automated systems development and it does not enable systems to be designed
automatically to meet business requirements.
----------------------

----------------------
---------------------- 1. Which of the following are rapid system development tools?
i. CASE tools
---------------------- ii. Prototyping
iii. Spiral Model
----------------------
iv. Object-oriented Programming
---------------------- 2. The non-functional prototype approach focuses on the following
aspects:
---------------------- i. User interface
ii. Increased volume of work
----------------------
iii. Data entry displays
---------------------- iv. System outputs
---------------------- 1. Prototyping is better suited for smaller/modular applications.
2. Analysis toolset provides detailed specifications of the system
----------------------
solution.
1. CASE Tools are also referred to as ______________.
----------------------

Notes
Activity 2
----------------------
1. With the help of Internet search the names of the vendors and the case
----------------------
tools along with and its purpose.
----------------------
8.5 OBJECT-ORIENTED SYSTEMS ----------------------
As has been discussed earlier, computers and computer languages have ----------------------
been evolving constantly over the years. With the technological innovations,
having moved from first-generation computers using radio valves to second- ----------------------
generation computers using semi-conductors transistors, to third and fourth-
----------------------
generation computers using integrated chips and very large scale integrated
chips respectively. Simultaneously, the programming languages have evolved ----------------------
from the earlier machine language to assembly language to the user-friendly,
English-like second and third- generation programming languages. ----------------------
With the changes in the hardware and software, the programming and ----------------------
development styles have also undergone metamorphic changes, moving from
top-down, structured, procedure-oriented system development to bottom-up, ----------------------
modular, object-oriented system development. ----------------------
Object-Oriented System Development Approach, as stated before, is
further improvement over the earlier approaches, the Procedure-Oriented ----------------------
Programming Approach in particular. ----------------------
Procedure-Oriented Approach
----------------------
The Procedure-Oriented Approach viewed the problem as a sequence of
action to be performed such as reading, calculating and printing. It basically ----------------------
consisted of writing a list of instructions (or actions) for the computer to follow
----------------------
and organised these instructions into groups known as “Functions”.
Some of the typical characteristics exhibited by the procedure-oriented ----------------------
approach are:
----------------------
1. Emphasis on algorithms
----------------------
2. Division of large programs into smaller programs known as “Functions”
3. The global data shared by Functions ----------------------
4. Data moving openly around the system from Function To Function ----------------------
5. Functions transforming data from one form to another ----------------------
6. Top-down approach in program design
----------------------
Object-Oriented Programming Approach
----------------------
As against this, the Object-Oriented Programming treats data as a critical
element in program development and does not allow it to flow freely around the ----------------------
system. It ties data more closely to the functions that operate on it.
----------------------

Notes Some of the major characteristics of object-oriented programming are:
1. Emphasises on data rather than procedure.
----------------------
2. Programs divided into “Objects”.
----------------------
3. Data structures designed in such a manner that they characterise the
---------------------- Objects.
---------------------- 4. Functions that operate on the data of an object are tied together in the data
structure.
---------------------- 5. Data is hidden and cannot be accessed by external Functions.
---------------------- 6. Objects can communicate with each other through Functions.
---------------------- 7. New data and Functions can be easily added whenever necessary.
8. “Bottom-up” approach in programming design.
----------------------
The OOP Concepts
----------------------
Some of the concepts used extensively in OOP include:
---------------------- 1. Objects: Objects are the basic run-time entities in object-oriented system.
---------------------- Each object contains data and code to manipulate the data.
2. Classes: Classes are user-defined data types and behave like the built-in
----------------------
types of a programming language.
---------------------- 3. Data abstraction and encapsulation: While “Abstraction” refers to the
art of representing essential features without including the background
----------------------
details or explanations, “Encapsulation” refers to the wrapping of data
---------------------- and functions into a single unit called “Class”.
4. Inheritance: It is the process by which objects of one class acquire the
----------------------
properties of objects of another class.
---------------------- 5. Polymorphism: It refers to the ability to take more from one form.
---------------------- 6. Dynamic binding: It is associated with polymorphism and inheritance.
Dynamic binding means that the code associated with a given procedure
---------------------- call is not known until the time of the call at run-time.
---------------------- 7. Message passing: Message passing involves specifying the name of the
object, the name of the function (message) and the information to be sent.
----------------------
The OOSD Approach
----------------------
The OOSD Approach combines the logic of the Systems Development
---------------------- Life Cycle with the power of Object-Oriented Modeling and Programming.
OOSD also follows a defined SDLC, the life cycle phases usually being
---------------------- completed with a number of iterations.
---------------------- OOSD typically consists of the following steps/activities:
---------------------- 1. Identifying potential problems/opportunities within the organisation

2. Deciding/defining the type of system required by the users
----------------------

3. Designing the system/modules Notes
4. Program development for modules
----------------------
5. Evaluation of/ by the users
----------------------
6. Periodic review and modifications
OOSD − The Advantages ----------------------
The OOSD has now become a preferred System Design and Implementation ----------------------
tool of both the developers as well as the users. OOSD is now preferred mainly
due the benefits it confers upon the developers and users. ----------------------
Some of major benefits of OOSD are as follows: ----------------------

1. The system development is mainly “Modular”. This saves development ----------------------
time, particularly in the contemporary project management environment,
where time overruns are the last thing desired by both developers and ----------------------
users.
----------------------
2. The modular development style also helps contain costs and/or become
cost-effective as cost overruns too are neither desired nor accepted. ----------------------
Reduction in costs is possible due to pre-developed, pre-tested
----------------------
programming modules.
3. System design and implementation are often easier. ----------------------
4. System maintenance is simpler and easier as minimal coding changes are ----------------------
required to mesh with the pre-developed objects/modules.
----------------------
5. The system objects are self-contained units. As such, they can be changed
or replaced with less disruption to the rest of the system. ----------------------
6. The collection of existing modules/codes/objects can be used across a ----------------------
number of applications.
----------------------
7. Program security is much higher.
Object-Oriented Languages ----------------------
OOSD does not necessarily require the use of a specific object-oriented ----------------------
language. OOSD and OOP can be implemented using extended conventional
languages such as C or Pascal. ----------------------
However, most developers use OOP languages for the structure and ease ----------------------
they provide. The OOP languages are generally classified into Object-Based
Programming Languages and Object-Oriented Programming Languages, ----------------------
depending upon the features supported by these languages. ----------------------
----------------------
----------------------
----------------------
----------------------

Notes OOP Applications
OOP has become a buzzword today. OOP applications are becoming
----------------------
important in a number of areas. While, till date, the most popular and widespread
---------------------- application of the OOP has been in the area of user interface design such as
Windows. Some of the other emerging OOP applications are:
----------------------
1. Real-time systems
---------------------- 2. Simulation and modeling
---------------------- 3. Object-oriented databases
---------------------- 4. Hypertext, hypermedia and expert text

5. Artificial intelligence
----------------------
6. Expert systems
----------------------
7. Neural networks
---------------------- 8. Decision support systems
---------------------- 9. CAD/CAM systems
---------------------- From the managerial perspective, OOSD and OOP help expedite project
completion within a shorter time and lesser costs. OOSD and OOP have also
---------------------- been instrumental in enhancing/improving productivity, which by itself is good
enough for increased future applications.
----------------------

----------------------
---------------------- 1. The characteristics exhibited by the procedure-oriented approach are:
---------------------- i. Emphasis on algorithms
---------------------- ii. The local data shared by Functions
iii. Functions transforming data from one form to another
----------------------
iv. Top-down approach in program design
----------------------
---------------------- 1. Polymorphism is the process by which objects of one class acquire
---------------------- the properties of objects of another class.
2. Encapsulation refers to the wrapping of data and functions into a
---------------------- single unit called Class.
---------------------- 1. ________________________ is associated with polymorphism and
inheritance.
----------------------
----------------------

Summary Notes
●● Systems Development encompasses all the activities, which go into ----------------------

producing/providing information systems solution to an organisation’s
----------------------
problems or opportunities. It is a structured problem-solving endeavour
consisting of distinct activities, which generally takes place in sequential ----------------------
and chronological order.
----------------------
●● Basic concepts associated with systems development are Systems
Analysis, Systems Design and Systems Implementation. ----------------------
●● Systems Development Process includes Systems analysis, system
----------------------
design, programming, testing/de-bugging, conversion, parallel runs,
implementation, maintenance and modifications. ----------------------
●● Rapid System Development requires dynamic system design tools and
techniques. CASE Tools, Prototyping and Object-Oriented Programming/ ----------------------
Systems are three such rapid system development tools. ----------------------
●● CASE Tools are also referred to as “Toolsets” and as stated by James
O’brein, these could be Planning toolset, Analysis toolset, Design toolset, ----------------------
Information integrator, Code generation toolset, Database generation ----------------------
toolset and Public interface.
●● A Prototype is basically a scaled-down model or a working version of a ----------------------
product. As prototyping is found to be more rapid, iterative, interactive ----------------------
and informal than the Systems Life Cycle Method, it is now becoming
Standard Operating Procedure (SOP) for software development. ----------------------
●● Prototype systems could be developed using one of the following ----------------------
approaches: Non-functional prototype, Partially functional prototype or
Fully functional prototype. ----------------------
●● The Object-Oriented Programming concepts extensively include objects, ----------------------
classes, data abstraction and encapsulation, inheritance, polymorphism,
dynamic binding and message passing. ----------------------
Keywords ----------------------
●● System development: It consists of all the activities, which go into ----------------------

producing/providing information systems solution to an organisation’s
problems or opportunities. ----------------------
●● System development process: The systems development process ----------------------

includes systems analysis, system design, programming, testing/
debugging, conversion, parallel runs, implementation and maintenance ----------------------
and modification. Prototyping: It consists of building an experimental ----------------------
system rapidly and inexpensively for the end-user to evaluate.
●● CASE: It is an acronym for Computer Aided Software Engineering or ----------------------
Computer Aided Systems Engineering. ----------------------
----------------------

Notes ●● CASE tools: The software packages available in the areas/activities of
automating the systems development activities.
---------------------- ●● Object-oriented programming: It treats data as a critical element in
---------------------- program development and does not allow it to flow freely around the
system. It ties data more closely to the functions that operate on it.
----------------------
----------------------
1. Discuss the software development process.
----------------------
2. State and explain the rapid application development tools.
---------------------- 3. What is prototyping? Explain the steps involved in the prototyping
---------------------- process.
4. What is CASE? State and briefly explain the various types of case tools.
----------------------
5. Explain the advantages and disadvantages of case tools.
----------------------
6. Discuss the object-oriented programming approach.
----------------------
----------------------
----------------------
Fill in the blanks.
----------------------
1. Systems analysis basically indicates what a system should do to meet
---------------------- information requirements.

1. False
----------------------
----------------------
1. A good system design should possess the following important
---------------------- characteristics:
i. Acceptability
----------------------
iii. Flexibility
----------------------
iv. Reliability
---------------------- v. Simplicity
1. Once the proposal is approved, the next step is feasibility assessment.
----------------------
2. Conversion is the process of changing from the old system to the new
---------------------- system.
----------------------
----------------------

Multiple Choice Multiple Response. Notes
1. The database design includes the following:
----------------------
i. Logical data relations
----------------------
ii. Volume and special requirements
iv. File organisation and design ----------------------
v. Record specification ----------------------
Multiple Choice Single Response. ----------------------
1. Which of the following is the conversion strategy?
----------------------
iii. Pilot Study Strategy
----------------------
1. Which of the following are rapid system development tools? ----------------------

i. CASE tools ----------------------
ii. Prototyping
----------------------
iv. Object-oriented Programming
----------------------
2. The non-functional prototype approach focuses on the following aspects:
i. User interface ----------------------
iii. Data entry displays ----------------------

iv. System outputs ----------------------
----------------------
1. True
----------------------
2. False
1. CASE Tools are also referred to as toolset. ----------------------

----------------------
1. The characteristics exhibited by the procedure-oriented approach are:
----------------------
i. Emphasis on algorithms
iii. Functions transforming data from one form to another ----------------------
iv. Top-down approach in program design ----------------------

State True or False. ----------------------
1. False
----------------------
2. True
----------------------

Notes Fill in the blanks.
1. Dynamic binding is associated with polymorphism and inheritance.
----------------------

---------------------- 1. Davis, G, and M. Olson. 1985. Management Information Systems. New
---------------------- York: McGraw Hill.
2. Hitesh Gupta, Hitesh. 2011. Management Information System. New
---------------------- Delhi: International Book House.
----------------------
4. Laudon, Kenneth C., Jane P. Laudon and Rajanish Dass. 2010. Management
---------------------- Information Systems: Managing the Digital Firm. New Delhi: Pearson
Education.
----------------------
5. O’Brien, James and George Marakas. 2011. Management Information
---------------------- Systems. McGraw- Hill/Irwin.
---------------------- 6. Pressman, Roger S. 2010. Software Engineering: A Practitioner’s
Approach. McGraw-Hill Higher Education.
----------------------
7. Sommerville, Ian. 2007. Software Engineering. New Delhi: Pearson
---------------------- Education.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

The Database Management System
UNIT
9
Structure:
9.1 Introduction
9.2 Database Management System
9.3 DBMS Components
9.4 Database Model
Summary
Keywords
Suggested Reading
The Database Management System 191

Notes
Objectives
----------------------
----------------------
●● Describe the concept and need for DBMS
---------------------- ●● State the characteristics and advantages of DBMS
---------------------- ●● Discuss database languages and models
---------------------- ●● Explain the various components of a DBMS
●● Analyse DBMS models
----------------------
---------------------- 9.1 INTRODUCTION

---------------------- Data, as we are all aware, is critical for transaction processing. However,
during the initial period of computer applications to data processing, the data
---------------------- was maintained/stored depending upon its use for application. Under this
---------------------- approach, each user system had its own master files and transaction files, which
were processed separately. Although, the data required by many systems were
---------------------- common, there used to be repetition of data stored in various user systems,
leading to data redundancy. The data redundancy, in turn, led to complexities in
---------------------- data management as all data has to be identical and currently updated in all the
---------------------- files, simultaneously. Data redundancy also resulted into lack of integrity and
inconsistency of data available/stored in various user files.
---------------------- The database approach emerged out of the need, indeed urgency, to
---------------------- eliminate the data management problems. Database is pivotal to MIS.
A database could be defined as “A mechanical/automated, formally
---------------------- defined, centrally controlled collection of data in an organization”.
---------------------- The database implies a particular structuring of data, both conceptual/
logical and physical. Instead of storing the data separately in different locations/
----------------------
files for different applications, the data records are physically organised and
---------------------- stored, so as to promote data sharing, availability, data consistency, security and
integrity, which are the major objectives of the database approach.
----------------------
---------------------- 9.2 DATABASE MANAGEMENT SYSTEM
---------------------- The Database Management System (DBMS), as it is popularly known,

acts as the interface between the application programmes and the data.
----------------------
DBMS is basically a software system which performs the functions of
---------------------- defining, creating, revising and controlling the database. DBMS is a specially
designed software to create and maintain a database and enable individual
---------------------- business applications to extract the data they need without having to create
separate files in their computer programs. A DBMS is a software that provides
----------------------
services for accessing a database, while maintaining all the required features of
---------------------- the data.

Database Instances and Schemas Notes
Database changes as information is inserted and deleted. The collection of
----------------------
information stored in the database at a particular moment is called as an instance
of the database. The overall design of the database is called the database schema. ----------------------
Characteristics of Data in DBMS
----------------------
1. Data sharing: Data should be shared amongst different users and
applications ----------------------
2. Data independence: Changes made in the schema at one level should not
----------------------
affect other levels.
3. Controlled redundancy: Data is not duplicated, however, any duplication ----------------------
is deliberate and controlled.
----------------------
4. Validity/Integrity/Correctness: Data entered should be correct with
respect of the real world entity that they represent. ----------------------
5. Security: Data should be protected from unauthorised users.
----------------------
Advantages of DBMS
----------------------
The following can be said to be the major advantages of the DBMS:
1. The DBMS helps reduce the complexity in the systems’ environment due ----------------------
to the central control/management of data, access, utilisation and security. ----------------------
2. As same data elements are not repeated in all the files, DBMS helps
reduce/eliminate data redundancy and inconsistency and promotes data ----------------------
integrity throughout the system/organisation.
----------------------
3. The DBMS provides for central control of data creation and definition,
thereby reducing/eliminating data confusion. ----------------------
4. DBMS helps bring about substantial reduction in the costs related with ----------------------
program development and maintenance.
5. DBMS helps separate logical view and physical arrangement, thereby, ----------------------
reducing program-data dependence.
----------------------
6. DBMS, particularly the RDBMS, permits ad-hoc queries, thereby
ensuring flexibility of information systems. ----------------------
7. DBMS helps increase access and availability of information.
----------------------
Database Languages
----------------------
The database provides two different types of languages: one to specify the
database schema and the other to express database queries and updates. ----------------------
1. Data Definition Language (DDL): DDL is the formal language used by ----------------------
the computer professionals to specify the database schema. The result
of compilation of DDL statements is a set of tables. It defines each data ----------------------
element as it appears in the database. The data element is then translated
into the format desired/required by the application’s programme. ----------------------
2. Data Manipulation Language (DML): It is a specialised language, which ----------------------

is used by the end-users and programmers to manipulate data in the
----------------------
database. By data manipulation we mean:

Notes a. The retrieval of information stored
b. The insertion of new information
---------------------- c. The deletion of information
d. The modification of information stored
----------------------
DML consists of commands, which enable end-users and programmers
---------------------- to extract data from the database to satisfy information requests and develop
applications.
----------------------
DMLs are basically of two types:
----------------------
i. Procedural DML: It requires the user to specify what data are
---------------------- needed and how to get those data.
ii. Non-procedural DML: It requires the user to specify what data are
----------------------
needed without specifying how to get those data.
---------------------- The Structured Query Language (SQL) is presently the most
prominent and popular database language used.
----------------------
A query is a statement requesting the retrieval of information. The
---------------------- portion of a DML that involves information retrieval is called as
query language.
----------------------

----------------------
Fill in the blanks.
---------------------- 1. A ___________________is a software that provides services for
---------------------- accessing a database, while maintaining all the required features of
the data.
---------------------- 2. The overall design of the database is called the ________________.
---------------------- 3. DBMS helps separate ___________ and _________ arrangement,
thereby reducing program-data dependence.
---------------------- 1. DML is the formal language used by computer professionals to
specify the database schema.
---------------------- 2. Procedural DML requires the user to specify what data are needed
and how to get those data.
----------------------
Match the following
---------------------- i. Data sharing a. Data is not duplicated, however, any
---------------------- duplication is deliberate and controlled.
ii. Data independence b. Data should be protected from
---------------------- unauthorised users.
---------------------- iii. Controlled redundancy c. Changes made in the schema at one level
should not affect other levels.
---------------------- iv. Security d. Data should be shared amongst different
users and applications
----------------------

9.3 DBMS COMPONENTS Notes
The major components of DBMS are: ----------------------

1. Transaction management: A transaction is a sequence of database ----------------------
operations that represents a logical unit of work and that accesses a
database and transforms it from one state to another. A transaction can ----------------------
update, delete or modify a single or a set of records. When the DBMS does ----------------------
a “commit” the changes made by the transaction are made permanent to
the database. If the changes are not to be made permanent, the transaction ----------------------
can be “rolled back” and the database will remain in its original state.
----------------------
2. Concurrency control: Concurrency control is the database management
activity of coordinating the actions of database manipulation process ----------------------
that operate concurrently; that access shared data and can potentially
interfere with one another. The goal of an ideal concurrency management ----------------------
mechanism is to allow concurrency while maintaining the consistency of ----------------------
the shared data.
----------------------
3. Recovery management: It ensures that aborted or failed transactions
do not create an adverse effect on the database or other transactions. ----------------------
It also ensures that the database is returned to a consistent state after a
transaction fails or aborts. Recovery is related to concurrency − more the ----------------------
concurrency, the more is the chance that an aborted transaction can affect
----------------------
many other transactions.
4. Security management: It refers to the protection of data against ----------------------
unauthorised access − only authorised users are given access to the data
----------------------
in the database. The level of access for each user and the type of operation
the user can perform on data will depend on the access privileges of the ----------------------
users.
----------------------
5. Language interface: It provides support languages used for the definition
and manipulation of the data in the database. ----------------------
6. Storage management: The DBMS provides a mechanism for management ----------------------
of permanent storage of the data. The internal schema defines how the data
should be stored by the storage management mechanism and the storage ----------------------
manager interfaces with the operating system to access the physical
storage. ----------------------
7. Data catalog management: Data catalog also called data dictionary ----------------------
is a system database that contains description of data in the database
(metadata). It contains information about data, relationships, constraints ----------------------
and the entire schema that organise these features into a unified database. ----------------------
The data catalog can be queried to get information about the structure of
the database. ----------------------
----------------------
----------------------

Notes
----------------------

1. A ______________is a sequence of database operations that represents
----------------------
a logical unit of work.
---------------------- 1. Security management ensures that aborted or failed transactions do
not create an adverse effect on the database or other transactions.
----------------------
Multiple Choice Single Response.
---------------------- 1. A data catalog is also called:
---------------------- i. Database schema
---------------------- ii. Data dictionary
iii. Transaction
----------------------
iv. Instance
----------------------
---------------------- 9.4 DATABASE MODEL

---------------------- There are three types of database models commonly in use in business
organisations.
----------------------
These models are used for keeping track of entities, attributes and relationships.
---------------------- The three database models are:
---------------------- 1. Hierarchical Database Model (HDBM): The Hierarchical Database
Model is one of earliest DBMS, when the computer applications focused
---------------------- on processing huge data like sales order processing, check processing,
inventory updating, etc.
----------------------
This Model follows a structured organisational mode. It represents data
---------------------- in a pyramidal or tree-like structure. Each record appears to be like an
organisational chart with one top- level segment, called the root, spreading
----------------------
downwards into branches and leaves as illustrated in Figure 9.1.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

ABC Bank’s Notes
Central Master
File ----------------------
----------------------
Division A Division B Division C Division D ----------------------
----------------------
Region I Region II Region III
----------------------
Manager ----------------------
----------------------
Name Posted At Date of Join Performance ----------------------
Fig.9.1 Hierarchical Database Model ----------------------

Under this Model, there is a record. Within each record, data elements ----------------------
are organised into pieces of record called segments. An upper segment is
connected logically to a lower segment in a parent-child relationship. A ----------------------
parent segment can have more than one child, but a child can have only
----------------------
one parent, indicating a one-to-many relationship.
The Hierarchical Model is, thus, highly structured and requires a ----------------------
controlled, finite and rule-based approach, where record and its segments
----------------------
are connected to each other in one-to-many parent-child relationships.
The most common hierarchical DBMS has been the Information ----------------------
Management System (IMS) released by the IBM in 1968.
----------------------
2. Network Database Model (NDBM): The NDBM is a variation of the
earlier Hierarchical Database Model. The Network Model features data ----------------------
logically as many-to-many relationship. To put it more succinctly, just ----------------------
as “parents can have multiple children”, a “child” too can have more
than one “parent”. The many-to-many relationship under this Model is ----------------------
illustrated in Figure 9.2.
----------------------
Sales Zone Sales Realisation Colgate Toothpaste
----------------------
----------------------
----------------------
Sales Person
----------------------
Fig.9.2 Network Database Model
----------------------
It would be observed that the data regarding the salesperson could be
made use of/for: ----------------------
i. Understanding/analysing “Sales Zone” performance.
----------------------

Notes ii. Analysing sales/recovery position.
iii. Analysing product-wise sales performance.
----------------------
The US giant business corporation General Electric used the Network
---------------------- Model during the mid-60s and their model was known as the Integrated
Data Store (IDS). GE under the leadership of Charles Bachman developed
----------------------
the model. The model used blocks, area and arrows to represent the
---------------------- organisation’s database. This method is popularly known as “Bachman’s
Diagram”.
----------------------
IDS, it may be noted, emerged to be the standard of the CODASYL
---------------------- Group, an organisation of major hardware and software vendors.
---------------------- 3. Relational Database Model (RDBM): The Relational Database Model

is the most recent of the three database models and was proposed by
---------------------- Dr. E. F. Codd in 1970. The Model represents all data in the database
as simple two-dimensional tables called “Relations”. The table has rows
---------------------- and columns, the rows representing individual records and the columns
---------------------- representing attributes of each record. Although the tables appear to be
similar to flat files, the information in more than one file can be easily
---------------------- extracted and combined to suit the user’s specific requirements, thereby
providing ad-hoc request flexibility/facility.
----------------------
The key is the separation of the data on logical and physical levels, which
---------------------- is made possible by the use of sophisticated mathematical algorithms and
notations, which are used in the relational model.
----------------------
4. Other Data Models: The other data models include the Object-Oriented
---------------------- Data Model that has been used widely after the Relational Model. It
includes the concept of encapsulation, methods and object identity.
----------------------

----------------------
---------------------- 1. Which of the following are database models?
---------------------- i. Hierarchical Database Model (HDBM)
---------------------- ii. Network Database Model (NDBM)
iii. Relational Database Model (RDBM)
----------------------
iv. Spiral Model
----------------------
v. Object-oriented Data Model
---------------------- 1. The __________________________ includes the concept of
encapsulation, methods and object identity.
----------------------
----------------------

Notes
Activity 1
----------------------
Find out the names of various database management system software
----------------------
applications used in industries.
----------------------
Summary
----------------------
●● A DBMS is a collection of programs that enables you to store, modify and
----------------------
extract information from the database.
●● Characteristics of data in DBMS are sharing, persistence, ----------------------
validity/integrity/correctness, security, non-redundancy of data and data
----------------------
independence.
●● Database changes over time as information is inserted and deleted. The ----------------------
collection of information stored in the database at a particular moment is
called an instance of the database. The overall design of the database is ----------------------
called the database schema. ----------------------
●● The database provides two different types of languages. They are Data
Definition Language and Data Manipulation Languages. ----------------------
●● The major components of DBMS are transaction management, concurrency ----------------------
control, recovery management, security management, language interface,
storage management, database catalog management. Data catalog or data ----------------------
dictionary is a system database that contains description of data in the ----------------------
database (metadata).
●● Database models are used for keeping track of entities, attributes and ----------------------
relationships. The database models are Hierarchical Database Model ----------------------
(HDBM), Network Database Model (NDBM), Relational Database
Model (RDBM) and the Object-oriented Data Model. ----------------------
Keywords ----------------------
●● Database Management System (DBMS): A software system which ----------------------

performs the functions of defining, creating, revising and controlling the
database. ----------------------
●● Data language: The database provides two different types of languages: ----------------------
Data Definition Language (DDL) to specify the database schema and Data
Manipulation Language (DML) to express database queries and updates. ----------------------
●● Database models: They are used for keeping track of entities, attributes ----------------------
and relationships.
----------------------
----------------------
1. What is DBMS? State its characteristics and advantages.
----------------------
2. What is DDL? Explain DDL.
----------------------

Notes 3. State and explain the components of DBMS.
4. Explain the models of DBMS.
----------------------

1. A Database Management System (DBMS) is a software that provides
----------------------
services for accessing a database, while maintaining all the required
---------------------- features of the data.
2. The overall design of the database is called the database schema.
----------------------
3. DBMS helps separate logical view and physical arrangement, thereby
---------------------- reducing program-data dependence.
---------------------- 1. False
2. True
----------------------
----------------------
i. − d.
---------------------- ii. − c.
---------------------- iii. − a.
iv. − b.
----------------------
---------------------- 1. A transaction is a sequence of database operations that represents a logical
unit of work.
----------------------
----------------------
1. False
---------------------- Multiple Choice Single Response.
---------------------- 1. A data catalog is also called:
---------------------- ii. Data dictionary

----------------------
----------------------
1. Which of the following are database models?
---------------------- i. Hierarchical Database Model (HDBM)
ii. Network Database Model (NDBM)
----------------------
iii. Relational Database Model (RDBM)
---------------------- v. Object-oriented Data Model

Fill in the blanks. Notes
1. The Object-Oriented Data Model includes the concept of encapsulation,
----------------------
methods and object identity.
----------------------
Suggested Reading
----------------------
York: McGraw Hill. ----------------------
----------------------
Delhi: International Book House.
----------------------
4. Kahate, Atul. 2009. Introduction to Database Management Systems.
New Delhi: Pearson Education. ----------------------
----------------------
Information Systems: Managing the Digital Firm. New Delhi: Pearson
Education. ----------------------
Systems. McGraw- Hill/Irwin. ----------------------
7. Pannerselvam, R. 2006. Database Management Systems. PHI Learning ----------------------
Pvt. Ltd.
----------------------
8. Silberschatz,Abraham, Henry Korth and S. Sudarshan. 2010. Database
System Concepts. McGraw-Hill Education. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Data Warehousing and Data Mining
UNIT
10
Structure:
10.1 Introduction
10.2 Data Warehousing
10.3 Data Warehouse Structure/Architecture
10.4 Data Mining
10.5 Applications of Data Mining
Summary
Keywords
Suggested Reading
Data Warehousing and Data Mining 203

Notes
Objectives
----------------------
----------------------
●● After going through this unit, you will be able to:
---------------------- ●● Identify data warehousing and its need and architecture
---------------------- ●● Explain the technology used to support data warehousing
---------------------- ●● Appraise implementation of data warehousing
●● Recognise the need for data mining, its functions and technology used
----------------------
●● Analyse the applications of data mining and trends affecting data
---------------------- mining
---------------------- 10.1 INTRODUCTION

---------------------- The corporate organisations generate huge amount of data from their day-
---------------------- to-day activities/operations. Online Transaction Processing (OLTP), Point-of-
Service (POS) Systems, ATMs and Webs have now become the new sources of
---------------------- data generation. This huge volume of routinely generated data are unfortunately,
equally routinely collected and confined to the archives of many corporate
---------------------- organisations.
---------------------- Such data, in today’s Information Era, constitutes one of the potentially
most powerful assets of the corporate organisations. However, as the data are
---------------------- routinely collected and stored away in the archives, these organisations typically
face the dilemma of being “data-rich” but “information-poor”. This dilemma
----------------------
leads to the challenge of “How to extract valuable information from huge data
---------------------- and make it available to the right person, at the right place, at the right time,
at the right cost and in the desired/appropriate form to support the decision-
---------------------- making process/function?”
---------------------- It is in the context of this dilemma that the question arises as to whether
the enormous data that is generated and stored away in the archives can be used
---------------------- for further improving the efficiency and effectiveness of the corporate/business
organisations.
----------------------
It is here where data warehousing and data mining play a crucial role. It
---------------------- would, indeed, be in the fitness of things to state that the corporate future, in
today’s increasing and intensifying globalisation, hinges on data warehousing
---------------------- and data mining.
---------------------- No wonder then that data warehousing and data mining are increasingly
becoming popular among both the IT professionals and the corporate world.
----------------------
10.2 DATA WAREHOUSING
----------------------
Data warehousing is a new technology that provides the users with
----------------------
the tools to store the summarised information from multiple, heterogeneous
---------------------- databases in a single repository.

Data warehouse is also seen as a data arrangement and analysis technology, Notes
adopting an “up-date” approach. A well-defined and properly implemented data
warehouse can be an invaluable competitive tool. It provides tools to satisfy the ----------------------
information needs of the employees at all organisational levels ─ not just for
complex data queries, but as a general facility for getting quick, accurate and ----------------------
often insightful information. A data warehouse is designed so that its users can ----------------------
recognise the information they want and access that information they want and
access that information using simple tools. ----------------------
Data warehouse users make requests and are delivered information ----------------------
“products” that are created from the components and parts stored in the
warehouse. A data warehouse is a typical blending of technologies, including ----------------------
relational and multidimensional databases, client/server architecture, extraction/
----------------------
transformation programs, graphical user interfaces and more.
A few definitions of data warehouse are as follows: ----------------------
According to Vidette Poe, “Data warehouse is a read-only analytical ----------------------
database that is used as the foundation of a decision support system”.
----------------------
Amy Helen Johnson defines data warehouse as “a database that collects
business information from many sources in the enterprise covering all aspects ----------------------
of the company’s processes, products and customers”.
----------------------
W. H. Inmon, who is considered to be the Father of Data Warehousing,
has given the following definition: “A Data Warehouse is a subject-oriented, ----------------------
integrated, time- varying, non-volatile collection of data in support of the
management’s decision-making process”. ----------------------
Subject-Driven ----------------------
A data warehouse is organised around major subjects and contains only ----------------------
the information necessary for the decision support processing. It is not organised
according to application (e.g., a data warehousing for bank would be organised ----------------------
by customer, deposit/advances, interest rate and not by different products).
----------------------
Non-Volatile
----------------------
A data warehouse is always a physically separate data store. The relative
data is transformed from the application data. As such, data warehousing does ----------------------
not require processing of transactions, recovery, etc. The data is not updated
or changed either after the data enters data warehouse. Data is only loaded, ----------------------
refreshed and accessed for queries. ----------------------
Time Varying
----------------------
Time-varying data in the data warehouse is collected from the corporate
data archives and could be 3 to 10 years old or even older. The data provide ----------------------
historical perspective and is used for comparisons, trends and forecasting.
----------------------
Integrated
----------------------
While constructing the data warehouse, multiple, heterogeneous sources
such as relational databases, flat files and OLTP files are utilised and data ----------------------

Notes collected from them is integrated. Data cleaning and data integration techniques
are applied to maintain consistency in naming conventions, measures of
---------------------- variables, encoding structure and physical attributes.
----------------------
----------------------
----------------------
1. Which of the following are the features of data warehouse?
----------------------
i. Subject-oriented
---------------------- ii. Integrated
---------------------- iii. Time-varying
iv. Volatile
----------------------
Fill in the blanks.
---------------------- 1. Data warehouse is also seen as a _________________ and
---------------------- ________________adopting an “update” approach.
----------------------
10.3 DATA WAREHOUSE STRUCTURE/ARCHITECTURE
----------------------
We have, so far, discussed the definition of data warehouse. Before we
---------------------- proceed further, let us note:
---------------------- Data Warehouse Structure
---------------------- A typical data warehouse structure is illustrated in Figure 10.1.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
---------------------- Fig. 10.1 A Typical Data Warehouse Structure

It must, however, be noted that the data warehouse structure could vary Notes
from one business to another depending upon the business activity.
----------------------
Structure of Data inside the Data Warehouse
The structure of data inside the data warehouse is illustrated in Figure 10.2. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 10.2 Data Structure in Data Warehouse
Flow of Data inside the Data Warehouse ----------------------
The flow of data inside the data warehouse is illustrated hereafter. Refer ----------------------
to Figure 10.3.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig.10.3 Flow of Data inside the Data Warehouse
----------------------
What does a Data Warehouse do?
----------------------
The major functions/utilities of data warehouse could be stated as follows:
---------------------- 1. It helps integrate data from a number of diverse, heterogeneous sources.
---------------------- 2. It consolidates such data and stores it in a step-by-step fashion. Such
data can then be used for Informative Analytical Processing over a long
---------------------- historical time period.
---------------------- 3. It allows the management, mostly at the senior level using the Decision
Support System (DSS) and the Executive Information System/Executive
---------------------- Support System (EIS/ESS) for semi/unstructured decisions, to consider
---------------------- issues in context, by providing a consistent view of the enterprise.
4. It helps create an enterprise-wide integrated database of summarised,
----------------------
historical information and supports business analysis and decision-
---------------------- making.
5. It improves the optimisation efforts through consolidation, conversion,
----------------------
transformation and integration of operational data.
---------------------- In addition to the utilities/functions stated above, there are some other
benefits of data warehousing. Such benefits are illustrated hereafter.
----------------------
Benefits of Data Warehousing
----------------------
(Adapted from H. J. Watson & B. J. Haley, Managerial Considerations,
---------------------- Communication of the ACM 41 (9) 1998.)
----------------------
----------------------

EASY TO MEASURE LOCAL IMPACT Notes
TIME SAVINGS
----------------------
FOR DATA SUPPLIERS AND FOR USERS
----------------------
MORE AND BETTER INFORMATION
----------------------
BETTER DECISIONS
----------------------
IMPROVEMENT OF BUSINESS PROCESSES
----------------------
SUPPORT FOR THE ACCOMPLISHMENT OF ----------------------
STRATEGIC BUSINESS OBJECTIVES
----------------------
HARD TO MEASURE GLOBAL IMPACT
----------------------
Fig. 10.4 Benefits from Data Warehousing
----------------------
Data Warehousing: Evolution
A data warehouse typically starts out as Very Large Databases (VLDBs) ----------------------
containing huge data records − numbering millions or even hundreds of ----------------------
millions. Data warehouse, as a process, evolved gradually within an enterprise.
The longer that a data warehouse has been in use, the more it would evolve. ----------------------
Initially, the data warehouse is mainly used for generating reports and ----------------------
answering pre-defined queries. Eventually, it is used to analyse the summarised
and the detailed data. ----------------------
In the next phase, the data warehouse is/can be used for strategic ----------------------
purposes, performing multi-dimensional analysis and sophisticated “slice and
dice operations”. ----------------------
Finally, the data warehouse may be used for knowledge discovery and ----------------------
strategic decision-making using data mining tools. In this context, the data
warehousing tools can be categorised into: ----------------------
(i) Access tools ----------------------
(ii) Retrieval tools
----------------------
(iii) Database reporting tools
(iv) Data analysis tools ----------------------
(v) Data mining tools ----------------------
Technology to support Data Warehousing
----------------------
The technology components required for a data warehouse implementation
can be classified as follows: ----------------------
1. The data contents are stored and manipulated and the contents retrieved ----------------------
by DBMS.
----------------------
2. To keep the data contents current with production system would require a
number of related components which can extract data from source systems, ----------------------

Notes clean it to ensure all information is consistent and of the expected type,
and transform it to the physical layout designed for the data warehouse.
----------------------
3. Users at different levels within the organisation will need a range of tools,
---------------------- which will support the many ways of extracting useful information from
the data warehouse and performing various types of analysis.
----------------------
4. A suitable hardware and operating system must be in place to suppor
---------------------- the workload. This includes the storage and manipulation of the data,
processing of the data to produce meaningful information and presentation
---------------------- of results to the end-users.
---------------------- 5. The entire environment has to be managed. Continuity of services must be
guaranteed. Security must be administered depending on the sensitivity
---------------------- of data. Changes to the warehouse to incorporate growing requirements
must be managed. Refer to Table 10.1.
----------------------
Table 10.1 OLTP vs. Data Warehouse
----------------------
OLTP Data Warehouse
---------------------- Consistency On Line Transaction Data warehouse is more global in
Processing is concemed its concern. The current load of new
---------------------- with large number of tiny data needs to be full and consistent
transactions
---------------------- witinKit losing any
Transaction Each transaction is a piece of Production data load (transaction)
----------------------
data may occur only once a day;
---------------------- but, contains thousands (even
millions) or records.Thisproduction
---------------------- dataloadcan be thought of as a
“snapshot” of the business.
---------------------- Users OLTPusers deal with one Data warehouses deal with
account at a time summaries of many accounts
---------------------- Managers OLTP Managers are concerned Data warehouse managers are
with performance and concerned with reporting.
---------------------- reliability.
---------------------- Tme An instantaneous “snapshots” Static “snapshots” are likea time
of the business, which is series of the business. The OLTP
---------------------- updated as transactions, snapshots are migrated to the data
occurs. warehouse on a regular basis (day,
---------------------- week, month)
Data Organi OLTP utilizes entity Data warehouse employs the
---------------------- nation relationships modeling to divide dimensional model call the star join
data into tables which are schema. Textual descriptions of the
---------------------- normalized to minimize redun business dimensions are stored in
dan cy the dimension tables. Tins simple
----------------------
construction allows for the storage
---------------------- and query of very large fact tables.
Separate Data Warehouse is a central repository of integrated data from multiple
---------------------- Systems remote OLTPsystems. The fundamental difference between the
purposes for data warehouse and OLTP require separately configured
---------------------- systems.

Data Warehousing: Successful Implementation Notes
Drury Jenkins, an expert on Business Intelligence, has written a lot
----------------------
about data warehouse and how it supports Business Intelligence. According
to Drury Jenkins, certain mistakes must be avoided while implementing data ----------------------
warehousing.
----------------------
Some of the data warehousing mistakes, which need to be avoided are:
(i) Not implementing a comprehensive meta data strategy ----------------------
(ii) Not deploying a central warehouse administration tool ----------------------
(iii) Not cleaning or integrating transactional data ----------------------
(iv) Expecting the warehouse to stay static
----------------------
(v) Underestimating refresh and update cycles
----------------------
(vi) Using a poor definition and approach
(vii) Poor design and data modeling ----------------------
(viii) Using inexperienced personnel ----------------------
While avoiding the mistakes indicated above would improve the data ----------------------
warehouse development, the keys to successful implementation could be as
follows: ----------------------
(i) Executive sponsorship is a must. ----------------------
(ii) A full-time project team with experienced staff is necessary.
----------------------
(iii) Both IT and business units must be involved in the project.
----------------------
(iv) Business analysts who understand the business objectives as well as the
data warehouse and the data mining technology must be involved. ----------------------
(v) The project’s scope must be focused and achievable. ----------------------
(vi) Activities must support the business goals.
----------------------
(vii) An iterative approach must be used to build, test and implement the
solution. ----------------------
(viii) Proven technology components must be used. ----------------------
(ix) Data quality must be given the priority it deserves.
----------------------
(x) “Think globally, act locally”.
----------------------
(xii) “Implement short-term. Plan long-term.”
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------

1. Data warehouse helps to integrate data from a number of diverse,
----------------------
homogeneous sources.
---------------------- 2. OLTP users deal with one account at a time whereas data warehouses
deal with summaries of many accounts.
----------------------
----------------------
1. Which of the following are the keys to successful implementation of
---------------------- data warehouse?
i. Executive sponsorship is a must.
----------------------
ii. The project’s scope must be focused and achievable.
---------------------- iii. Activities must support the business goals.
---------------------- iv. Think locally, act globally
v. Proven technology components must be used.
----------------------
----------------------
Activity 1
----------------------
Data warehousing requires investing a lot of money. What is the basis on
---------------------- which an organisation decides to go for data warehousing?
----------------------
10.4 DATA MINING
----------------------
In the corporate world, a lot of data gets collected in the course of their
---------------------- daily operations. This data collected is normally stored/accumulated in a data
---------------------- warehouse and data mart for analysis. The analysis is conducted, using the
stored data, to help managers in the decision-making process. The analysis
---------------------- becomes more meaningful using data mining, as it enables managers to establish
relationships between business elements and find out aspects and facts about
---------------------- their business that may not be evident otherwise.
---------------------- Data mining, thus, is an information analysis tool that involves the
automated discovery of patterns and relationships in a data warehouse. Data
----------------------
mining is a new, but powerful concept that has started to gain popularity in the
---------------------- world of Business Intelligence.
Data mining aims at extracting patterns, trends and rules from data
----------------------
warehouse to evaluate either predicted or scour-proposed business strategies,
---------------------- which in turn, will improve competitiveness, improve profits and transform
business processes.
----------------------
The extraction of hidden predictive information from large databases is
---------------------- called data mining, which is a powerful new technology with great potential to

help companies focus on the most important information in their warehouses. Notes
Data mining techniques can be implemented rapidly on existing software and
hardware platforms to enhance the value of existing information resource, and ----------------------
can be integrated with new products and systems.
----------------------
“Data mining or Knowledge Discovery Database (KDD), as it is also
known, is the non-trivial extraction of implicit, previously unknown and ----------------------
potentially useful information from the data. This encompasses a number of
----------------------
technical approaches, such as clustering, data summarisation, classification,
finding dependency networks, analysing changes and detecting anomalies.” ----------------------
Knowledge Discovery Database
----------------------
Knowledge discovery in database is the process of identifying a valid,
potentially useful and ultimately understandable structure of data. The process ----------------------
involves selecting or sampling data from a data warehouse, cleaning or pre-
----------------------
processing it, transforming or reducing it (if needed), applying a data-mining
component to produce a structure and then evaluating the derived structure. ----------------------
“Data mining is the search for the relationships and global patterns that ----------------------
exist in large database but are hidden among vast amounts of data, such as the
relationship between patient data and their medical diagnosis. This relationship ----------------------
represents valuable knowledge about the database, and the objects in the
database, if the database is a faithful mirror of the real world registered by the ----------------------
database.” ----------------------
Data mining refers to “using a variety of techniques to identify nuggets
of information or decision-making knowledge in the database and extracting ----------------------
these in such a way that they can be put to use in areas such as decision support, ----------------------
prediction, forecasting and estimation. The data is often voluminous, but it has
low value and no direct use can be made of it. It is the hidden information in the ----------------------
data that is useful”.
----------------------
Data mining is “the process of discovering meaningful, new correlation patterns
and trends by sifting through large amount of data stored in repositories, ----------------------
using pattern recognition techniques as well as statistical and mathematical
techniques”. ----------------------
What does Data Mining do? ----------------------

Data mining is expected to lead to the following results: ----------------------
(a) Discovering unknown associations. Such associations can be found ----------------------
when one event can be co-related to another event that seems completely
unrelated. ----------------------
(b) Sequences, where one event leads to another later event.
----------------------
(c) Recognising patterns that lead to classification or new organisation of
data. ----------------------
(d) Finding out facts previously not known (event clustering).
----------------------
(e) Forecasting or simply discovering patterns in the data that can lead to
predictions in/about the future. ----------------------

Notes (f) Determining the most significant changes in some key measures from
previous or expected values (deviation detection).
----------------------
How does Data Mining work?
---------------------- Data mining, as is clear by now, is more empirical and hence application-
oriented and an application’s facilitator. As such, data mining has to be of real
----------------------
value for an organisation. The outcome of data mining must be measurable
---------------------- and actionable. Hence, data mining should not only enable the analysis to be
undertaken/performed but it must enable learning from this activity. These
---------------------- lessons learnt, in turn, are applied in practice for ensuring qualitative predictive
decision-making.
----------------------
The typical cyclical functioning of data mining would therefore consist of
---------------------- the following:
---------------------- 1. Understanding the situation.
2. Building/developing (suitable) model/s.
----------------------
3. Undertaking analysis based on the model/s.
---------------------- 4. Initiating appropriate action.
---------------------- 5. Measuring the results.
6. Iterations.
----------------------
The aforesaid steps could also be presented as follows.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 10.5 Cyclical functioning of Data Mining
---------------------- Technologies used in Data Mining
---------------------- 1. Neural networks: Provides non-linear predictive models. Neural networks
are used for modeling complex relationships between inputs and outputs
---------------------- or to find patterns in data.

2. Rule induction: The extraction of useful if-then rules from data based on Notes
statistical significance.
----------------------
3. Evolutionary programming: This system automatically formulates
hypotheses about the dependence of the target variable on other variables ----------------------
in the form of programs expressed in an internal programming language.
----------------------
4. Case-based reasoning (CBR): This system finds the closest past analogies
of the present situation and chooses the same solution, which was the right ----------------------
one in those past situations. This method is also called nearest neighbour
method. ----------------------
5. Decision trees: Tree-shaped structures that represent set of decisions. ----------------------
6. Generic algorithm: Optimisation techniques that use processes such as ----------------------
generic combination, mutation and natural selection in a design based
concept of evolution. ----------------------
7. Non-linear regression methods: These methods are based on searching ----------------------
for a dependency of the target variable on other variable. The obtained
formula is more suitable for analysis and interpreting in principle. This ----------------------
method has better chances of providing reliable solutions in applications
such as financial markets or medical diagnostics. ----------------------
----------------------
----------------------
1. The extraction of hidden predictive information from large databases ----------------------
is called ____________________.
1. Data mining encompasses the following technical approaches: ----------------------

i Clustering ----------------------
ii Data summarisation
----------------------
iii Data manipulation
iv. Classification ----------------------
v. Finding dependency networks ----------------------
----------------------
i. Neural networks a. The extraction of useful if-then
rules from data based on statistical ----------------------
significance. ----------------------
ii. Rule induction b. Tree-shaped structures that represent
set of decisions. ----------------------
iii.Evolutionary programming c. Provides non-linear predictive models ----------------------
iv. Decision trees d. Automatically formulates hypotheses.
----------------------

Notes
Activity 2
----------------------
Who are data miners and what do they do?
----------------------
---------------------- 10.5 APPLICATIONS OF DATA MINING

---------------------- As stated earlier, data mining takes the evolutionary process beyond retrospective
---------------------- data access and investigation to prospective and pro-active delivery of
information. No wonder then that data mining is being extensively utilised for
---------------------- managerial decisions in the increasingly competitive business scenario. Some
of the more frequent practical managerial applications of/for data mining can
---------------------- be summarised as below.
---------------------- Table 10.2 Data Mining Applications
---------------------- Application Details/Narrations
Marketing Customer segmentation
---------------------- Customers likely to leave your organization for another (cost,
churn or swing)
----------------------
Identify ‘prospects’ for making list to obtain highest response, hit rate
---------------------- Regular and ‘loyal’ customer identification
Market Basket Analysis to identify commonly demanded
---------------------- products/services
Trend analysis
----------------------
Customer clustering for prioritizing
---------------------- Area wise / Segment wise preferred products/services
Launching of ‘exchange’ schemes
---------------------- Financial Financial statement analysis
Rating” loan application
---------------------- Assessing credit risk/creditworthiness
---------------------- Ascertaining fraudulent customers/transactions/ accounts
(Banking/Credit Cards Unusual credit card usage/impropriety)
---------------------- Manufacturing Vendor analysis
Personnel Problem employees identification
----------------------
Trends affecting Data Mining
---------------------- Grossman (1999) has identified five external trends, which are likely to have a
---------------------- fundamental impact on data mining.
1. Data trends: Digitisation of data has caused data explosion over the past
----------------------
two decades. The data availability is going to increase further. As such,
---------------------- data mining is going to play a critical role in ensuring that the huge data
is not dumped in archive files without any extraction and practical use.
----------------------
2. Hardware trends: The memory size and processing speed/capabilities
---------------------- of workstations are going to improve significantly. This would enable
intensive numerical/statistical computation, further facilitating data
---------------------- mining applications.

3. Network trends: The improvements in Internet connectivity and Notes
availability of bandwidth are going to make network connectivity and
distributed database use easier. This is going to further facilitate data ----------------------
mining applications.
----------------------
4. Scientific computing trends: Data mining and knowledge discovery play
an important role in linking theory, experiment and simulation, especially ----------------------
for those cases in which the experiment or simulation results in large
----------------------
datasets.
5. Business trends: Today’s business operations are highly competitive. ----------------------
To survive, succeed and prosper in this fiercely competitive world, the
----------------------
business organisations have to be more profitable, respond quickly and
offer better quality of products/services at prices lower than before. ----------------------
And all this has to be achieved with fewer people and lesser wastage/
rejection of cost, price, quality and technology competitive. Under these ----------------------
circumstances of growing constraints and expectations, data mining can
----------------------
become a fundamental technology in enabling business organisations to
predict opportunities and risks generated by their customers and their ----------------------
transactions more accurately.
----------------------
In a nut shell, data mining, therefore, is likely to emerge as an important
managerial decision-making tool. In fact, it is now being increasingly accepted ----------------------
that data mining represents the next step in the evolution of decision support
systems. ----------------------
In this connection, it deserves to be mentioned that the major players in the ----------------------
software industry have already realised the great potential of data mining. It is
because of the realisation of the great potential of data mining that some of the ----------------------
leading DBMS/RDBMS software companies like Oracle, Informix Software, ----------------------
Sybase, Tandem and Real Price Systems have all started incorporating data
mining functionality into their products. ----------------------
----------------------
----------------------
----------------------
----------------------
1. Which of the following are the trends affecting Data Mining?
i. Data trends ----------------------
ii. Software trends ----------------------

iii. Network trends ----------------------
iv. Scientific computing trends
----------------------
v. Business trends
----------------------
----------------------

Notes Summary
---------------------- ●● Data warehousing is a new technology that provides the users with the
tools to store the summarised information from multiple, heterogeneous
----------------------
databases in a single repository.
---------------------- ●● Data warehouse is also seen as a data arrangement and analysis technology,
adopting an “update” approach.
----------------------
●● A data warehouse typically starts out as Very Large Database (VLDB)
---------------------- containing huge data records − numbering millions or even hundreds
of millions! Data warehouse, as a process, evolved gradually within an
----------------------
enterprise. The longer that a data warehouse has been in use, the more it
---------------------- would evolve.
●● Data mining is an information analysis tool that involves the automated
---------------------- discovery of patterns and relationships in a data warehouse. Data mining
---------------------- is a new, but powerful concept that has started to gain popularity in the
world of Business Intelligence.
---------------------- ●● Data mining or Knowledge Discovery Databases (KDD), as it is also
---------------------- known, is the non-trivial extraction of implicit, previously unknown
and potentially useful information from the data. This encompasses a
---------------------- number of technical approaches, such as clustering, data summarisation,
classification, finding dependency networks, analysing changes and
---------------------- detecting anomalies.
---------------------- ●● External trends that are likely to have a fundamental impact on data mining
are data trends, hardware trends, network trends, scientific computing
---------------------- trends and business trends.
----------------------
Keywords
----------------------
●● Data warehousing: It is a technology that provides the users with the
---------------------- tools to store the summarised information from multiple, heterogeneous
---------------------- databases in a single repository.
●● ata mining: It is an information analysis tool that involves the automated
D
---------------------- discovery of patterns and relationships in a data warehouse.
----------------------
----------------------
1. What is data warehousing? Describe its evolution.
----------------------
2. Draw and explain the structure of data warehouse.
----------------------
3. What mistakes should be avoided while implementing data warehousing?
---------------------- 4. List down the keys to successful implementation of data warehousing.
---------------------- 5. What is data mining? What results are expected from data mining?
---------------------- 6. What are the functions of data mining?

Answers to Check your Progress Notes
1. Which of the following are the features of data warehouse?
----------------------
i. Subject-oriented
----------------------
ii. Integrated
iii. Time-varying ----------------------
1. Data warehouse is also seen as a data arrangement and analysis technology ----------------------
adopting an “update” approach.

1. False ----------------------
2. True
----------------------
----------------------
1. Which of the following are the keys to successful implementation of data
warehouse? ----------------------
i. Executive sponsorship is a must. ----------------------
ii. The project’s scope must be focused and achievable.
----------------------
iii. Activities must support the business goals.
----------------------
v. Proven technology components must be used.

1. The extraction of hidden predictive information from large databases is ----------------------
called data mining.
----------------------
1. Data mining encompasses the following technical approaches: ----------------------
i. Clustering ----------------------
ii. Data summarisation ----------------------
iv. Classification
----------------------
v. Finding dependency networks
----------------------
----------------------
----------------------

Notes Match the following.
i. – c.
----------------------
ii. – a.
----------------------
iii. – d.
---------------------- iv. – b.
---------------------- Multiple Choice Multiple Response.

1. Which of the following are the trends affecting Data Mining?
----------------------
i. Data trends
----------------------
iii. Network trends
---------------------- iv. Scientific computing trends
---------------------- v. Business trends
---------------------- 1. Davis, G, and M. Olson. 1985. Management Information Systems. New
---------------------- York: McGraw Hill.
---------------------- Delhi: International Book House.
----------------------
4. Kahate, Atul. 2009. Introduction to Database Management Systems. New
---------------------- Delhi: Pearson Education.
---------------------- 5. Laudon, Kenneth C., Jane P. Laudon and Rajanish Dass. 2010. Management
Information Systems: Managing the Digital Firm. New Delhi: Pearson
---------------------- Education.
---------------------- 6. O’Brien, James and George Marakas. 2011. Management Information
Systems. McGraw- Hill/Irwin..
----------------------
7. Silberschatz,Abraham, Henry Korth and S. Sudarshan. 2010. Database
---------------------- System Concepts. McGraw-Hill Education.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Information Security and Control
UNIT
11
Structure:
11.1 Introduction
11.2 Why Break IT System Security
11.3 Information System Security Threats
Summary
Keywords
Suggested Reading
Information Security and Control 221

Notes
Objectives
----------------------
----------------------
●● Justify the need for security
---------------------- ●● Explain information breach
---------------------- ●● Analyse the reasons for breaking IT system security
---------------------- ●● Identify system security threats
---------------------- 11.1 INTRODUCTION

---------------------- Information Technology and computers have brought about a paradigm
---------------------- shift in the way the corporate organisations operate. There is a significant impact
of IT and computers on the business processes, evolution of new products/
---------------------- services, improved profits, global integration and more efficient and effective
allocation and utilisation of resources, among others.
----------------------
IT and computers have indeed heralded the “Information Age”. Resultantly,
---------------------- “Information” itself has emerged as one of the most valuable and sought after
“Resource”, conferring competitive advantage on those organisations, which
---------------------- have it.
---------------------- However, those organisations which missed the bus, did try to regain their
position by sometimes, poaching or on other occasions, trying to encroach upon
----------------------
the Information Resource base of their competitors, by cracking or breaking
---------------------- into the Information/Computer Systems of their leading counterparts. The
spread of Internet and the relative ease of access made this task of “Information
---------------------- Breach” relatively easier. The cracking or breaking into the computer system by
way of malicious and unauthorised access could be any one of the following or
----------------------
otherwise:
---------------------- i. Unauthorised reading of data (theft of information)
---------------------- ii. Unauthorised modification of data
---------------------- iii. Unauthorised destruction of data
---------------------- 11.2 WHY BREAK IT SYSTEM SECURITY

---------------------- There could be a number of reasons as to why people/organisations
would want to crack or break into the computer systems of their competitors, in
----------------------
particular. Some of the most popular reasons could be mentioned as follows:
---------------------- i. Revenge
---------------------- ii. Money
---------------------- iii. A shot at/of notoriety

iv. The challenge of doing “IT”
----------------------

Regardless of the reasons, there is no denying the fact there continued to Notes
be a number of attempts—some successful, some failed—against the computer/
IT systems security. It then became apparent, indeed imperative, that the ----------------------
organisational “Information Resources” needed to be guarded, protected and
controlled against such unauthorised and undesired access as, otherwise, not ----------------------
only the data, the networks and the information infrastructure but, ultimately, ----------------------
the organisation itself could be at risk.
----------------------

1. The spread of Internet and the relative ease of access made the task of ----------------------
_____________________relatively easier.
----------------------
1. The most popular reasons for breaking IT security is: ----------------------
i. Revenge ----------------------
ii. Money ----------------------
iii. A shot at/of notoriety ----------------------
iv. Validating Information
----------------------
v. The challenge of doing “IT”
----------------------
11.3 INFORMATION SYSTEM SECURITY THREATS ----------------------
There are two different types of threats/problems: ----------------------
1. External threat
----------------------
2. Internal threat
----------------------
With the prevalence of remote access, the World Wide Web, intranets
and extranets, the distinction/difference between the external threats and the ----------------------
internal threats is more often blurred and hazy. Thus, the difference is more
logical than a physical one. ----------------------
1. External security threats: The external threats would be those emanating ----------------------
from outside the organisation. To provide security against these threats,
the following issues need to be addressed: ----------------------
a. Internet connections: Normally, in every organisation, there are ----------------------
relatively few, identifiable Internet connections. It is, therefore,
relatively easy to focus upon them and exercise control. This ----------------------
connection should be protected by a “Firewall”. ----------------------
Firewalls are hardware and software combinations that guard the
border between the corporate Inter/Intranet (private access) and the ----------------------
Internet (public access) as illustrated in Figure 11.1. ----------------------

Notes
----------------------
----------------------
----------------------
---------------------- Fig. 11.1 Firewall
---------------------- Firewalls can control who can surf the Web, download files, etc.
Firewalls can also hide the organisational network’s identity from the
---------------------- rest of the world on the Internet, as the corporate internal IP address is
never used. It should be remembered that if the organisation’s Internet
---------------------- connections are not protected by firewalls, it would be like going
---------------------- away on leave/vacation/holidays and leaving the door unlocked. It
would be an invitation for disaster as, while there may not be any
---------------------- visible indication that you are vulnerable, the first person who comes
knocking on the door is going to find out that the door is open and
---------------------- not locked, and he may not be exactly your best and trusted friend.
---------------------- b. Remote dial-in capabilities: While the Internet connections are
few and easy to watch/control, the threats from dial-in are real.
---------------------- There might be hundreds of dial-in threats, most of which might be
---------------------- unknown to the security administration. Any user in the organisation
with a phone line and a modem attached to his PC can be an exposed
---------------------- to external access.
---------------------- While controlling remote dial-in capabilities, the following aspects need
to be given due weightage/considerations:
----------------------
i. Remote access
---------------------- ii. Remote Access Servers (RAS)
---------------------- iii. Server ID
---------------------- iv. The weak points of the system environment

2. Internal security threats: It is generally thought that the people who
---------------------- are employees of the company are on “our” side and the real threat for
---------------------- security comes from “outside”. Security threats can also come from
within the organisation.
----------------------
It is, therefore, imperative that formal security policies/measures are
---------------------- carefully designed and scrupulously followed to ensure best protection
and prevent security breaches.
----------------------
The policies/measures need to address the following aspects:
---------------------- a. Passwords: Password should be at least five characters in length. It
should be neither the same as the user’s ID nor be a common word.
----------------------
It should expire/change regularly and reuse of the older password
---------------------- should not be permitted. Some software, with the ability to disable

an ID if too many or specified failed attempts are made within a Notes
specified period of time should be installed.
----------------------
b. User terminations: When the user ceases to be an employee, intern,
temporary associate or consultant/contractor, the user security ----------------------
administrator must be informed immediately, so that the user ID
could be terminated. ----------------------
c. Special privilege IDs: Certain functionaries like Network/System ----------------------
Managers are allotted special IDs and passwords called Root,
Supervisor or Administrator ID/Passwords providing “Carte ----------------------
Blanche” access to the system.
----------------------
These passwords too should be changed regularly and changed
immediately when someone who knows them leaves the ----------------------
organisation.
----------------------
d. Access review: There are generally number of users and hundreds
of thousands, if not millions, of files on computer networks. Some ----------------------
type of user administrator review must be undertaken − twice or ----------------------
thrice a year − to ensure that unauthorised users are not given access.
e. Authorisation levels: It must be made clear as to who has authority ----------------------
over what. It must also be ensured that the requests for authorisation ----------------------
permitting access to relative database files are received and issued
in writing, usually via e-mail. ----------------------
Further, the user could be assigned several forms of authorisation ----------------------
for access to parts of database. The authorisation could be:
----------------------
l Read authorisation
l Insert authorisation ----------------------
l Update authorisation ----------------------
l Delete authorisation ----------------------
l Index authorisation
----------------------
l Resource authorisation
----------------------
l Actuation authorisation
l Drop authorisation ----------------------
f. User information: The users should be made aware of the security ----------------------
issues.
----------------------
g. Routine maintenance: Routine maintenance should mainly cover
activities like: ----------------------
l IDs that have not been used in a predefined period of time ----------------------
should be disabled.
----------------------
l Logs giving details about unsuccessful login attempts should
be reviewed and investigated. ----------------------

Notes l Files that have not been accessed for quite some time should be
purged to free up space.
---------------------- h. Software updates: Security administrators should regularly check
with the software vendors to obtain and apply the latest software
----------------------
updates or patches that help close security gaps/holes.
---------------------- i. Virus checking: Viruses are any type of programming code that
intentionally causes a system disruption, shut down or loss of data.
----------------------
The disruption might be harmless or even amusing like displaying
---------------------- the message, “Feel like banana?” on the computer screen. The
disruption could also be hostile and destructive leading to erasing
---------------------- of files/data on hard drives without any intimation.
---------------------- There are many types of viruses including those known as “Trojan
Horses” and “Worms”. Some other major viruses are “Melissa”,
---------------------- “Chernobyl”, “Explorer Zip.Worms”, “I Love You”, “Code Red”
and “WBL SQL Slammer”, among others.
----------------------
Viruses, therefore, have been occupational annoyances/hazards for
---------------------- the IT professionals. As, however, viruses pose a very real threat
to security, due, in fact, special attention has to be paid to the virus
---------------------- protection programs, policies and procedures. Installation of anti-
virus software is, hence, a must. Pattern files, which contain all the
----------------------
information that the actual anti-viruses program uses to look for
---------------------- virus, must be updated regularly. Further, as e-mail has become the
most prevalent form for propagating viruses, anti-virus software
---------------------- should be installed on mail servers to scan message attachments.
---------------------- Some of the anti-virus software products currently in use are
Symantec’s Norton Antivirus, McAfee Antivirus, Kaspersky
---------------------- Antivirus, etc.
j. Physical considerations: The physical access to the IT area needs to
----------------------
be controlled. Access to the computer room or data centre should be
---------------------- limited on need basis. Other IT areas like auxiliary storages, wiring
closets, etc. should be locked. Even printed report distribution
---------------------- should be controlled and apart from the door locks and access cards,
shredders should be made available to dispose of redundant output.
----------------------
Visitors should be personally escorted within the premises.
---------------------- k. Audit trails: It can/should be made mandatory to maintain an audit
trail. An audit trail is a log of all changes (inserts/deletes/updates) to
----------------------
the database, along with information such as which user performed
---------------------- the change and when the change was performed.
The audit trails help “security” and “control” in a number of ways
---------------------- such as:
---------------------- i. Tracing all the updates performed.
ii. Finding incorrect/fraudulent updates.
----------------------
iii. Finding the person who carried out the updates.
----------------------

Audit trails could be created by defining appropriate triggers on Notes
relation updates.
----------------------
Audit trails could also be based on built-in mechanisms.
----------------------
----------------------
1. ____________________ are hardware and software combinations ----------------------
that guard the border between the corporate Inter/Intranet and the
Internet. ----------------------
1. An audit trail is a log of all changes to the database, along with
----------------------
information such as which user performed the change and when the
change was performed. ----------------------
----------------------
Activity 1
----------------------
Study any three recent antivirus software and list their features. ----------------------
----------------------
Summary
----------------------
●● While one may never be able to eliminate altogether all the security
----------------------
hazards/risks, one can certainly be more aggressive about trying to
minimise IT/System security. ----------------------
●● Although absolute protection of the database from malicious access/abuse
----------------------
may not be possible, we can/should make the cost to the perpetrator high
enough to deter most, if not all, attempts to access the database without ----------------------
proper authority.
●● The best defense is a good offense, in IT/computers, a strong and vigilant ----------------------
defense is the only defense. ----------------------
Keywords ----------------------
----------------------
●● External security threats: The external threats are those emanating from
outside the organisation. ----------------------
●● Firewalls: Hardware and software combinations that guard the border
----------------------
between the corporate Inter/Intranet (private access) and the Internet
(public access). ----------------------
●● Viruses: Any type of programming code that intentionally causes a
system disruption, shut down or loss of data. ----------------------
----------------------

Notes
----------------------
1. List down the reasons as to why people break into computer systems.
---------------------- 2. What is a firewall and how can it help to control threat to computer
systems?
----------------------
3. What are the threats to Information System Security?
---------------------- 4. What are the different levels of authorisation?
---------------------- 5. State various internal threats.
----------------------

Fill in the blanks.
----------------------
1. The spread of Internet and the relative ease of access made the task of
---------------------- information breach relatively easier.
1. The most popular reasons for breaking IT security is:
----------------------
i. Revenge
----------------------
ii. Money
---------------------- iii. A shot at/of notoriety
v. The challenge of doing “IT”
----------------------
----------------------
Fill in the blanks.
---------------------- 1. Firewalls are hardware and software combinations that guard the border
---------------------- between the corporate Inter/Intranet and the Internet.
----------------------
1. True
----------------------
Suggested Reading
----------------------
----------------------
York: McGraw Hill.
---------------------- 2. Hitesh Gupta, Hitesh. 2011. Management Information System. New
----------------------
---------------------- Education.

Information System and Quality
UNIT
12
Structure:
12.1 Introduction
12.2 Need for Software Quality Assurance
12.3 Software Quality
12.4 Software Quality Assurance
12.5 Quality Assurance Standards or Models
Summary
Keywords
Suggested Reading
Information System and Quality 229

Notes
Objectives
----------------------
----------------------
●● Describe Software Quality and Software Quality Assurance
---------------------- ●● Justify the need of Software Quality Assurance
---------------------- ●● Describe SQA group and their responsibilities
---------------------- ●● Discuss the quality standards or models
---------------------- 12.1 INTRODUCTION

----------------------
Application of Information Technology was initially confined to scientific
---------------------- and research related activities, where time was not considered to be a constraint.
However, as the IT capabilities and their impact on organisational functioning
---------------------- became apparent, IT emerged as a new, powerful tool to outperform business
rivals and gain competitive advantage by improving product quality, adding
----------------------
value to quality, facilitating product delivery and changing the very processes
---------------------- in an organisation.
It is now being realised that the development of Information Systems
----------------------
requires a constant trade-off of schedule and cost vs. quality. With operational
---------------------- problems emerging after the installation of the systems and with the high
maintenance costs, it is being realised that there is an urgent need that software
---------------------- products, like any other product in the market, should also be evaluated carefully
before they are delivered and implemented.
----------------------
Software is ubiquitous and people often behave as if they had complete
---------------------- confidence in it. For example, the ATMs, online booking of tickets for railways
---------------------- or flights or the mobile network. People do not expect them to fail.
Software failures can now impact many areas of people’s lives and are
---------------------- much less likely to be tolerated than in the past when software was used only
---------------------- by a small number of people who understood that they were using an inherently
unreliable system.
---------------------- It is, therefore, the responsibility of the software developers and providers
---------------------- to develop and provide quality software, which justifies this level of public
confidence. Hence, the expectation and demand for the most stringent Software
---------------------- Quality Assurance Program to provide the required degree of confidence.
---------------------- 12.2 NEED FOR SOFTWARE QUALITY ASSURANCE
---------------------- Apart from the factors discussed earlier, Software Quality Assurance is
---------------------- also required for the following reasons:
i. Avoiding legal liability if the software fails.
----------------------
ii. Proving, with due documentation, that the software was developed using
---------------------- the best practices techniques embodied in various standards.

iii. Convincing the users or prospective clients that the developer has a Notes
satisfactory Software Quality Assurance Program in place.
----------------------
iv. Being able to develop/deliver a good quality product, which, in turn,
may enable the developer to offer guarantees with software as a part of ----------------------
marketing strategy.
----------------------
v. Making software development more cost-effective.
vi. Taking advantage of a rigorous Quality Assurance Program as a marketing ----------------------
USP.
----------------------
----------------------
----------------------
1. Software Quality Assurance convinces the users or prospective clients
that the developer has a satisfactory Software Quality Assurance ----------------------
Program.
----------------------
12.3 SOFTWARE QUALITY ----------------------
Let us first discuss the two terms separately, before discussing Software ----------------------
Quality.
----------------------
Software
Generally, software is defined as a set of instructions. In the context of ----------------------
Software Quality Assurance, let us now view the software as “all instructions/ ----------------------
data put into a computer to cause it to function in any code”. It includes
“operating systems, supervisory systems, compilers and test routines as well as ----------------------
application programs. It also includes the documents used to define and describe
the program, including flow charts, network diagrams and program listings as ----------------------
well as specifications, test plans, test data, test results and user instructions”. ----------------------
Quality
----------------------
“Quality indicates the degree of excellence of a product or service.”
According to ISO 1986, quality means the totality of features and characteristics ----------------------
of a product or service that bear on its ability to satisfy stated or implied needs.
----------------------
As could be observed, the ISO definition clearly reflects the desire to define
quality in a way, which captures the current concept of quality as customer ----------------------
satisfaction in the broadest possible context.
----------------------
Now that we have noted the definitions of “Software” and “Quality”, let
us now move over to Software Quality. ----------------------
Software Quality ----------------------
Software quality is the inherent ability of software to be used for a ----------------------
specified purpose as the software possesses certain features and characteristics
and which enables it to be used for that purpose. ----------------------

Notes According to Pressman, software quality is “Conformance to explicitly
stated functional and performance requirements, explicitly documented
---------------------- development standards, and implicit characteristics that are expected of all
professionally developed software.”
----------------------
IEEE defines software quality as:
----------------------
1. The degree to which a system, component or process meets specified
---------------------- requirements.
2. The degree to which a system, component or process meets customer or
----------------------
user needs or expectations.
---------------------- Thus, software quality is the ability of a software to be fit for its purpose and
---------------------- capability to ensure that:
1. It is reliable.
----------------------
2. It is doing what it is supposed to do.
----------------------
3. It is performing according to its specifications.
---------------------- 4. It is doing efficiently.
---------------------- 5. It is working efficiently for the time for which it is predicted to work.
---------------------- There are a set of quality criteria that help in determining the quality of
the software. If they are required and not present, they pose a risk to the success
---------------------- of the software. These are given below:
---------------------- ●● Correctness: The extent to which a program satisfies its specifications.

●● Reliability: The extent to which a program can be expected to perform its
---------------------- intended function with required precision.
---------------------- ●● Efficiency: The amount of computing sources and code required by a
program to perform its function.
----------------------
●● Integrity: The extent to which access to software or data by unauthorised
---------------------- persons can be controlled.
●● Usability: The ease with which a user is able to navigate to the system.
----------------------
●● Maintainability: The effort required to fix and test the error in an
---------------------- operational program.
---------------------- ●● Flexibility: The effort required to modify an already operational program.
●● Testability: The effort required to test a program so that it performs its
----------------------
intended function.
---------------------- ●● Portability: The effort required to transfer software from one configuration
to another.
----------------------
●● Reusability: The extent to which a program/sub-program can be re-used
---------------------- in another applications.
---------------------- ●● Interoperability: The effort required to couple one system with another
system.
----------------------

Software quality would also imply quality of conformance, reflecting Notes
the extent to which the developer has succeeded in producing software which
implemented the design, and quality of design, which reflects the extent to ----------------------
which a given software product meets a customer’s expectation.
----------------------
----------------------
Fill in the blanks.
1. ___________ indicates the degree of excellence of a product or ----------------------
service. ----------------------
----------------------
1. Software quality is the ability of a software to be fit for its purpose
and capability to ensure: ----------------------
i. It is reliable. ----------------------
ii. It is not doing what it is supposed to do.
----------------------
iii. It is not performing according to its specifications.
iv. It is doing efficiently. ----------------------
v. It is working efficiently for the time for which it is predicted to ----------------------
work.
a. Correctness i. The effort required to modify an already ----------------------

operational program.
b. Usability ii. The extent to which a program satisfies its ----------------------
specifications. ----------------------
c. Flexibility iii. The effort required to transfer software from one
configuration to another. ----------------------
d. Portability iv. The ease with which a user is able to navigate to
the system. ----------------------
----------------------
12.4 SOFTWARE QUALITY ASSURANCE ----------------------
Quality assurance is “a planned and systematic pattern of all actions ----------------------
necessary to provide adequate confidence that the item or project conforms to
established technical requirements”. ----------------------
Software Quality Assurance (SQA) is an umbrella activity that is applied ----------------------
through the software process. SQA is important as it reduces the amount of
rework that it must do, which results in lower costs and more importantly, ----------------------
improved time to market.
----------------------
Software quality assurance, accordingly, lays considerable stress on getting
the design right, prior to coding, although the increasing use of prototyping in ----------------------
systems development is reducing the differences between the production stages
----------------------
of hardware and software.

Notes Software quality assurance must also:
i. Provide for exhaustive testing
----------------------
ii. Obtain a mathematical proof of correctness
----------------------
iii. Convince oneself that the output from each phase of the development
---------------------- process, which will be a different representation of the software, is
functionally equivalent to its predecessor.
----------------------
Management Role in Software Quality Assurance
---------------------- The failure of the management to properly plan and control the software
---------------------- development process is now felt to have been responsible for much of the
poor quality software developed/produced in the past. In fact, one of the major
---------------------- roadblocks in software quality was the belief/attitude that problems can be
sorted out at the end of the development process.
----------------------
It is now generally recognised that management has a key role to play
---------------------- in the production/development of quality software, as the software quality
assurance, like any other form of quality assurance, is highly dependent upon
---------------------- management attitudes. While the organisational structures could be created and
---------------------- put in place any time, the real change required is the change in managerial
attitudes.
----------------------
The management must manifest and transmit a greater desire to produce
---------------------- high quality product. The management must also commit “commensurate
resources” to ensure this. In turn, the software developers must plan and
---------------------- implement software development projects with the objective of “building in”
quality.
----------------------
Towards this end, they must:
----------------------
1. Establish and maintain the requirement specifications.
---------------------- 2. Establish and implement a process for developing the software.
---------------------- 3. Establish and maintain an evaluation process.
Further, the “Discipline Triangle” must be applied to produce quality
---------------------- software successfully. The “Discipline Triangle” would contain Management,
---------------------- Software Development and Product Assurance Discipline.
The “Management Discipline” would include both project management
----------------------
and general management. The “Software Development Discipline” would
---------------------- involve such activities like analysis, design, testing, etc. The “Product
Assurance Discipline” would include quality assurance, test and evaluation and
---------------------- configuration management.
---------------------- Software Quality Assurance Activities
Software quality assurance is composed of a variety of tasks associated
----------------------
with two different constituencies − the software engineers who do technical
---------------------- work and an SQA group that has responsibility for quality assurance planning,
oversight, record keeping, analysis and reporting. The charter of the SQA group
---------------------- is to assist the software team in achieving a high quality product.

The SQA group prepares an SQA plan. The plan identifies: Notes
●● Evaluations to be performed
----------------------
●● Audits and reviews to be performed
●● Standards that are applicable to the project ----------------------
●● Procedures for error reporting and tracking ----------------------
●● Documents to be produced by the SQA group
----------------------
●● Amount of feedback provided to the software project team
Responsibilities of SQA Group ----------------------
A few of the responsibilities of the SQA group are listed as under: ----------------------
1. The SQA group identifies, documents and tracks deviations from the
----------------------
process and verifies that corrections have been made.
2. They audit designated software work products to verify compliance with ----------------------
those defined as part of the process.
----------------------
3. They ensure that deviations in software work and work products are
documented and handled according to a documented procedure. ----------------------
4. They record non-compliance and reports to senior management. ----------------------
----------------------
----------------------
Fill in the blanks.
----------------------
1. _________________________is an umbrella activity that is applied
through the software process. ----------------------
1. The Discipline Triangle consists of: ----------------------
i. Management Discipline
----------------------
ii. Team Development Discipline
----------------------
iii. Software Development Discipline
iv. Product Assurance Discipline ----------------------

1. The software development group identifies, documents and tracks ----------------------
deviations from the process and verifies that corrections have been
made. ----------------------
----------------------
12.5 QUALITY ASSURANCE STANDARDS OR MODELS
----------------------
The formal Quality Assurance model would need to be woven around
the ISO 9000 Standard. The International Organisation for Standardization ----------------------
(ISO) developed the family of standards for software. The ISO 9000 framework
describes quality assurance elements, which includes organisational structure, ----------------------

Notes procedures, processes and resources needed to implement quality planning,
quality assurance and quality control.
----------------------
The family of ISO 9000 includes standards such as ISO 9001, 9002 and
---------------------- 9003. These standards are continuously being evolved and applicable to various
disciplines.
----------------------
ISO 9001 is acknowledged as requiring additional features for software
---------------------- development.
ISO 9001 Standard with the IEEE 1298 Standards and the ISO 9000-
----------------------
3 states the guidelines that would be required to be considered for Software
---------------------- Quality Assurance.
---------------------- Some of the elements covered in ISO 9000-3 are management

responsibility, quality system, design control, document and data control,
---------------------- process control, inspection and testing, corrective and preventive action, control
of quality records, internal quality audits, training and statistical techniques.
----------------------
In addition to the ISO standards, the other models highly used in the IT industry
---------------------- are:
---------------------- 1. Capability Maturity Model (CMM): The CMM is a framework
developed by Software Engineering Institute (SEI) at Carnegie Mellon
---------------------- University. The framework is based on the best practices in software and
other organisations. Thus, CMM reflects the collective process experience
---------------------- of many companies.
---------------------- The CMM is used to evaluate the software processes and identify
deficiencies. CMM framework provides five levels of the process as per
----------------------
the level of maturity.
---------------------- These five levels are:
---------------------- i. Initial
---------------------- ii. Repeatable

iii. Defined
----------------------
iv. Managed
----------------------
v. Optimising
---------------------- In the initial stage, processes are immature or ad hoc, which means these
process are not clearly defined and the outcome of these processes largely
----------------------
depends on the capability of the team and project leader. From level
---------------------- two to five, the key process areas are defined and these are more refined
and as we go up one scale, processes become more matured. In mature
---------------------- processes, each process is well defined and the outcome of the process
does not depend on the team but on the process. More mature the process,
----------------------
more quality we can expect.
---------------------- 2. Six Sigma: The Six Sigma process was developed by Motorala. It is a
---------------------- quality management methodology, which focuses on achieving high

levels of quality by controlling the process and reducing defects. Six Notes
Sigma derived its name from the statistical term “standard deviation” and
is denoted by letter ó sigma (a Greek notation) that defines the degree of ----------------------
variance.
----------------------
Six Sigma puts a primary focus on quantifying, measuring and controlling
quality of the product. Thus, it focuses on collecting data and analysing ----------------------
the results in order to minimise the defects in the product. Six Sigma is
----------------------
an approach towards enhancing products as well as process quality. To
achieve Six Sigma certification, the process must not produce more that ----------------------
3.4 defects per million opportunities. The philosophy behind Six Sigma
is that, if you can measure the defects, you can systematically define the ----------------------
procedure to eliminate them and arrive at zero defects.
----------------------
----------------------
1. Which of the following are the levels of Capability Maturity Model ----------------------
(CMM)? ----------------------
i. Initial
----------------------
ii. Repeatable
----------------------
iii. Refined
iv. Managed ----------------------
v. Optimising ----------------------
1. Six Sigma process was developed by ____________________.
----------------------
----------------------
Activity 1
----------------------
With the help of NASSCOM list of IT companies, prepare a list of CMMI
----------------------
level 5 certified companies.
----------------------
Summary
----------------------
●● Software quality is the inherent ability of software to be used for a specified
purpose as the software possesses certain features and characteristics and ----------------------
which enable it to be used for that purpose. ----------------------
●● The software quality must satisfy the criteria consisting of Correctness,
Reliability, Efficiency, Integrity, Usability, Maintainability, Testability, ----------------------
Flexibility, Portability, Reusability, Interoperability. ----------------------
●● Quality assurance is “a planned and systematic pattern of all actions
necessary to provide adequate confidence that the item or project conforms ----------------------

Notes to established technical requirements”. Software Quality Assurance lays
considerable stress on delivering the right product to the customer.
---------------------- ●● To ensure systematic development of the software, various quality
---------------------- assurance standards or models such as Capability Maturity Model, Six
Sigma and others can be implemented.
----------------------
---------------------- Keywords
---------------------- ●● Software: All instructions/data put into a computer to cause it to function

in any code.
---------------------- ●● Quality: It indicates the degree of excellence of a product or service.
---------------------- ●● Software quality: The inherent ability of a software to be used for
a specified purpose as the software possesses certain features and
---------------------- characteristics and which enable it to be used for that purpose.
---------------------- ●● Quality assurance: It is a planned and systematic pattern of all actions
necessary to provide adequate confidence that the item or project conforms
---------------------- to established technical requirements.
---------------------- ●● Ethics: The system or code of morals of a particular person, religion,
group or professions.
----------------------

---------------------- 1. What is software quality?
---------------------- 2. Why do we require Software Quality Assurance?
3. What is the role of management in Software Quality Assurance?
----------------------
4. State and explain the various quality criteria.
----------------------
5. What is an SQA group? Explain its responsibilities.
---------------------- 6. Explain the features of ISO.
---------------------- 7. What is Six Sigma?
----------------------
----------------------
---------------------- 1. True
Fill in the blanks.
----------------------
1. Quality indicates the degree of excellence of a product or service.
----------------------
----------------------

Multiple Choice Multiple Response. Notes
1. Software quality is the ability of a software to be fit for its purpose and
----------------------
capability to ensure:
i. It is reliable. ----------------------
iv. It is doing efficiently. ----------------------
v. It is working efficiently for the time for which it is predicted to ----------------------
work.
a. – ii. ----------------------
b. – iv. ----------------------
c. – i.
----------------------
d. – iii.
----------------------
1. Software Quality Assurance (SQA) is an umbrella activity that is applied ----------------------

through the software process.
----------------------
----------------------
1. The Discipline Triangle consists of:
i. Management Discipline ----------------------
iii. Software Development Discipline ----------------------

iv. Product Assurance Discipline ----------------------
----------------------
1. False
----------------------
1. Which of the following are the levels of Capability Maturity Model ----------------------
(CMM)?
----------------------
i. Initial
----------------------
ii. Repeatable
iv. Managed ----------------------
v. Optimising ----------------------
1. Six Sigma process was developed by Motorola.
----------------------
----------------------

Notes
Suggested Reading
----------------------
---------------------- York: McGraw Hill.
----------------------
---------------------- Education.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
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Functional Applications
UNIT
13
Structure:
13.1 Introduction
13.2 Accounts Payable System
13.3 Production Management System
13.4 Marketing Service System
Summary
Keywords
Suggested Reading
Functional Applications 241

Notes
Objectives
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●● Explain the working of accounts department
---------------------- ●● Analyse the production management system
---------------------- ●● Describe the marketing service system
---------------------- 13.1 INTRODUCTION
----------------------
This unit gives you an introduction about the functioning of various
---------------------- systems in various departments of an organisation such as accounts payable
system, production management system and marketing service system.
----------------------
The system design such as functional decomposition diagram, context
---------------------- level diagram, data flow diagram, data entry screen design and report layout are
presented for these systems.
----------------------
---------------------- 13.2 ACCOUNTS PAYABLE SYSTEM
---------------------- Scope of the System

1. The management gives details of the vendors. These include vendor code,
----------------------
name, address and other individual and unique details.
---------------------- 2. The audit department submits passed advance requisitions along with the
---------------------- purchase order details and payment details.
3. Bank payment vouchers are then generated for these advances and are
---------------------- paid against proforma invoice or the purchase order that is the main
---------------------- supporting document.
4. The audit department submits the passed invoices for payment. It also
---------------------- gives details of types of the bills, tax deductible and supporting documents
---------------------- like RCIA, Challan, purchase order and account codes.
5. Invoices are then generated for the different categories of bills according
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to their details for record.
---------------------- 6. Net payment to be made results from the deduction of advances and TDS.
---------------------- 7. Bank vouchers are generated for effecting payment of the invoices.
---------------------- 8. Debit/credit note payments/deductions are made as and when the need
arises.
---------------------- 9. Cheques are issued as per bank payment vouchers for the entire invoice,
---------------------- advance or debit/credit note payments.
10. Balances of the creditors and those of the control accounts, as per above
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transactions, are maintained through double entry bookkeeping.
----------------------

11. Reports required for management or audit department are generated as Notes
and when required.
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Fig. 13.1 A-Functional Decomposition Diagram ----------------------

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Fig. 13.1 B-Context Level Diagram ----------------------
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Fig. 13.1 C-First Level Data Flow Diagram
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Notes The following are some input formats:
1. Bank Payment Voucher
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2. Journal Entry
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3. Debit Note Notes
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4. Accounts Master ----------------------
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Notes The following are some output report formats:
1. Bank Details Report
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---------------------- XYZ Co. Ltd.

BANK DETAILS REPORT
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Bank Code Bank Name Branch Fax No. Phone No.
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2. Vendor Balances
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XYZ Co. Ltd.
---------------------- BANK BALANCE REPORT
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Ven. Invoice Trans. Trans. IDS BP Vchr Prev. Type of Trans. Current
Code Code No. Date Clode No. Balance Balance Amount Balance
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3. Invoice Notes
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Activity 1 ----------------------
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Prepare Context Level Diagram for Billing System.
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13.3 PRODUCTION MANAGEMENT SYSTEM ----------------------
Scope of the System ----------------------

1. The scope of the project begins when the work order is received by the ----------------------
shop from the Planning Department. Accordingly, the shop prepares the
Material Requirement Note (MRN) and sends it to the store. ----------------------
2. The store sends raw material to the shop as per the details of the MRN ----------------------
along with the Material Issue Note (MIN).
----------------------
3. The Planning Department sends the Production Plan and the Daily
Production Plan to the shop. Accordingly, the shop carries out the ----------------------
processes involved in the manufacturing of the product.
----------------------
4. At each section, the Inspection Department inspects the processed batch
and gives the following details: ----------------------
i. Accepted quantity ----------------------
ii. Rework quantity
----------------------

Notes iii. Reason for rework
iv. Rejected quantity
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v. Reason for rejection
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After the required quantity in the work order is produced, the work order
---------------------- is treated as closed.
---------------------- 5. Various reports such as production plan report, daily product report,
production plan achievement status, inspection report are prepared. These
---------------------- reports are also sent to the management whenever required.
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13.2 Context Level Diagram
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The following are some sample input screens. Notes
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The following are some report formats: Notes
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---------------------- 1. The Inspection Department inspects the processed batch and gives
the following details:
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i. Accepted quantity
---------------------- ii. Rework quantity
---------------------- iii. Reason for sales/purchase
---------------------- iv. Rejected quantity

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13.4. MARKETING SERVICE SYSTEM Notes
The system will perform the following tasks: ----------------------
1. It will record upcoming project information from primary sources. ----------------------
2. The system will accept package, consultant and follow-up information of
the various projects from the branch office and primary sources. ----------------------
3. It will receive enquiries for the supply of cable joining kits from different ----------------------
contractors who apply for the tender for implementation of package
----------------------
works.
4. It will generate offers against the enquiries received. ----------------------
5. The system will store a comparative statement of the enquiries received ----------------------
by the company’s competitors for the supply of cable jointing kits. The
branch offices will provide this information. ----------------------
6. The system will record the orders received by the company’s competitors ----------------------
on the basis of comparative statement entries previously recorded. The
branch office of the company will provide this information. ----------------------
7. It will match the enquiries received and the orders received by the ----------------------
company as well as competitors and close enquiries as well as packages.
The branch offices will provide competitor order details. ----------------------
8. The system will also record direct enquiries received from distributors ----------------------
or end-customers belonging to the utilities market segment for supply of
materials for maintenance purposes. ----------------------
9. The processing of direct enquiries is similar to that of package enquiries. ----------------------

10. It will provide the facility of re-opening enquiries. ----------------------
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Notes
Marketing Service System
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Master Transaction Reports
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→ Competitor → Projects → Detail Project Report
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→ Zone → Direct Enquiry → Summary Project Report
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→ Branch → Comparative Statement → List of Closed Proiects
---------------------- → Engineer → Order Updation → Detail Enquiry Report
---------------------- → Distributor → Enquiry Reopen → Summary Enquiry Report

→ Customer → List of Closed Enquiries
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→ Company Kit → Sales Analysis
---------------------- → Competitor Kit → (CompetitorWise)
---------------------- → Stage → Comparative Statement
→ Category → Min. Price Quoted List
----------------------
→ Technology → Market Share Analysis
---------------------- → Cable → Co. Kit List
---------------------- → Voltage → Competitor Kit List
→ Kit Type → Competitor Information
----------------------
→ Material → Offer Preparation
---------------------- → Supplier Mailing List
→
---------------------- → Type Testing
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---------------------- 13.3 A Functional Decomposition Diagram
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Notes
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13.3 B Context Level Diagram
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The numbers shown in the diagram represent:
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1. Competitor Details 12. Project Details
2. Category Details 13. Package Details ----------------------
3. Additional Customer Details 14. Order Kit Details ----------------------
4. Stage Details 15. Order Details ----------------------
5. Supplier Details 16. Kit Details
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6. Material Details 17. Customer Type Details
----------------------
7. Market Segment Details 18. Customer Details
8. Enquiry Reopen Details 19. Enquiry Details ----------------------
9. Type Details 20. Competitor Order Details ----------------------

10. Offer Details 21. Competitor Enquiry Details ----------------------
11. Report Details 22. Follow-up Details
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Notes The following are some input screens:
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Notes
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The following are some output reports:
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Notes
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Other Output Reports can be:
---------------------- 1. Detailed Project Report
---------------------- 2. Summary Project Report
---------------------- 3. List of Closed Projects

4. Summary Enquiry Report
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5. List of Closed Enquiries
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6. Sales Analysis Competitor Wise
---------------------- 7. Comparative Statement
---------------------- 8. Market Share Analysis
---------------------- 9. Company Kit List

10. Competitor Kit List
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11. Competitor Information
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---------------------- Activity 2
---------------------- Visit an organisation involved in sales and purchase of a product and study
their sales and purchase system. Based on your study, write the scope for
----------------------
that system.
----------------------
---------------------- Summary
---------------------- ●● In this unit, the scope of the system and design aspects such as Context
level diagram, data flow diagrams, functional decomposition diagram,
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input screens and report layouts for accounts payable system, production
---------------------- management system and marketing service system have been covered.
----------------------

Keywords Notes
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●● Dataflow Diagram: A graphical representation of the “flow” of data
through an information system, modeling its process aspects. A DFD is ----------------------
often used as a preliminary step to create an overview of the system,
which can later be elaborated. ----------------------
●● Functional Decomposition Diagram: The purpose of the functional ----------------------
decomposition diagram is to show on a single page the capabilities of an
organization that are relevant to the consideration of an architecture. ----------------------
----------------------
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1. With the help of the Accounts Payable System, prepare a list of all the
files. ----------------------
2. Prepare the 1st level data flow diagram for Production Management ----------------------
system.
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3. Prepare 1st level data flow diagram for Marketing Service system.
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1. The Inspection Department inspects the processed batch and gives the
following details: ----------------------
i. Accepted quantity ----------------------
ii. Rework quantity
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iv. Rejected quantity
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Information Systems: Managing the Digital Firm. New Delhi: Pearson ----------------------
Education.
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Applications in Service Sector
UNIT
14
Structure:
14.1 Introduction
14.2 MIS Applications in Service Industry
14.2.1 Airlines
14.2.2 Hospitals
14.2.3 Banking
Summary
Keywords
Suggested Reading
Applications in Service Sector 263

Notes
Objectives
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●● Describe the service sector
---------------------- ●● Identify the difference between service and product
---------------------- ●● Justify MIS applications in service industries like airlines, hospital
and banking
----------------------
---------------------- 14.1 INTRODUCTION

---------------------- Unlike the manufacturing sector, the service sector does not have physical
goods to be manufactured for the customer. Hence, the MIS normally found
---------------------- in a manufacturing and selling organisation will not be suitable in the service
---------------------- sector. The data processing applications like Payroll, Accounting and Inventory
are required in the service industry too, but they may not be all critical to the
---------------------- service industry. The mission in a service industry is of providing the most
satisfying service to the customer, while in a manufacturing industry; it could
---------------------- differ from industry to industry and from organisation to organisation.
---------------------- There are certain mission critical applications in the service industry,
which need to be managed best. These applications make a service organisation
---------------------- efficient and effective in providing the best service to the customer. In a
---------------------- competitive situation, this industry requires service distinction to create an
identity, a position and a growth, to remain ahead of the competition. In a service
---------------------- industry, therefore, a sensitive market and consumer research is necessary
to identify the segment to be served and to study its service requirements,
---------------------- expectations and perceptions. Since the service demands are more dynamic
---------------------- than that of a product, a continuous search on the requirements, expectations
and perceptions is to be conducted to upgrade and enhance the service facilities.
---------------------- Most of the service industries have front-end facilities to serve the
---------------------- customer to clear their immediate needs and make them comfortable for the
rest of service demands. Any human interaction is knowledge based, hence,
---------------------- information based. All the systems, which make human interaction effective
and comfortable are mission critical applications and a service industry has
---------------------- to provide these to offer the most satisfying service. The mission critical
---------------------- applications are built around the business strategy. The strategy formulation
and implementation depends a lot on the information on the socio-economic
---------------------- changes, the new demands arising out of these changes and the technology to
meet the changing needs effectively.
----------------------
The service organisations undergo changes more rapidly than the
---------------------- manufacturing sector. The returns in the service industry are immediate
compared to the manufacturing sector. The entire managerial effort in a service
----------------------
industry is to create a distinctive service to remain competitive.
----------------------

Tom Peters in The Service Edge: 101 Companies that Profit from Customer Notes
Care states five principles of a distinctive service.
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1. Listen, understand and respond to the customers.
2. Define a superior service and establish a service strategy. ----------------------
3. Set standards and measure the performance. ----------------------
4. Select, train and empower the employees to work for the customers. ----------------------
5. Recognise and reward the accomplishments.
----------------------
Before going into the details of these, one should understand the meaning
of the distinctive service in the service industry and how it differs from the ----------------------
manufacturing sector. This would help us to evolve and understand the specific
mission critical application in the service and hospitality industry. ----------------------
Creating an Outstanding Service ----------------------

Creating a distinctive service is a willful, conscious and deliberate ----------------------
management endeavour. The management of a service business calls for such
a willful, conscious and deliberate act to create a distinctive service and hence, ----------------------
to remain in the business. To manage a service effectively, it is necessary to
----------------------
understand the distinctive characters between the product and the service, the
customer expectation and perception. ----------------------
Service Vs Product ----------------------
A product is tangible, but a service is not. A product consumes a shelf
space, has a shelf life and has a physical unit of measure such as kgs, sq. metre, ----------------------
etc. The product can be offered on payment, while services are offered on ----------------------
demand. The quality control of the product is possible with reference to the
determined standards, while the quality control of a service is difficult due to its ----------------------
reference to the customer’s expectation, which is difficult to judge and control.
----------------------
The product can be demonstrated before the actual sale, while the service
cannot be demonstrated. The product can be produced, sold and consumed in ----------------------
stages while the service has to be produced, sold and consumed simultaneously.
The receiver and provider of the service are very close to each other. ----------------------
The quality of service results in the satisfaction or dissatisfaction of ----------------------

the customer. The satisfaction is related to the customer’s expectations and
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perceptions of the service and its outcome, which is integral to his needs, could
be specific or vague. The customer is dissatisfied if the service received is below ----------------------
his expectations and not as perceived by him.
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The satisfaction is also based on the manner in which the service is
being offered or perceived. If the servicing process is not enjoyable though it ----------------------
gives what is asked for, then dissatisfaction results. The service expectations
are dynamic and not static. The expectations are about the service process and ----------------------
the outcome, and satisfaction relates to both. Hence, to create a distinctive
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service, the management of a service business must understand the customer
expectations, and if the customer expectations and perceptions are not rational ----------------------

Notes and are generated out of knowledge, then customer awareness and education is
absolutely necessary.
----------------------
The service function essentially is a human interaction between the
---------------------- service receiver and the provider. The service-focused organisation manages
this human interaction at its best through a well-defined customer-oriented
---------------------- strategy designed for an excellent distinctive service.
----------------------
14.2 MIS APPLICATIONS IN SERVICE INDUSTRY
----------------------
We will discuss MIS applications in major service and hospitality
---------------------- industries. We shall concentrate only on the mission critical applications of the
business where the issue of distinctive service is a focus. These applications are
---------------------- critical to the industry’s performance.
---------------------- 14.2.1 Airlines
---------------------- The operative function of airlines is to move people and goods from one
location to the other safely on time. The expectations and perceptions about the
---------------------- distinctive service are beyond the operative function of carrying people and
goods on time. The perceptions about good service are schedule, convenience,
----------------------
prices, seat comfort, meal quality, treatment by the crew and the ground staff,
---------------------- the facilities at the airport, etc. Another set of people have a perception of the
distinctive service, which falls into pre- and post-travel period. A distinctive
---------------------- service means assistance in the travel arrangement, arranging the hotel
accommodation, surface transport to and from the airport, etc.
----------------------
The third set of people believe that a distinctive service means solving the
---------------------- passengers’ problems immediately at the front desk with no hassle of moving
from counter to counter or entering into correspondence.
----------------------
The MIS applications in the airlines industry would be towards supporting all
---------------------- decisions, which affect the objective of offering a distinctive service to the
---------------------- customers having different expectations and perceptions. They concentrate on
the process and the outcome of the service.
---------------------- The service goals could be:
---------------------- i. One complaint per 1,00,000 passengers.
---------------------- ii. 95 per cent occupancy to conclude that the schedules are convenient.
iii. Throughput time, check in to check out is less than 10 minutes.
----------------------
The MIS, therefore, will concentrate on the following information to
---------------------- make the managerial and the operative decisions to achieve the service goals.
---------------------- 1. Passenger Information
---------------------- ●● The type, class and purpose of travel.

●● The socio-economic group.
----------------------
●● The duration of stay at the destination.
---------------------- ●● The food and eating habits.

●● The language and communication needs. Notes
●● The expectations on the service before and after the journey.
----------------------
●● The traffic flow between towns, cities and countries.
●● The emerging/future pattern of travel. ----------------------
●● Information as regards the flight schedules/punctuality records/fares/ ----------------------
add-on services for competing airlines.
----------------------
The MIS in the airlines industry should focus on collecting this information.
This will help to revise the schedules frequently to suit the passenger ----------------------
needs. It would help to build the passenger profile and make decisions
to meet the expectations and perceptions of maximum passengers. For ----------------------
example, the passenger profile will be different for the tourists and non-
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tourists, a domestic traveller and an international traveller, a family and an
individual, etc. Hence, each passenger profile will have a different service ----------------------
expectation. It is, therefore, necessary to collect this information and build
the service package around this profile. Such an information would help ----------------------
to build and modify the service package, satisfying the changing profile
----------------------
of the passenger.
Information on the traffic flow and the type and class of passengers would ----------------------
help to design different fares affordable to the passengers. The different
----------------------
types of fares can be offered for off-season, off-time travel, individuals
and family, business routes and tourist sites, etc. It is also possible to build ----------------------
packages where passengers pay for all services, and airline takes care of
all the requirements in pre- and post-travel total service. ----------------------
2. Information on the aviation: The best service package for a distinctive ----------------------
service would fail in implementation, if the safety, security and availability
of planes are doubtful. It is necessary to have a dedicated MIS to manage ----------------------
the aspect of the airline industry, where the decisions related to new ----------------------
purchases, planned replacement, investment in the infrastructural facilities
to keep the planes in a good shape for flying are taken. The critical spares ----------------------
in the inventory, manpower training, etc. are taken with confidence.
----------------------
The MIS in this area would heavily rely on the business and operations
research models to solve the complex problem of planning and control. ----------------------
The MIS would help in the perspective planning and strategy formulations,
which would support the implementation of the plan framed for offering a ----------------------
distinctive service. ----------------------
14.2.2 Hospitals
----------------------
The role of a hospital in today’s world has changed from the medical
and clinical assistance to health care with a concern for the people who need ----------------------
it. The hospitals are required to run as business institutions with the mission
----------------------
of best health care for the people. The scope of service now includes health
care guidance, preventive care, post-clinical attention, care and advice. The ----------------------
hospitals may handle a person who is not a patient and hence, we call a person
visiting a hospital a “customer” and not a “patient”. Hence, the customer profile ----------------------

Notes would include besides a patient, an associate of a patient, a doctor, a consultant,
a para-medical personnel, a medicine supplier and so on.
----------------------
The management of the hospital has to provide distinctive service to wide
---------------------- range of customers whose service expectations and perceptions are varied. The
customers can easily discriminate between the quality of care, quality of caring,
---------------------- between being treated medically and being treated personally, between being
served at least cost and served with efficiency and effectiveness. The customer
----------------------
aims at the terminal result of the service and evaluates the management on the
---------------------- quality of the service process.
Unlike any other service business, in the hospitals, the service provider/
----------------------
server is a highly knowledgeable resource while the customer is a no-knowledge
---------------------- person with high demands on the service expectations. The risk management
in hospitals is highly punitive but not necessarily highly rewarding. It is the
---------------------- management of customer through a high-level human resource management.
---------------------- Like any other business, the management of hospitals has changed from an
art to a science and then to a technology. Today’s hospitals use a lot of medical
---------------------- hardware and software in health care activity. Health care decisions are based
on diagnostic aids and assistance through X-ray, scanning, pathological tests
----------------------
and knowledge base of case history, etc. The operational aspect of the health
---------------------- care is supported by a lot of equipment and instrument specially developed
for the purpose. The role played by these aids is so vital and important that
---------------------- it is called medical engineering. Thus, medical engineering has helped the
medical professionals to reduce the drudgery of health care and concentrate on
----------------------
diagnosis, prescriptions and treatment. The management of the infrastructure
---------------------- of equipment, instruments, etc. is a very important management function
supporting the effect of offering a distinctive service to the customer.
----------------------
In hospitals, there are critical resources such as an operation theater, an
---------------------- X-ray lab, hospital beds, etc. These resources are to be managed efficiently and
to be used effectively by planning and control by the other associate resources
---------------------- such as the surgeon, anesthetist, physician, and nursing staff. More than any
---------------------- other service industry, handling of emergency in the hospital is highly critical
and hence detrimental to the distinctive service. The resource planning must
---------------------- consider the emergency requirement of the customers, which are difficult to
predict and control.
----------------------
The mission critical applications in the hospital industry are discussed below.
---------------------- Front-end Applications
---------------------- 1. Patient database
---------------------- l To handle the queries on the existing patients and the patients treated
and discharged. The queries may come from a visitor, a doctor or
---------------------- any other staff of the hospital.
---------------------- 2. Medical server database
---------------------- l The name, address, contact numbers of all the medical staff
including doctors, nurses, and technicians, hospitals, locations and
work times on weekdays for contact. Notes
l Important service centres in the town where support services can
----------------------
be obtained in emergency. These are the laboratories, blood banks,
special clinics and special facility centres. ----------------------
3. Resource planning and control
----------------------
l An online query facility to answer the number of queries on the
availability, scheduling and rescheduling of the resources and the ----------------------
facilities.
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l For judging the usage of the facilities and to put them in proper use.
----------------------
4. Medical case history database
l Knowledge database on the case history for guidance and research. ----------------------
l Monitoring the effect of drugs to judge the efficacy in terms of the ----------------------
patient’s response.
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l Analyse the health care demand and make planning for health
service strategy. ----------------------
Back-office Applications ----------------------
1. Core applications ----------------------
l Manpower and personnel planning.
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l Payroll and employee related applications.
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l Hospital billing and recovery.
l An inventory control − procurement, planning and control. The ----------------------
expiry date management.
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l Financial accounting. Capital budgeting and expense control.
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l Maintenance of service facilities.
l Resource utilisation and analysis. ----------------------
2. Critical control application ----------------------

Evolve the basic standards for control and provide exception reports to ----------------------
the management for forward planning and control.
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l Patients waiting time and service cycle.
l Non-use of critical resources. ----------------------
l Stock-outs of the critical drugs and the time taken to restore supply. ----------------------
l The number of patients admitted, treated and cured. Length of the ----------------------
stay, cost and revenue to the hospital.
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l New trends in service demands and service performance in such
cases. ----------------------
l Analysis of the delays in terms of duration and causes.
----------------------

Notes l The number of patients turned down or sent to other hospitals for
want of facilities − analysis and causes.
----------------------
Unlike a manufacturing industry, it is not possible to have mechanisation
---------------------- and automation in the hospital services. They could be, at the most, aids.
The service quality depends on the people who provide it. Most of the
---------------------- management issues are related to the manpower and human resource
planning. The MIS largely revolves around this aspect in the industry. If
----------------------
this aspect is not taken care of, the service would suffer badly in spite of
---------------------- the best physical resources available.
The hospital management is a high-risk business, both for the server and
----------------------
the customer and the risk spreads from business risk to the survival of the
---------------------- patient. It is a business of non-standard activity where every customer
needs a unique approach. The steps of service may be common but the
---------------------- process may differ putting strain on the facilities. The MIS in hospital
management plays more of a support role in forward planning than the
----------------------
present control needs. The MIS plays a support role for a strategic decision-
---------------------- making for expansion, upgradation and training of human resource. The
MIS plays a role of crisis management through information support.
----------------------
14.2.3 Banking
---------------------- A bank is generally understood as a place where the financial services
---------------------- such as checking/savings and providing credit to the customers are offered. The
scope of this service in today’s world is expanded to a “Financial Services Super
---------------------- Shoppe” where the banks have become an instrument in providing financial
assistance to a number of activities as a policy or by regulation or for meeting
---------------------- socio-economic obligations. In banking also, the concept of financial product
---------------------- has come in.
The customers choose a bank mainly on the following three factors:
----------------------
i. The ease of doing business.
----------------------
ii. The quality of personnel and service.
---------------------- iii. The range of the financial services.
---------------------- The factors outrank the factors such as the location, interest rates, layout,
banking hours, etc.
----------------------
The bank has a wide range of customers like individuals, institutions,
---------------------- trusts, business organisations, Government and local bodies.
---------------------- The banks deal with a number of transactions, which also vary widely
in terms of length and complexity. The bank customer, like any other service
---------------------- industry, is interested in getting terminal results quickly. The distinctive service
in banking mostly means solving the customers’ problems in the financial
---------------------- matters, and the single most widely used measure of quick service is the elapsed
---------------------- time of transaction execution. For example, the time taken for crediting the
amount, withdrawal of cash, the sanction of a loan or credit facility, etc. are
---------------------- the norms of deciding a good service. The MIS in banking industry revolves

around this aspect. The customer of the bank would like to know the status Notes
of the account very fast to make decisions on withdrawals or payments. He is
interested in obtaining the loan assistance for his specific need with a reasonable ----------------------
rate of interest. Some customers would be interested in tax consulting and
tax planning. Another group of customers would be interested in investment ----------------------
guidance for investing in stocks and securities. ----------------------
To avoid the inconvenience of going to a number of places for payment
----------------------
of small amounts, customers need service at the counter to pay electricity bills,
telephone bills, taxes and duties to the local bodies and the Government. Hence, ----------------------
the MIS is to be designed to identify, decide and design a service strategy for
offering a distinctive service to the wide range of customers seeking a variety of ----------------------
service demands. The following points should be taken care of while designing
----------------------
an MIS for a bank:
1. Customer database ----------------------
The service expectations and perceptions revolve around the following ----------------------
factors:
----------------------
i. Customer − individuals, company, institutions, etc.
ii. Operator − housewife, employee, officer of the organisation. ----------------------
iii. Range of service − savings, credit checking and payment, other ----------------------
financial services.
----------------------
iv. Class of customers − income group, corporate bodies, etc.
----------------------
v. Working hours − morning, afternoon, evening, etc.
The management of the bank should create a customer database and ----------------------
analyse the needs of the customers from time to time to create suitable ----------------------
service package.
2. Service to the account holders ----------------------
The customers (account holders) need constant advice on the status and its ----------------------
operations. Most of the customers use their account for routine payments
affecting the balance. Many a times the account holds a large amount and ----------------------
it is not transacted for any purpose. ----------------------
The MIS should give following reports to the management:
----------------------
a. The non-moving account
----------------------
b. The account having balance of more than, say Rs.50,000.
c. The account going down below minimum balance. ----------------------
d. The routine payments not made. ----------------------

e. The routine credits not arrived. ----------------------
f. The defaults on loan repayment.
----------------------
g. The delays on crediting cheque amounts.
----------------------

Notes h. A sudden rise and fall in the account movement.
i. The account holders giving 80% business to take personal care of
----------------------
their service expectations and perceptions (the CRM perspective).
---------------------- Based on these reports, the management of the bank should alert or warn
the customer to act on his account to correct the situation. The personal
----------------------
and individual account holders need such a service badly as they have to
---------------------- manage their domestic or business activities in a tight money situation.
The MIS built around such demands would help not only the bank
---------------------- manager but also the account holder.
---------------------- 3. Service for business promotions
---------------------- The bank finances can be utilised in a number of ways to increase the
banking operations by offering credit to the right kind of customers. It is,
---------------------- therefore, necessary to study the trend in the business industry and solicit
the customers from the upcoming and growing business sector.
----------------------
The MIS should concentrate on data collection from various sources to
---------------------- analyse and conclude the future business strategy. Such information will
help the banker to move out to talk to the customer to obtain business for
---------------------- the bank. Such support will also reduce the risk of account going into the
---------------------- red and bad debt.
4. The index monitoring system
----------------------
One more feature of the MIS is to monitor the variety of indices and ratios
---------------------- related to banking operations, which are internal to the banking business.
Some of these ratios fulfill the statutory needs like the Cash Reserve Ratio
----------------------
(CRR)/ Statutory Liquidity Ratio (SLR); some meet the policy needs like
---------------------- the priority sector ratio to total advances and so on. It is necessary to build
the MIS applications to support the bank manager in making decisions to
---------------------- keep different norms and ratios within the acceptable limits. He should
also get support through Decision Support Service to handle the problem
----------------------
of not meeting these statutory standards.
---------------------- 5. Human resource upgrade
---------------------- There is a lot of human aspect in the banking operations. With
computerisation, the service may become faster or quicker but still it
---------------------- requires a human touch and skill. It is, therefore, necessary to upgrade the
---------------------- skills and knowledge of the bank employees to offer proper service to the
customers.
---------------------- The financial world changes so fast that retaining a customer base is a
---------------------- challenge. The financial service business is becoming competitive and
offering a good distinctive service is the only solution to improve the
---------------------- business prospects. The service has to be more aggressive for specific
problem solving of the customers. The MIS should identify such needs
---------------------- and offer help to the management in designing training courses for the
---------------------- employees to improve their knowledge about banking and the financial
world.
In the banking industry, the traditional methods of good performance Notes
are at odds with good service. A good financial performance may not
necessarily mean a good service quality. ----------------------
The customers of the bank expect the service to be delivered in a smooth, ----------------------
problem-free, efficient and timely manner. The managers in the bank
have the service as well as the financial goals to achieve. It is, therefore, ----------------------
necessary to set the internal standards, accuracy, responsiveness and
----------------------
timeliness. The systems and the resources provided to achieve these
standards need monitoring and the MIS will provide a feedback on these ----------------------
standards so they can be regulated and controlled.
----------------------
For example, a multinational bank has set standards on satisfying the
queries in the first phone call, cheque clearance time, waiting time, etc. It ----------------------
has set eighty-one separate ‘Quality Indicators’ for the Bank Card business
and so on. The MIS measures these standards and gives a feedback on ----------------------
achievement or non-achievement.
----------------------
----------------------
Fill in the blanks.
1. Creating a distinctive ____________ is a willful, conscious and ----------------------
deliberate management endeavour. ----------------------
----------------------
1. A product and service both are tangible.
----------------------
----------------------
Activity 1
----------------------
1. Visit a call centre and prepare a report on the service they provide. ----------------------
2. Prepare managerial and operational service goals for the hotel industry.
----------------------
----------------------
Summary
----------------------
●● The MIS in the service industry should focus on the evaluation of service
needs of the people. The needs should be continuously monitored/ ----------------------
scrutinised to ascertain the change in the service demand in terms of
scope and level. Unless this is monitored, it will not be possible to revise ----------------------
the service strategy. The perception of good service also needs frequent ----------------------
scrutiny, and the strategy should then include the processes, which will
take care of the customer perception of good service. Many a times the ----------------------
perceptions are not directly related to satisfaction of basic service need,
but they are related to the peripheral processes which makes servicing ----------------------
process a comfortable experience. ----------------------

Notes ●● The MIS should evaluate the process efficiency and effectiveness by
fixing measurable operating standards. The service business has to
---------------------- also focus on the service technology. The efficiency and effectiveness
improves with an appropriate choice of technology. The technology in
---------------------- the service industry deals with communication, data and information
---------------------- search, real time decision-making and movement of matters such as
customer, paper and documents. If the technology chosen handles
---------------------- these four factors effectively, the throughput of the system improves.
Otherwise, there would be delay, confusion, and a loss of resource. The
---------------------- management in the service industry relies heavily on the appropriate
---------------------- technology such as automation, computerisation and mechanisation to
upgrade the basic service process.
---------------------- ●● The choice of technology makes a significant difference in the service
---------------------- quality to the customer. The distinctive service strategy means in most
of the cases, the appropriate choice of technology. While designing the
---------------------- MIS for any service industry, the people, process and technology to be
used should be identified and an information support on these key factors
---------------------- should be provided to the management to make decisions to design the
---------------------- service strategy.
---------------------- Keywords
---------------------- ●● Service: The service function essentially is a human interaction between
---------------------- the service receiver and the provider.
●● Service and product: A product is tangible, but a service is not.
----------------------

---------------------- 1. State three distinguishing factors between the manufacturing sector and
service sector.
----------------------
2. List the five principles of a distinctive service.
----------------------
3. Discuss the function performed by the airline industry to achieve the
---------------------- service goals.
---------------------- 4. Explain the front-end and back-end applications in a hospital.

5. What points should be taken care of while designing an MIS for a bank?
----------------------


1. Creating a distinctive service is a willful, conscious and deliberate
----------------------
management endeavour.
----------------------

State True or False. Notes
1. False
----------------------

Cases. New Delhi: Tata McGraw Hill. ----------------------
Information Systems: Managing the Digital Firm. New Delhi: Pearson ----------------------
Education. ----------------------
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Notes Appendix I
Abbreviations
----------------------
BSP Business System Planning
----------------------
CASE Computer Aided Systems Engineering
---------------------- CCWS Computerised Collaborative Work System
---------------------- CSFs Critical Success Factors
---------------------- EDP Electronic Data Processing

GDSS Group Decision Support System
----------------------
GIS Global/Geographical Information Service
----------------------
ITES Information Technology Enabled Services
---------------------- KDD Knowledge Discovery Databases
---------------------- OAS Office Automation System
---------------------- OOP Object-Oriented Programming
OOSD Object-Oriented System Development
----------------------
QA Quality Assurance
----------------------
RAS Remote Access Servers
---------------------- SDLC System Development Life Cycle
---------------------- SQA Software Quality Assurance
---------------------- TPS Transaction Processing System
----------------------
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----------------------

Glossary Notes
Application Software: Programs written for a specific application for
----------------------
an individual/organisation. Application software is primarily used for
accomplishing the tasks of end-users. ----------------------
Computer: Electronic device, which accepts input, processes it according to
----------------------
a set of instructions provided and generates the desired output. It can store,
process and retrieve data as and when desired. ----------------------
Computer Network: Interconnection of one or more computers through use
----------------------
of satellite, microwave, terrestrial line or other communication media and
terminals or a complex consisting of two or more interconnected computers. ----------------------
Data: Raw facts and figures. ----------------------
Data Processing: Converting data into information.
----------------------
Extranet: While the Internet is public, and an intranet is private. An extranet is
essentially a hybrid of the two: it is semi-private! ----------------------
Information: Processed data. ----------------------
Information technology: Integration of telecommunications and computer
----------------------
science technologies and other aspects of managing and processing information,
especially in large organisations. ----------------------
Internet: Collection of servers connected by common protocols and agreed- ----------------------
upon standards.
ISDN: International standard for transmitting voice data, image and video to ----------------------
support a wide range of services over the public telephone lines. ----------------------
Software: A sequence of instructions, written in a language, which can be
understood by a computer is called a computer software. ----------------------
System Software: A set of generalised programs that manage the resources of the ----------------------
computers, such as the central processor, communication links and peripheral
----------------------
devices.
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Glossary 277
Notes
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MANAGEMENT INFORMATION

(FOR PRIVATE CIRCULATION ONLY)

COURSE DESIGN AND REVIEW COMMITTEE

Published by Symbiosis Centre for Distance Learning (SCDL), Pune

Copyright © 2019 Symbiosis Open Education Society

Prof. Jayant K. Oke

He is presently working on his doctoral research in the area of Corporate Governance.

Unit No. TITLE Page No.

6 Decision Support System 123-150

7 System Analysis and Design 151-164

8 System Development 165-190

9 The Database Management System 191-202

10 Data Warehousing and Data Mining 203-220

11 Information Security and Control 221-228

12 Information System and Quality 229-240

13 Functional Applications 241-262

14 Applications in Service Sector 263-275

Management Information System 1

---------------------- 1.1 INTRODUCTION

---------------------- If personal/individual life has been impacted by information, it has

---------------------- 4. Explosion of information

2 Management Information Systems

These complexities have in turn necessitated: ----------------------

“The information we have, ----------------------

Management Information System 3

4 Management Information Systems

Check your Progress 1 ----------------------

Management Information System 5

6 Management Information Systems

Check your Progress 2 ----------------------

Management Information System 7

---------------------- Marketing Sales forecasting, sales planning, customer and sales

---------------------- Strategic Planning

---------------------- Management Control

---------------------- Fig. 1.2 : MIS as a Federation of Sub-systems

8 Management Information Systems

User Functions ----------------------

Fig. 1.3 : MIS: A multi-disciplinary subject ----------------------

Management Accounting is meant for monitoring, controlling the ----------------------

Management Information System 9

---------------------- Time 1950s 1960s 1970s 1980s 1990s

---------------------- Fig. 1.4 : Changing MIS Focus

10 Management Information Systems

●● Database: It is the gathering of associated files or tables containing ----------------------

Management Information System 11

12 Management Information Systems

5. Should be cost-effective/beneficial. ----------------------

1.5 CONTEMPORARY APPROACHES TO MIS ----------------------

Management Information System 13

14 Management Information Systems

Fill in the blanks. ----------------------

Management Information System 15

---------------------- Access to and availability of information yields strategic opportunities and

---------------------- 6. What drives the competitors, as shown by their future objectives?

16 Management Information Systems

Management Information System 17

---------------------- Fill in the blanks.

---------------------- 1. ______________ is the gathering of data and information.

18 Management Information Systems

Management Information System 19

---------------------- iii. Quality of their services

---------------------- i. Meet benchmarking standards

20 Management Information Systems