MANAGEMENT INFORMATION SYSTEM

Unit -1 System Analysis and Design - An overview: System study System design -Development and Implementation testing and conversion. Unit - 2 Management Information System - An overview: Management Information System concept - Evolution and clement of MIS Definition - characteristics and basic requirements of MIS - Structure of MIS - Computerised MIS - Approaches of MIS development - Prerequisites of an effective MIS. Unit-3 Computers and its effect on MIS - Limitations of MIS - MIS vs data processing - MIS and decision support system - MIS and information resource management - Executive information and decision support system - Artificial intelligence and expert system MIS in Indian organizations - Recent development in information technology. Unit-4 Computes and communication - An overview: The information technology - The concept of Global villageOn-line information services Electrical bulletin board systems - The internet, electronic mail, interactive video - Communication Channels - Communication networks - Local are networks Wide area network - Video conferencing. Unit-5 Client / Server Computing: Communication servers - Digital networks Electronic data interchange and its applications -

Enterprise resource planning systems (ERP Systems) organisational Networking. Unit- 6 information system Value added

Inter-

networks

Electronics Commerce and Internet: E-commerce bases - ECommerce and Internet Application of internet and website management REFERENCES 1. O'Brien James A, Management Information Systems, Galgotia Publication. 2. Sadagopan S, Management Information Systems, PHI. 3. Murdic and Ross, Management Information Systems. 4. Optner, Systems Analysis for Business. 5. Lucas, Management information Systems. 6. Sen, Management Information Systems.

UNIT-1
SYSTEM ANALYSIS AND DESIGN 1.0 INTRODUCTION

System Development Stages In order to develop a system successfully, it is managed by breaking the total development process into smaller basic activities or phases. Any system development process, in general, is understood to have the following phases. Investigation Analysis Design Construction Implementation and Maintenance A brief description of the above - mentioned stages is discussed as follows. A). System Investigation Some problem may be bothering a business organisation. The managers in the organisation (user) may or may not be very clear about the problem. The user may invite a system analyst or information analyst (consultant) to assist him/her in defining and resolving the problem in a clear way. Preliminary investigation is the first step in the system development project. The preliminary investigation is a way of handling the user's request to change, improve or enhance an existing system. The objective is to determine whether the request is

valid and feasible before any recommendation is made to do nothing, improve or modify the existing system, or build altogether a new one. It is not a design study, nor docs it include the collection of details to completely describe the business system. The following objectives should stages. (i) (ii) Problem definition, and Feasibility study. be accomplished, while working on Ihe preliminary investigation. System investigation includes the following two sub-

Problem Definition Although the need for problem definition may seem obvious, this is perhaps the most frequently bypassed step in the entire system development process. So the first responsibility of a system analyst is to prepare a written statement of the objectives and scope of the problem. Based on interviews with the user, the analyst writes a brief description of his/her understanding of the problem, and reviews it with both groups, ideally in a joint user/information analyst meeting. People respond to written statements. They ask for clarifications and they correct obvious errors or misunderstandings. This is why a clear statement of objectives is so important. In other words, proper understanding and definition of the problem is essential to discover the cause of the problem and to plan a directed investigation by asking questions like what is being done? Why? Is there an underlying reason different from the one the user identifies? Here are some possible definitions of problems. 1. The existing system has a poor response time, i.e. it is slow.

2. It is unable to handle the workload. 3. The problem of cost, i.e. the existing system is not economical. 4. The problem of accuracy and reliability. 5. The requisite information is not produced by the existing system. 6. The problem of security. Similarly, a system analyst should provide a rough estimate of the cost involved for the system development/This is again a very important question that too often is not asked until if is quite late in the system development process. Feasibility Study The literal meaning of feasibility is viability. This study is undertaken to know the likelihood of the system being useful to the organisation. Feasibility study, basically, is a high-level capsule version of the entire process, intended to answer a number of questions like what is the problem? Is the problem even worth solving? However, as the name indicates in preliminary investigation, feasibility study should be relatively brief, as the objective at this stage is only to get an idea of the scope. The finding of this study should be formally presented to the user management This presentation marks a crucial decision point in the life of the project. If the management approves the project, the feasibility study report represents an excellent model of the system analyst's understanding of the problem and provides a clear sense of direction for the subsequent development of the system. The aim of a feasibility study is to assess alternative systems and to propose the most feasible and desirable system for development. Thus, feasibility study provides an overview of the

problem and acts as an important checkpoint that should be completed before committing more resources. The feasibility of a proposed system can be assessed in terms of four major categories, as summarised below. (i) Organisational Feasibility The extent to which a proposed information system supports the objective of the organisations strategic plan for information systems determines the organisational feasibility of the system project. The information system must be taken as a sub-set of the whole organisation. (ii) Economic Feasibility In this study, costs and returns arc evaluated to know whether returns justify the investment in the system project. The economic questions raised by analysts during the preliminary investigation are for the purpose of estimating the following: (a) the cost of conducting a full system investigation. (b) the cost of hardware and software application being considered. (c) the benefits in the form of reduced costs, improved customer service, improved resource utilisation or fewer costly errors. (iii) Technical Feasibility Whether reliable hardware and software, capable of meeting the needs of the proposed system can be acquired or developed by the organisation in the required time is a major concern of the for the class of

technical feasibility. In other words, technical feasibility includes questions like: (a) Does the necessary technology exist to do what is suggested and can it be acquired? (b) Does the proposed equipment have the technical capacity to hold the data required to use the new system? (c) Will the proposed system provide adequate responses to inquiries, regardless of the number of locations and users? (d) Can the system be expanded? (e) Is there any technical surity of accuracy, reliability, ease of access and data security? (iv) Operational Feasibility The willingness and ability of the management, employees, customers, suppliers, etc , to operate, use and support a proposed system come under operational feasibility. In other words, the test of operational feasibility asks if the system will work when it is developed and installed. Are there major barriers to implementation? The following questions are asked in operational feasibility. (a) Is there sufficient support from the management? From employees? From customers? From suppliers? (b) Are current business methods acceptable to the users? (c) Have the users been involved in the planning and development of the system project? '

Operational feasibility would pass the test if the system is developed as per rules, regulations, laws, organisational culture, union agreements, etc., and above all with the active involvement of the users. Besides these four main categories, the system should also be assessed in terms of legal feasibility and schedule feasibility. Whereas legal feasibility refers to the viability of the system from the legal point of view. i.e. it checks whether the system abides by all laws and regulations of the land, the schedule feasibility evaluates the probability of completing the system in the time allowed for its development, since for the system to be useful, it must be finished well before the actual requirement of its usage. For determining feasibility, a project proposal must pass all these tests. Otherwise, it is not a feasible project. For example, a personnel record system that is economically feasible and operationally attractive is not feasible if the necessary technology does not exist. Infeasible projects are abandoned at this stage, unless they are reworked and resubmitted as new proposals. Following are the methods for conducting a preliminary investigation. Methods of Preliminary Investigation During a preliminary investigation, the following two main methods are used. (I) Reviewing documents, and (ii) Interviewing selected persons,

(i) Reviewing Organisation Documents The analysts conducting the investigation first learn about the organisation involved in, or affected by, the system project. For example, to review an inventory systems proposal means knowing first how the inventory department operates and who the managers and supervisors are? It can be learnt by examining the organisation charts and studying written operating procedures. The procedures describe how the inventory process should operate and identify the most important steps involved in receiving, managing and dispensing stock. (ii) Conducting Interviews Written documents do not give user about current operations. To learn these details, analysts conduct interviews, interviews allow analysts to learn more about the nature of the system project request and the reason for submitting it. To accomplish the purpose of the interview, analysts must be sure to emphasise the request and the problem it addresses. In other words, interviews should provide details that further explain the project "and show whether assistance is merited economically, operationally and technically. It must be kept in mind that working out a solution to the situation comes later, during the detailed investigation.

The

following

format

is

suggestive

of

the

preliminary

investigation scope. 1. Project Title 2. Problem Statement 3. Project Objectives 4. Preliminary Ideas 5. Project Scope 6. Feasibility Study : : : : : Concise, possibly in a few lines, stating the problem. State objectives of the project defined by the problem. Possible solutions, if any, occurring to user and/or analyst could be stated here. Give overall cost estimate. Indicate here time and cost for the next Step. B). System Analysis Analysis is a detailed study of the various operations of a business activity (system), along with its boundaries. The objective of this phase is to determine exactly what must be done to solve the problem. Many system analysts have a technical background. The temptation of many technically trained people is to move too quickly to program design, to become pre-maturely physical Such a temptation must be avoided, rather a logical model of the system should be developed using various modem tools such as data flow diagrams, an elementary data dictionary and rough descriptions of the relevant algorithms. System analysis involves a detailed study of: (i) The information needs of the organisation and its end users. (ii) Existing information systems (their activities, resources and products). (iii) The expected information system (in terms of capabilities of IS required to meet the information needs of users).

The final product of system analysis is a set of system requirements of a proposed information system. The analysis phase provides the analyst with a clear understanding of what is to be done. The next step is to decide as to how the problem might be solved. C). System Design System analysis describes WHAT a system should do to meet the information needs of users. System design specifies HOW the system will accomplish this objective. The term design refers to the technical specification (analogous to the architect's blue prints) that will be implied in constructing the system. System design should stress on the following three activities. (i) (ii) (iii) User interface, Data design, and Process design.

Where an interface design activity focusses on designing the interactions between end users and computer systems; the data design activity focusses on the design of the logical structure of database and files to be used by the proposed information system. Process design activity focusses on the design of the software resources, that is, the programs and procedures needed by the proposed information system. In this phase, system designers should use their knowledge of business operations, information processing and hardware and software to specify the physical design of an information system. The design must specify what type of hardware resources, software resources (programs and procedures), and people resources (end users and system staff) will be needed. These specifications are also known as system specifications. D). Construction and Testing

Once the system specifications are understood, the system is physically created. The required programs are coded, debugged, and documented. The system should be tested with some test data to ensure its accuracy and reliability. In fact, construction of the system takes place on the basis of the system design specifications. So in this phase, the various directions as per system specifications are followed. In addition to the activities are performed performed during after the system basic

development,

some

activities

development is complete. Such activities are covered under the Implementation phase and Maintenance phase. These phases are described below. E). Implementation The system implementation stage involves hardware and software acquisition, site preparation, user training and installation of the system. Here again, testing of the system, involving all components and procedures should be done, It must be realised that implementation may he the most crucial phase of System Development Life Cycle, because this step is vital in assuring the success of any newly developed system. Even a well-designed, system will fail if it is not properly implemented. F). Maintenance System maintenance involves the monitoring, evaluating and modifying of a system to make desirable or necessary improvements. In other words, maintenance includes enhancements, modifications or any change from the original specifications. Therefore, the information analyst should take change as his/her responsibility so as to keep the system functioning at an acceptable level.

Software needs to be maintained not because some of its modules or programs 'wear out" and need to be replaced, but because there are often some residual errors remaining in the system which have to be removed as soon as they are discovered. This is an on-going process, until the system stabilises. 1.1 SYSTEM ANALYSIS System analysis may be understood as a process of collecting and interpreting facts, identifying problems and using the information to recommend improvements in the system. In other words, system analyse means identification, understanding and examining the system for achieving pre-determined goals/objectives of the system. System analysis is carried out with the following two objectives. (i) (ii) to know how a system currently operates, and to identify the users' requirements in the proposed system. Basically, system analysis is a detailed study of all important business aspects under consideration and the existing system, and thus, the study becomes a basis for the proposed system (may be a modified or an altogether new system), System analysis is regarded as a logical process. The emphasis in this phase, is on investigation to know how the system is currently operating and to determine what must be done to solve the problem. The system analysis phase is very important in the total development efforts of a system. The user may be aware of the problem but may not know how to solve it. During system analysis, the developer (system designer) works with the user to develop a logical model of the system. A system analyst, because of his technical background, may move too quickly to program design to

make the system prematurely physical, which is not desirable and may affect the ultimate success of the system. In order to avoid this, the system analyst must involve the user at this stage to get complete information about the system. This can be achieved if a logical model of the system is developed on the basis of a detailed study. Such a study (analysis) should be done by using various modern tools and techniques, such as data flow diagrams, data dictionary and rough descriptions of the relevant algorithms. The final product of the system analysis is a set of system requirements of a proposed information system. The following pages will discuss determination of system requirements and system analysis tools. 1. 1A. REQUIREMENT DETERMINATION Requirement determination, which is also termed as a part of Software Requirement Specification (SRS) is the starting point of the system development activity. This activity is considered as the most difficult and also the most error-prone activity because of the communication gap between the user and the developer. This may be because the user usually does not understand software and the developer often does not understand the user's problem and application area. The requirement determination is a means of translating the ideas given by the user, into a formal document, and thus to bridge the communication gap. A good SRS provides the following benefits. (i) It bridges the communication gap between the user and the developer by acting as a basis of agreement between the two parties. (ii) It reduces the development cost by overcoming errors and misunderstandings early in the development.

(iii) It becomes a basis of reference for validation of the final product and thus acts as a benchmark. Requirement determination consists of three activities, namely, requirement anticipation, requirement investigation and requirement specification. Requirement anticipation activities include the past experience of the analysis, which influence the study. They may foresee the likelihood of certain problems or features and requirements for a new system. Thus, the background of the analysts to know what to ask or which aspects to investigate can be useful in the system investigation. Requirement investigation is at the centre of system analysis. In this, the existing system is studied and documented for further analysis. Various methods like fact-finding techniques are used for the purpose. In the requirement specification activities, the data produced during the fact-finding investigation is analysed to determine requirement specification, which is the description of the features for a proposed system. Requirement determination, in fact, is to learn and collect the information about (a) the basic process, (b) the data which is used or produced during that process, (c) the various constraints in terms of time and the volume of work, and (d) the performance controls used in the system. Let us discuss these activities in more detail. Understand the Process Process understanding can be acquired, if the information is collected regarding

(a) the purpose of the business activity, (b) the steps, which and where they are performed, (c) the persons performing them, and (d) the frequency, time and user of the resulting information. Identify Data Used and Information Generated Next to process understanding, an information analyst should find out what data is used to perform each activity. For example, in an inventory system, the buyer may require data describing the quantity of an item, supplier name, item cost and demand for the item. To know when to place an order, the buyer would also like to get the information regarding lead time. The information generated in business transactions is also required to be gathered, as such information may be used by managers in many decision-making activities. For example, data about inventory system also provides information about warehousing, sales and cash flow decisions. Determine Frequency, Timing and Volume Information should also be collected to know how often the activity is repeated and the volume of items to be handled. Similarly, timing does affect the way analysts evaluate certain steps in carrying out an activity. In other words, timing, frequency and volume of activities art important facts to collect. Know the Performance Controls System controls enable analysts to understand how business functions can be maintained in an acceptable manner. During system investigation, information is gathered mainly from personnel and written documents from within the organisation's

environment, which includes financial reports, personnel documents and various other types of documents like transaction documents, manuals, etc. To get information about the external environment, the sources include vendors, various government and private agencies, newspapers and journals, etc. It must be understood that the personal managerial attributes of the individual manager and the organisational environment in which decisions are made affect the information requirements for the proposed system. The personal attributes may be a managers knowledge of information systems, managerial style, his perception of information needs, whereas organisational environment factors may include nature of the company, level of management and structure of the organisation, System analysis consists of two main activities. (i) Studying the business operations to understand the existing system. (ii) To make an analysis of the information gathered to determine information requirements of the manager in the proposed system. In order to study the business operations of the organisation and thus to know the existing system and information requirements for the new system, an information analyst collects the information and then makes an analysis of the collected information by using certain analysis tools. 1. IB. STRATEGIES FOR REQUIREMENT DETERMINATION In order to collect information so as to study the existing system and to determine information requirement, there are different

strategies, which could be used for the purpose. These strategies are discussed below. Interview The interview is a face-to-face method used for collecting the required data. In this method, a person (the interviewer) asks questions from the other person being interviewed. The interview may be formal or informal and the questions asked may be structured or unstructured. The interview is the oldest and the most often used device for gathering information about an existing system. The respondents are generally current users of the existing system or potential users of the proposed system. Although interview is one of the preferred techniques, interviewing is not always the best source of application data. Because of the time required for interviewing and the inability of the users to explain the system in detail, other methods are also used to gather information. However, this method is helpful for gathering information from individuals who do not communicate effectively in writing or who may not have the time to answer questionnaires. Interviews allow analysts to discover areas of misunderstanding, unrealistic expectations and even indications of resistance to the proposed system. The analyst must plan the interviews and must know clearly in advance regarding the following issues. 1. Whom to interview? 2. When to interview? 3. What to ask? 4. Where to hold the interview? 5. How to begin the interview? 6. How to conclude the interview?

Interviewing is regarded as an art and it is important that analysts must be trained in the art of successful interviewing. This is also important because of the fact that the success of an interview depends on the skill of the interviewer and on his or her preparation for the interview. Questionnaire A questionnaire is a term used for almost any tool that has questions to which individuals respond. The use of questionnaires allows analysts to collect information about various aspects of a system from a large number of persons. The questionnaire may contain structured or unstructured questions. The use of a standardised questionnaire may give more reliable data than other fact-finding techniques. Also the wide distribution ensures greater anonymity for respondents, which can lead to more honest responses. The questionnaire survey also helps in saving time as compared to interviews. However, this method does not allow analysts to observe the expressions or reactions of respondents as is possible during interviewing and also, it is difficult to design exhaustive questionnaires. The analyst should know the advantages and disadvantages of structured as well as unstructured questionnaires. Questionnaires must be tested and modified as per the background and experience of the respondents. Record Review Record review is also known as review of documentation. Its main purpose is to establish quantitative information regarding volumes, frequencies, trends, ratios, etc. In record review, analysts examine information that has been recorded about the system and its users. Records/documents may include written policy manuals, regulations and standard operating procedures used by the organisation as a guide for managers and other employees.

Procedures, manuals and forms are useful sources for the analyst to study the existing system. The main limitation of this approach is that the documentation on the existing system may not be complete and up-to-date. It may be noted here that there are two different views regarding the study of the existing system. One view, which favours the study of the existing system, is that through study of the existing system, one learns about its shortcomings and may use this knowledge to avoid committing the same mistakes again. Whereas the view which is against such a study, argues that it inhibits the generation of new ideas and may bias the developer towards the same logic which is contained in the old system. It is difficult to comment upon the two views. However, both the views seem valid. It can only be suggested here that an information analyst should study the existing system, if any, to know more about the whole of the system. Observation Another information-gathering tool used in .system studies is observation. It is the process of recognising and noticing people, objects and occurrences to obtain information. Observation allows analysts to get information, which is difficult to obtain by any other fact-finding method. This approach is most useful when analysts need to actually observe the way documents are handled, process are carried out and whether specified steps are actually followed. As an observer, the analyst follows a set of rules. While making observations, he/she is more likely to listen than talk. The exercise is time-consuming and costly. Also the observer may not be able, to get all the required information, especially about some intricacies of the system. Nowadays, electronic observation and monitoring methods are being used widely as information-gathering tools because of their speed and efficiency.

The analysts usually use a combination of all these approaches to study an existing system, as any one approach may not be sufficient for eliciting information requirement of the system. The fact-finding techniques which have been discussed above represent only one aspect of system analysis. Various tools for organising the details collected are discussed as follows. 1. ID. STRUCTURED ANALYSIS TOOLS Structured analysis tools help the system analyst to document the system specification of a system to be built. The main tools which are used for the purpose are given below. (i) (ii) (iii) (iv) (v) Data Flow Diagram (DFD) Data Dictionary Structured English Decision Trees Decision Tables Data

Flow Diagram (DFD) Data Flow Diagram (DFD) is a graphical representation of the logical flow of data. It helps in expressing the system's requirements in a simple and understandable form. . It is also known as a bubble chart. Its aim is to clarify the system requirements and identify major transformations that will become programs in system design. It decomposes the requirement specifications down to the lowest level of details.

A DFD consists of a series of bubbles joined by lines representing data flow in the system. There are four main symbols used in a DFD, which are depicted below (i) Square: It represents source/destination of system data.

(ii)

Arrow: It identifies data flow; it is a pipeline through which the data flows.

(iii)

Circle/Bubble: It represents a process that transforms incoming data flow into outgoing data flow. A process can be represented by a circle or an oval bubble.

(iv)

Open Rectangle: It represents a data stores.

A number of rules are to be followed in drawing a DFD: (i) Processes should be named and numbered. Name should represent the process. [ii) The direction of flow is from top to bottom and from left to right. (iii) When a process is exploded into lower levels, they are numbered properly, e.g. the process obtained from the explosion of process number 5, should be numbered as 5.1, 5.2, etc.

(iv) The name of data stores, sources and destinations are written in capital letters. Process and data flow names have the first letter capitalised. A DFD should have no more than 1012 processes, as having even 12 will make a DFD complex and difficult to understand. A DFD shows the minimum contents of a data store. Each data store should contain all the elements that flow in and out of it: A DFD for Payroll Processing: Macro View

FIGURE -1.1 DFD FOR PAYROLL PROCESSING - MACRO VIEW DFD is very effective, when the required design is net clear and the user and the analyst require some symbolic representation for communication. The main disadvantage of a DFD is that a large number of iterations are often required to arrive at an accurate and complete solution. For example, consider the case of a payroll system to prepare salary statements for each employee of an organisation. Data flow for such a system can be represented, as shown in Figure - 1.1.

Employees data originate from accounts departments (source), gets processed, salary statements are received by employees (sink) and updated data on employees (e.g. total tax deducted, provident fund contribution, etc.) is stored in an intermediate file (data store), which is required for processing in the subsequent months. A DFD displays data flow in a top-down approach. To draw a DFD, start with a macro DFD (overview) and then explode it into micro DFDs. The following figure -1.2 illustrates the method.

FIGURE - 1.2 DFD - EXPLODED VIEW OF PAY ROLL PROCESSING A DFD for Payroll Processing: Exploded View

FIGURE - 1.3 EXPLOSION OF A DFD

While exploding a DFD into lower levels, continuity and linkage is maintained between a DFD and its member DFDs. This is achieved by numbering each circle (processing step) by adopting the numbering system, e.g. 1,2,3 each further numbered as 1.1,1.2,1.3 and still further numbered as 1.1.1, 1.1.2. The above figure -1.3 illustrates the point. Data Dictionary A data dictionary is a structured repository of data, about data. In other words, it is a set of precise and accurate definitions of all DFDs, data elements and data structures. It supports documentation in a better way. It also improves communication between the user and analyst as it provides precise and consistent definitions for various data elements, terms and procedures. It can also serve as a common database for programmers and can also be used for control purposes. Most databases have data dictionary as a desirable feature. There are mainly three items of data present in a data dictionary. (i) Data Element: It is the smallest unit of data and cannot be decomposed further. (ii) Data Structures. It is a group of data elements handled as a unit. A data structure contains a number of data elements as its fields. (iii) Data Flows and Data Stores: Data flows are nothing but data structures in motion, whereas data stores are data structures at rest In other words, data stores are locations where data structures are

temporarily stored. Data dictionary is an integral part of the structured specifications. The following rules are followed in constructing a data dictionary. (i) The terms used to describe data structures are always in capital letters. (ii) Multiple word names are hyphenated. (iii) Assigned names should be straight-forward and useroriented. (iv) There should be names for every data flow, data store, data structure and data element. (v) Consistency checks should be performed. (vi) Identification numbers of the processes and their names should be mentioned in the data dictionary. (vii) Aliases must be discouraged. Various symbols, which are used in the data dictionary are explained in Table -1.1. TABLE-1.1 SYMBOLS USED IN DATA DICTIONARY

Data dictionary and DFD are correlated and data should be present in a specification. However, a DD does not provide functional details and thus is not very acceptable among non-technical users. Decision Tree and Structured English The logic of the process, which may not be very clear through DD, can easily be represented using a graphic representation, which looks like the branches of a tree, called decision tree. A decision tree has as many branches as there are logical alternatives. It is easy to construct, read and update. For example, a policy can be shown through a decision tree.

The example illustrates the following discount policy. Computer dealers get a trade discount of 35 per cent if the order size is 6 or more PCs, whereas for orders from educational institutions and individuals, 15 per cent discount is allowed on orders of 619 PCs, per PC type; 20 per cent on orders for 20 49 PCs; 30 per cent on orders for 50 PCs or more, per PC type. Alternatively, the logic can be represented by using Structured English. It uses logical construction and imperative sentences designed to carry out instructions for actions. Decisions are made through IF-THEN-ELSE statements.

Structured English can be made compact by using terms defined in the data dictionary. However, its sentences should be clear, concise and precise in wording and meaning. For example, the process ORDER may have the data element ORDER-SIZE, which defines the following values. MINIMUM SMALL MEDIUM LARGE : 5 or less Personal Computers, per PC type : 6 to I9 PCs : 20 to 49 PCs : 50 or more PCs

DISCOUNT-POLICY Add up the number of PCs per PC type . If order is from a dealer andIf ORDER-SIZE IS SMALL OR MEDIUM OR LARGE THEN: Discount is 35% ELSE (ORDER-SIZE IS MINIMUM) So: no discount is allowed ELSE (ORDER is from educational institution or individual customers) SOIF ORDER-SIZE IS LARGE Discount is 30% ELSE IF ORDER-SIZE IS MEDIUM Discount is 20% ELSE IF ORDER-SIZE S3 SMALL Discount is 15% ELSE (ORDER-SIZE IS MINIMUM) So: no discount is allowed. FIGURE-1.4 STRUCTURED ENGLISHAN EXAMPLE

Using these values, structured English would read as shown in Figure 1.4 Decision 'trees can be used to verify logic in problems that involve few complex decisions, resulting in a limited number of actions. However, its biggest limitation is the lack of information due to its structure. Decision Table Decision table is a matrix of rows and columns that shows conditions and actions. Decision rules state the procedure to be followed when certain conditions exist Decision tables are best-suited for dealing with complex branching routines, e.g. inventory control, etc. A decision table consists of four sections. ss A condition stub at the upper left, a condition entry at the upper right, an action stub at the lower left, and an action entry at the lower right. Condition Slab. Action stub Stub Condition Entry Action Entry Entry

FIGURE - 1. 5 A DECISION TABLE. Questions are listed in the condition stub and the action stub outlines the action to be taken to meet each condition. ssThe condition entry part contains the answers to questions asked in the condition stub and the action entry part indicates the appropriate action resulting from the answers to the conditions in the condition entry quadrant.

In constructing a decision table, the following rules are observed, (i) A decision should be given a name to be written at the top left of the table. (ii) The logic should be independent of i.ie sequence in which the condition rules were written, but the actions take place in the order in which the events occur. (iii) Consistent and standardised language should be used. (iv) Duplication of terms should be avoided to the maximum extent 1.2 SYSTEM DESIGN System design is another important step in the system development process. This phase starts after the system analysis phase is over. In other words, the output of the system analysis phase, i.e. requirement specifications become an input in the design phase. Data requirements are worked out on the basis of user requirement estimates. The identification of data requirements includes identifying data sources, the nature and type of data that is available and data gaps. For example, for designing a salary system, a system designer would consult the input documents (data sources) such as attendance, leave account, deductions to be made, etc. so that he may understand what kind of data is available, in what form, when it is supplied and by whom. 1.2 A DESIGN OBJECTIVES A system is designed with the following main objectives. Practicality

The system should be designed in such a way that it may be learnt and operated with ease by the users. Thus, the design should be user-oriented. Flexibility The business organisations are dynamic in nature. Therefore, a system must be responsive to the change inevitably requested by its users. Efficiency A system must be efficient, i.e. it should perform jobs-within their specified time. The efficiency of a system may be measured in terms of the following parameters. (i) Throughput: It is the ability to handle a specified number of jobs per unit of time. (ii) Response time: The ability to respond to a request made by the user within a given time limit. (iii) Run time: It is the ability to undertake the complete job within a given time limit; Security This aspect relates to hardware reliability, physical security of data and the detection and prevention of fraud and abuse of data. System design is carried out at two levels, namely conceptual level and physical level, known as conceptual design and physical design, respectively. These two phases are also called external design or general design and internal design or detailed design.

1. 2B CONCEPTUAL DESIGN It is in the conceptual design stage that alternative overall MIS designs are conceived and the best one is selected by the system analyst in consultation with the top management. In the conceptual design, the feasibility of meeting the management objectives for the MIS is assessed and a broad-brush picture of the system is painted. That is why, conceptual design is also known as gross design, highlevel design or an overall MIS design, which becomes a basis for the detailed MIS design. In other words, a conceptual design is a prerequisite for the detailed design. Conceptual design involves the following steps. 1. Define problem 2. Set system objectives 3. Identify constraints 4. Determine information needs 5. Determine information sources 6. Develop various designs 7. Document the conceptual design 8. Prepare report A brief discussion of these steps will make the concept clearer. Define Problem The first step in conceptual MIS design is to clearly understand and define the problem to be solved. It should be noted here that these are not only the current problems, which are of concern; rather MIS design should be related to long-range planning for the organisation so as to solve future problems. Further, MIS function is supposed to solve the problems relating to information needs for the business organisation. Thus information needs of the organisation are

to be identified and understood in this step, which can be determined by understanding the mission, objectives, and strategic and operating plans for the business. Set System Objectives Having defined and understood the problem to be solved, the system, analyst, in consultation with the user, must set the system objectives. While setting system objectives, it must be kept in mind that the value of an information system lies in the benefits to its users. Thus, mere efficiency of the system would not serve .the purpose. However, it is very difficult to set the real objectives of an information system. Quite often the objectives of an information system are set in vague terms, for example, 'keep accurate records', 'have maximum efficiency", 'reduce costs', 'provide quality information', 'pa salary to employees by due date'. No" doubt, setting of specific objectives is difficult, but it is very important, so that system objectives may provide a measure of performance of the system or to design an information system to help achieve its objectives. Therefore, system objectives should be stated, as far as possible, in quantitative rather than qualitative terms. For example, some of the already given objectives may be re-stated as 'pay salary to 100 per cent employees by the last day of the month', 'pay 100 per cent of invoices before due date', etc. Identify Constraints System constraints are also known as problem boundaries or restrictions. Knowledge of the constraints is essential, as it helps the designer to consider the limitations that restrict the design of the system. In other words, constraints limit freedom of action in designing a system to achieve the objective. In the light of the constraints, a constant review of objectives is necessary. Thus, establishing constraints will help ensure that the design is realistic.

System constraints may be classified under two categories, namely: (i) (ii) External constraints, and Internal constraints.

External constraints, as the name indicates, are external to the organisation. For example, constraints posed by customers, the government and suppliers. Whereas internal constraints are posed from within the organisation, for example, non co-operation and lack of support from top management; organisational policy; resource constraints like manpower, time and money, etc. Determine Information Needs For a good design of information system, it is very important to know the real information needs of management (users) in a clear statement. Thus, information needs which can really help the management in discharging their functions are identified. For determination of information needs, users should specify (i) What they want out of an information system; and (ii) Items of information that are needed to achieve the predetermined objectives. But, user-managers are rarely specific on the above points, since getting them to be specific about their information needs is a challenging job for the system analyst. A system analyst, thus depending on the situation, has to adopt either a direct or an indirect approach for eliciting information needs. In the direct approach, the system analyst would ask four or five major responsibilities of the user-manager, followed by one or two specific items of information that are required to carry out each of the responsibilities. Indirect approach stresses on the avoidance of direct questions. Instead, the

system: analyst asks the user to describe his/her decision-making process. This is found an easy way as the user-manager is wellfamiliar with the operation/job and thus can describe clearly his/her decision-making process. As already discussed in system analysis, there, are several approaches like interviewing the user managers, using questionnaires, record' review and observation, etc., but the system analyst has to take a judicious decision regarding an approach or a combination of approaches to understand clearly the information needs of user-managers in an organisation. Determine Information Sources Just as clear understanding and wholistic view of the users' information needs is the basis for the design of MIS, the source of this information requires to be determined in order to identify input data, along with identification of its source, timing and format, etc. Though some information systems may require considerable external information, the main information in a majority of the information systems is found from within the organisation: the internal records, files, books, statistical and accounting documents, etc. Thus, for determining sources of information, studying the existing system is quite helpful. A system analyst should clearly understand that in this step, the structure of the new system starts to take shape and thus he should not cnly determine information sources for the particular sub-system under consideration, but also must take into account how they fit into the overall sources of information and techniques of analysis. Sources of information may be classified as given below: .

(i) Internal and External Records: The internal records may be in written form like files, inputs and outputs, correspondence, reports, documentation of the present or planned systems, etc., whereas external sources may include trade publications, government statistics, etc. (iii) Managers and Operating Personnel: User-managers and operating personnel may be an important source for understanding input, output and data processing requirements of an information system. However, gathering data from this source involves interviewing the managers and operating personnel, which'requires proper planning and skill.

FIGURE- 1.6 INFORMATION NEEDS/INFORMATION SOURCES MATRIX

Once the information sources and information needs are determined, the next activity is to match the information needs and sources. This can be done by using a matrix diagram, which is a valuable device for integration of sub-systems and in the rest of the system design process. The above figure - 1.6 illustrates the use of a matrix diagram in one of the sub-systems of the materials management system.

Develop Various Designs By now, a system analyst should be able to conceptualise the overall structure of the information system, he or she is going to design. As already mentioned, conceptual design gives us an overview or a sketch of the structure of the MIS. Thus, conceptual design is like a skeleton of the MIS, which guides and restricts the form of the detailed design. To be more concise, it may be said that if conceptual design is the skeleton, then detailed design is the flesh. At this stage, the conceptual design would define the main decision points, information flows, channels of information and roles of usermanagers. Here the system analyst works out broad feasible alternative combinations of input, storage, processing, communication and output to generate various conceptual MIS designs. More than one alternative conceptual designs are to be developed which are compared to select the optimum one, which (i) (ii) meets the requirements of the users / organisation, and is cost effective.

The following examples of alternative conceptual designs will further clear this point. Suppose a person who wants to build his house, approaches an architect for the plan of his 'would be' house. The architect in turn, on the basis of the requirements of the person, prepares three or four plans for his house. These three or four plans, in fact are alternative conceptual designs of the house. Each design may differ in terms of dimensions, locations or any other specifications of the rooms, etc. For example, one design may propose two bedrooms on the ground floor and one room on the first floor for a three-bedroom house. Whereas other designs may propose all the three bedrooms at the ground floor but having different specifications and locations of each room.-The person, on the basis of already given criteria, selects the

optimum design for his would be house from these alternative designs. Similarly consider an organisation having 15 finished inventory stores, which spread all over India. Head office of the company and the manufacturing plant are located at Delhi. The organisation is facing a crisis in deliveries to its customers. To provide better service to its customers, it requires an MIS to be developed, which may regulate its manufacturing and inventories. The systems analyst may develop more than one alternative conceptual designs of MIS. One design may suggest all orders from customers be sent directly to marketing department at the organisational head-office. Marketing department will then provide demand forecasts to the production department and shipping order to the stores of the organisation. A computer-based information system will maintain a perpetual inventory of all products in all the stores. The second design may propose orders to be sent by the customers directly to the nearest store. Each store keeps its own inventor)' records; each forecasts its demand for the month ahead and sends it to the production department. A third design may propose region-wise control of the orders, which are sent by the customers to the stores at the region level, which in turn process the orders of customers from their respective regions and transmit the orders to the marketing department at the head office of the organisation. Marketing department sends the demand order to the production department and shipping orders to the concerned stores. Before recommending the optimal conceptual design, the system analyst evaluates each of the alternative designs. The following criterion may be adopted as a basis for evaluating the designs:

Economic Basis A preliminary cost-benefit analysis of each of the designs is made. Performance Basis Each alternative is objectively evaluated for the anticipated performance with the objectives of the systems as previously developed. Operational Basis For each alternative, analysis is made to determine the strong and weak points in respect of quality of the databases, information, potential breakdown points, etc. Documentation of the Conceptual Design The final selected conceptual alternative is documented in specific terms. The documentation of the conceptual design involves: 1. Overall system flow, 2. System inputs, 3. System outputs, and 4. Other documentations like activity sheet and system description, etc. Report Preparation Having documented the conceptual design, the next step is to get an approval of the management (user) so as to start the detailed design activity. Thus, a proposal giving the cost to be incurred and possible organisational changes is prepared for the management. The report thus prepared should briefly mention the problem, the

objectives, an overall view of the system, justifications for selecting one alternative over others, time and other resources required for developing and implementing the system. Documentation of the system should also be appended in the annexure or be given in a different volume of the report. The report thus submitted, is reviewed by the top management of the organisation. If approved, the detailed system design activity is undertaken.

1.2C DESIGN METHODS There are a number of methods for designing information systems. Following is a brief description of some of the popular methods. Problem Partitioning The method is based on the principle of 'divide and conquer'. In this method, instead of solving the entire problem at once, the problem is divided into small manageable parts (modules) that can be solved separately. This problem partitioning method aims at reducing composition because each module can be developed, coded and tested relatively independently of the others. Also, maintenance is minimised if each module can be modified separately.

Structured Design In this method, a structured chart is created, which can be used to implement the system. The chart depicts modules defining each module by the specific function. The aim is to produce a structure where the modules have minimum dependence on each other (decoupling); and have a high level of cohesion, meaning all the statements within a module are functionally related. Various tools like

flow-charting, data flow diagrams, structure charts, structured English, etc., are used in a structured design. Top-Dow., Design The top-down design is based on the concept of a system which suggests that a system consists of sub-systems (components), which have sub-systems of their own. In other words, a system may be termed as a hierarchy of sub-systems, the highest level sub-system corresponding to the total system. Accordingly, this method involves the identification of the main components of the system, decomposing them into their lower-level components and iterating until the desired level of detail is reached. It attempts to smoothen the path of system design by starting at the top and designing the broad modules first. At each stage, adequate attention is paid to subsequent interfacing so that as the system expands further, modules can be added without trouble. 1.2D DETAILED SYSTEM DESIGN As already stated, conceptual design in itself is not the end of the design process; rather it serves as a basis for the detailed MIS design. The performance requirements specified by the conceptual design become inputs to the detailed design phase, in which these are further refined, detailed and finalised to be called the system specifications. Thus, the main objective of the detailed system design is to prepare a blue print of a system that meets the goals of the conceptual system design requirements. Detailed system design involves the following phases. 1. Project Planning and Control 2. Involve the User

3. Define the Detailed Sub-Systems 4. Input/Output Design 5. Feedback from the User 6. Database Design 7. Procedure Design 8. Design Documentation

A brief discussion on each of these phases is given below. Project Planning and Control In order to ensure an effective and efficient design of an MIS, it is very important that a detailed design process should in itself be considered a complete project. Therefore, the first step in the detailed design is planning and controlling, so that standards may be established and a proper follow-up is made. Some of the main point? which are important in planning and control of a detailed design are given below. Project Planning (i) (ii) (iii) Formulate the project objectives, Define the project tasks. Prepare a network diagram of all events and. activities so as to specify sequential and parallel events. (iv) (v) Schedule the work as per the requirements of the user, Prepare a budget for the project.

Project Control 1. Get a feedback of the actual performance of the project with respect to time, cost and work of the project and compare it with schedules, budgets and technical plans. 2. Take corrective action where required so as to maintain control. Involve the User System designers must inform the users regarding the new information system being developed and gain their support and acceptance. In this phase, users are assured that changes will benefit them or that they will not be at disadvantage because of the new system. It is also important to take users in confidence so as to obtain information for the design of the system. This will also help managing resistance to change and would ensure successful implementation of the system. Detailed Sub-System Definition In detailed system design, every system needs to be broken down to ascertain all activities required and their respective inputs and outputs. In some of the cases, subsystems are broadly defined in the conceptual design phase, but at this stage they are specifically defined to work out every detail concerning the sub-system. Decomposition of the system to operational activities in general is carried out as follows. System Sub-system Functional Component Task

sub-task Operation element Wherever needed, integration of activities into a sub-system may be done on the basis of any one or more of the following common features. 1. Common functions 2. Common techniques or procedures 3. Logical flow relationships 4. Common outputs or inputs

Output/Input Design Having defined the sub-systems well, by way of flow diagrams and a thorough discussion with the users of the MIS, the system designers now define the specifications of outputs and inputs for each sub system, in more detail. These specifications will later be used by programmers to develop programs to actually produce the output/ input. As the main purpose of an MIS is to provide information to aid decision-making, to the user, output/input is one of the most important characteristics of the information system. As decisions are based on the output from the system and input to the system, system designers must give this phase the attention it deserves. The following paragraphs will highlight the key points to be considered while preparing output and input design. Output Design The term output implies any information printed or displayed, produced by an MIS. At this stage, the following activities take place. 1. Specific outputs which are required to meet the information needs are identified.

2. 3.

Methods for presenting information are selected, and Reports, formats or other documents that act as carrier of information, produced by an MIS, are designed.

Objectives of Output Design An output from an MIS should meet one or more of the following objectives. 1. It should provide information about the past, present or future events. Outputs at the operational control level provide information of the past and the present events, whereas outputs which are required at the strategic planning level include information on future projections. 2. It should signal important events, opportunities and problems. For example, exceptional reports indicate such happenings. 3. It should trigger an action in response to some event A set of rules is pre-defined for such a trigger. For example, an order is prepared when inventory reaches a certain level. 4. It should confirm an action as a result of some transaction. For example, printing a receipt upon receiving the telephone bill.

Main Points for Output Design The following questions need to be answered for designing good output. 1. Who will receive the output? The answer to this question will help determine the level of the user and also the use of the information, i.e. internal or external to the organisation. The

content, format and media needs of the output may be designed accordingly. For example, vice president of an organisation may require reports only of exceptions and in summary form, supplemented by graphic displays, whereas customers may like on-line query facilities. 2. When and how often is the output needed? This determines the timing and frequency of output generation. Some outputs are generated regularly, whereas some are generated only when certain conditions arise, e.g. inventory orders are generated when inventory falls to a certain level. 3. What is its planned use? The usage of the output determines its content, form and media. For example, the content, layout and media will be different for the output if it is used to convey information (sales report), to ask a question (queries by the customer) or to trigger an action (generation of an order). 4. How much details are needed? This question specifically answers about the details required from an output, which will affect the output design. Presentation of Output Even a high quality content may go unnoticed, if presented poorly. Therefore, presentation of output is regarded an important feature of output design. The presentation rftay be either tabular or graphical, or both. The tabular format, in general, should be preferred when (i) (ii) (iii) details dominate the contents contents are classified in groups total are to be drawn and comparisons are to be made.

In the detailed reports, a tabular format is preferred. However, graphics are used to improve the effectiveness of output, especially in detecting patterns in data and trends or changes in trends. Some users like to see information in graphic form rather than in rows and columns. The following figure 1.7 exhibits tabular and graphic forms of output. Tabular and graphical formats may be combined together to enhance the presentation of output.

Output Design Specifications The main points which should be considered in the output design specifications are given below. Paper Size: The designer must specify the size of the paper to be used for the output, e.g. A4 size, A3 size, etc., or 9.5 x 11 inches, 11 x 14.7/8 inches or 8 x 14.7/8 inches, etc. Purchase Order Sr. No. Hem Code Qty Ordered

FIGURE - 1.7 TABULAR & GRAPHICAL FORM OF OUTPUT (ii) Special Forms: Outputs can be designed on the pre-printed form where standard print headings/titles, etc., are required. For example, the pre-printed form may have the name and logo of the organisation printed at the top. This enhances presentation and gives a professional look to the output document. Some of the universities use this type of form for the certificates / degrees to be awarded to the students. Railways are also using similar forms for reservation tickets. (iii) Multiple Copies of Output: When more than one copy is required from the system. Multiple copies are to be produced. This can be achieved by using multipart forms. Multiple paper is available in carbon and carbonless forms. (iv) Turnaround Documents: The output may be designed as a turnaround document, if the organisation uses optical scanners for reading data from the forms. Thus, in a turnaround document, the output later comes back as an input document (v) Output Layout: The arrangement of items on the output medium is known as an output layout. The layout design acts as a blue print that guides the

programmer in the development of codes. The output layout should have the following. (a) Headings and date (b) Data and details (c) Summaries and totals (d) Page title, number and date (e) Notes and comments (f) Column headings and data type. Designers usually use N(n) for numeric data type and X(n) for alpha data type, n specifies the width of the column. The following figure 1. 8 depicts output layout.

ABC Pvt. Ltd. Salary Statement for the Month N(2) Total Pages N(2) Emp. Code X(4) Name X(20) Amount N(8) Print Date: Account No. X(4) Remark X(25)

FIGURE-1.8 OUTPUT LAYOUT For designing screens, system designer may design multiple screens or special windowing capabilities such as pop-up windows. Such designs will enhance readability for the visual displays. In put Design Generally, output from a system is regarded as the main determinant of the system's performance, yet as already mentioned, outputs from the system are affected by the inputs to the system. Therefore, input design is equally important for the system designer.

Objectives of Input Design The main objectives which guide the input design are briefly discussed as below: 1. Control the volume of input data. Try to reduce data requirements and avoid capturing unnecessary data. Constant and system-computable data should not be captured. 2. Avoid processing delays during data entry. Automating data capturing may reduce this delay. 3. Avoid data entry errors. Checks in the data entry program which are called input validation techniques may help. 4. Keep the process simple. The system should be kept as simple and easy to use as possible. Input Layout The input layout should contain the following. (i) (ii) (iii) (iv) Heading and date of data entry. Data heading and value. Data type and width of the column. Initials of data entry operator.

Figure 1. 9 illustrates an input layout design.

ABC Pvt. Ltd. Customer Order Form Customer Code: X(4) Sr. No 1 2 Item Code X(4) Date: Qty. Ordered N(4)

FIGURE-1.9 INPUT LAYOUT DESIGN Feedback from the User Having specifically defined sub-systems, output and inputs, the designers once again involve the user to get feedback. This step will increase the acceptance of the MIS being designed. The system analyst should demonstrate the proposed MIS to the users of the system sub-system. This step will also reassure the top management of the user organisation that the detailed design project is progressing as per plans. Database Design A database is an orderly arrangement of all the records related to each other. It serves as a data resource for the MIS of an organisation. To have optimum performance, storage and fast retrieval of data, database, design is an important phase in the detailed design of a system. For designing a database, the designer should keep the following points in mind. (i) (ii) Identify all data tables and record types. Identify fields for each table, the key fields for each table and relations between various tables.

(iii)

Determine the data type and width for each field of the tables.

(iv) (v)

Normalise the data tables. Properly document data dictionary.

Procedure Design Procedures are the rules, standards or methods designed to increase the effectiveness of the information system. The procedures detail about the tasks to be performed in using the system. They serve as ready reckoners for the designers as well as for the users. Sometimes they perform the task of a supervisor over operators. There is a wide variety of procedures, which include: (i) Data Entry Procedures: These are the methods designed for data entry, e.g. data entry sequence. (ii) Run-time Procedures: The actions to be taken by the users to achieve the intended results, e.g. a procedure may instruct the user to load printer with a specific size of paper. (iii) Error-handling Procedures: These procedures help the user in detecting and correcting errors, (iv) Security and Backup Procedures: Through these procedures information is provided regarding actions required to be taken to protect the system against damage. (v) Software Documenting Procedures: The programmers get instructions on how to document the programs. In designing procedures, designers should:

(a) understand the purpose and quality standard of each procedure (b) develop a step-by-step direction for each procedure, and (c) document all the procedures. Design Documentation Detailed design starts with the performance specifications given by the conceptual design and ends with a set of design specifications for the construction of MIS. The outputs from the detailed design, i,e. design specifications, are handed over to the programmers for writing codes to translate system specifications into a physical MIS. Therefore, the system analyst should very carefully document the detailed design. In fact, design documents should consist of- comprehensive details of all the design phases. Design documentation of detailed design report, generally, consists of detailed flow charts), 1. 2. 3. 4. 5. 6. 7. 8. 9. System objectives, Design constraints, Inputs/outputs, Data files, Procedures (manual), Proposed system (a summary and Input/output specifications, Program specifications, Database specifications,

10. 11.

Cost of installation and implementation, and System test conditions.

Documentation of the system should also include a usermanual and operator-manual. A user-manual is prepared to guide the user in understanding and using the system. Thus, it should be simple, easy to understand and without any technical jargon. Whereas an operator- manual is written for the computer operators. Operator- manual should include an operator's view of the system, specifying start, stop and restart sequences. It should also contain various procedures which may guide the operator regarding security, privacy and integrity of data. 1. E SYSTEM TESTING AND IMPLEMENTATION Testing is one of the most difficult tasks in system

development; it requires creativity persistence, and a thorough understanding of the system. It involves thoroughly probing the system to ensure that its performance matches system requirements and meets the expectations of end-users. There are three types of testing: unit testing, system testing, and acceptance testing. In unit testing, a system is viewed as a collection of programs (units), and each program is individually tested, without any assurance that the system is free of errors. In system testing, testing is performed of the entire system to ensure that its component units will function effectively when brought together as a system. In acceptance testing, developers and users test the system under actual or simulated operating conditions to ensure that it is acceptable to users. A good system prevails when it is implemented without affecting the routine operations of the organisation. This requires

careful planning and coordination. In case the system is new, implementation is quite straightforward. If the system is replacing an existing one, implementation becomes critical. In such a case, there are four types of conversion strategies: parallel conversion, direct cutover, a pilot study, and a phased conversion. These conversion strategies are explained briefly in Table 1.2.

TABLE-1.2 Method Parallel conversion Description Old and new system run in parallel till new system becomes reliable. Costly but safe approach. Best suited to critical applications. Old system is replaced with new system. Less costly but more risky than

Direct cutover

Pilot study

parallel approach. Best suited to noncritical applications. One department or unit is testing ground. Good for systems that are moderately critical. New system is slowly phased into the operational environment. Safe and conservative approach. Well suited to critical systems.

Phased Conversion

A post-implementation review helps developers and users to analyse and highlight the successful and not-so-successful parts of a system. This review enables to perform a systematic search for better ways to develop and implement systems, apart from helping the

organisations to recap the important lessons it gained from developing the system. Such an audit is normally conducted after the system is fully operational and its performance can be evaluated.

System Maintenance System maintenance ensures that it continues to meet the growing and changing needs of users through system modifications as and when it requires. System maintenance starts after the system becomes operational, and should last as long as the system is in use. Maintenance is the key to continuing to drive the maximum benefits from a system. User requests for new features or for enhancement of existing facilities, a changing business climate, new technologies, or new information needs within the organisation can accelerate system maintenance. Maintenance costs usually increase with time and when it is more expensive than to develop a new one, the organisation must decide to abandon the existing system and build a new system. System maintenance is basically performed for three reasons : (a) To correct errors; (b) To keep systems current; and (c) To improve the systems. In essence, the SDLC is one of the most common and traditional system development methodologies. It is based on a systems approach to problem-solving, Various phases of the SDLC are summarised in Table 1.3. Table : 1.3 Activities in Different Phases of SDLC System definition Address the questions: and

Planning

Why do we need a new system? What are the objectives of the system ? Gain thorough understanding of

new the

System analysis

problem. Conduct feasibility study Determine and establish

system

System design and development

requirements Explore different designs and select best design Provide a detailed roadmap for converting requirement into actual performance Create logical and physical design specifications Plan, coordinate, control, and manage technical aspects of the system Convert design specifications into program code Perform unit, system, testing Decide on and acceptance strategy:

Testing and implementation

implementation

parallel conversion, direct cutover, or phased conversion Evaluate system performance Make modifications and enhancements to ensure that system continues to meet user needs

Maintenance

Limitations of SDLC The system development life cycle is appropriate to those systems that are highly structured and routine, such as TPS and MIS. However, it has some inherent limitations for its inflexible, sequential processes. These are 1. Structured methods are no more applicable, because things done today are fast, cheap and reality checking. 2. Step-by-step approach of the SDLC does not suit the PCbased systems. 3. SDLC assumes that system requirements can be frozen during the system analysis phase. However, in the dynamic real world, user requirements change frequently. 4. The SDLC works better in stable environments, whereas the world of information system today is turmoil. The number and complexity of operating systems, user interfaces, network choices, software languages, and development tools have grown manifold. Inspite of its limitations, the SDLC continues to be widely used for developing large, monolithic systems. As a way to better respond to users' needs, information analysis have more modifications lo the SDLC so that the time required to implement systems is minimised. Of the many modifications attempted, two approaches prototyping and cud- user computing, which are best for PC-based systems, are increasing in popularity. PROTOTYPING

Prototyping, also an important component of rapid application development (RAD), is the approach where systems are developed swiftly, without having undergone a complete analysis and specification. The system that is developed is known as the prototype. The process relies on the prototype system itself being an aid to the specification by consideration of the prototype and identification of its weaknesses an improved system can be developed. Prototyping also relies on the presence of software tools to produce prototypes quickly. Typically, users take part in the prototyping process either with or without the aid of the computer centre. The process is thus heavily user-orientated. There are two types of prototypes discardable prototypes and operational prototypes. Types of Prototypes There are two types of prototypes: Discardable prototype and operational prototype. Discardable prototype serves as the blue-print for the operational system. Discardable prototype. The steps involved in discardable prototype are as follows: 1. Identify user needs. 2. Develop a prototype, using one or more prototyping tools integrated application generators and prototyping toolkits. An integrated application generator is a prewritten software system that is capable of producing all of the desired features in the new system menus, reports, screens, a database, and so on. A prototyping toolkit includes separate software systems, each capable of producing a portion of the desired system features.

3. Determine if the prototype is acceptable. 4. Code (he operational system. 5. Test the operational system. 6. Determine if the operational system is acceptable. 7. Use the operational system. Operational prototype. For developing this prototype, the first three steps are the same as for discardable prototype. The next step is as follows 4. Use the prototype. This approach is possible only when the prototyping tools enable the prototype to contain all of the essential elements of the new system. Prototyping and SDLC For small-scale systems, prototyping can replace the system development life cycle. However, for large-scale systems or those that affect large organisational units, prototyping is incorporated into the SDLC. Advantages of Prototyping Users and information experts like prototyping for the following reasons: Communications between the systems analyst-and user are improved. The expert can do a better job of determining the user's needs. The user plays a more active role in system development.

 The expert and (he user spend less time and effort in developing the system. Implementation is much easier because the user knows, what to expect. A system developed through operational prototyping capable of easy adaptation. is

Disadvantages of Prototyping Following are the potential pitfalls of prototyping: 1. Because of prototypings iterative nature, there is no definite deliverable or completion deadline. 2. Code inefficiencies may be a drawback in terms of

functionality. 3. The computer-human interlace provided by certain prototyping tools may not reflect good design techniques. Prototyping is most appropriate for applications characterised by: 1. High risk. The problem is not well structured, there is a high rate of change over time, and the data requirements are uncertain. 2. Considerable user interaction. The system features on-line dialogue between the user and a microcomputer or a terminal. 3. Large number of users. Agreement on design details difficult to achieve without hands-on experience, 4. A need for quick delivery.

5. An expected short use phase of the system. 6. An innovative system. The system is on the cutting edge, either in the way that it solves the problem or in its use of hardware. 7. Unpredictable user's behaviour. The user has had no previous experience with such a system. Prototyping is least likely to be appropriate when 1. Appropriate development tools are not available and not understood by the users! computer centre. 2. End users are unwilling to commit the necessary development time to prototype development. 3. High-volume transaction processing is required. 4. Technical efficiency in the use of computer-processing

resources is a high priority.

UNIT - 2 MANAGEMENT INFORMATION SYSTEMS - AN OVERVIEW 2. 1 INTRODUCTION Today the need for an updated information has become inevitble to arrive at an effective decision in all walks of life. Whether it is industry, commerce, defence, banking, education, economics or politics, information is needed everywhere. A significant part of an executives working and personal time is spent on recording, searching, absorbing and communicating information. Information is live as it is required to be updated all the time and is renewable. It is substitutable and transportable and can be made to travel. The all round exponential growth of information makes it necessary that information is collected, stored and retrieved in various fields so that it could be usefully exploited as and when needed. For example: (a) In setting up a new industry, information regarding the choice of technology (methods), skill (manpower), money and material becomes an important requirement for its growth and smooth functioning. In the absence of such information the proposed industry becomes sick over a period of time; (b) In a competitive market, before deciding about the price of an item, the producer needs information about the pricing policy of the competitors, specially of competitive products, sales techniques, etc. to effectively combat the effect of competition; and (c) In defence, considerable amount of money is spent in gathering information (intelligence) from all possible sources. Information is considered as the sixth resource, the other five being men, machines, materials, money and methods. The following figure: 2.1 illustrates the flow of information in a production organisation along with other resources.

FIGURE - 2. 1 INFORMATION AS A RESOURCE 2. 2 MANAGEMENT INFORMATION SYSTEMS The Management Information System (MIS) is an integrated man-machine system that provides information to support the planning and control functions of managers in an organisation. MIS can also be defined as the combination of human and computerbased resources that results in the collection, storage, retrieval, communication and use of data for efficient management of operations and for business planning. MIS is something more than just a computer system. Before the evolution of computers, MIS techniques existed to supply users with information that would permit them to arrive at an effective decision. The computer has added new dimensions such as speed, accuracy and processing of massive data, that permit the consideration of more alternatives in a decision.

The scope and purpose of MIS is better understood if each part of the tenn MIS is explained in detail separately.

FIGURE: 2. 2 MIS STRUCTURE Management Management has been viewed as a function, a process, a profession, and as ail elite or a class of people. Management has also been described as an art; and as a science. And along with material, capital and labour, management is considered as a resource. It is possibly the most valuable resource because it provides the primary force for converting other resources into products and services. This section is confined to the elaboration of only one point management as a function. Il refers to the kind of tasks and activities that are performed by managers. The specific nature of the activities are determined by such managerial functions as planning, organising, directing, leadership (initiating or coordinating) and controlling. In fact, management is a process of achieving an organisations goals and objectives by judiciously making use of resources of men, materials, machines, money, methods, messages and moments (the last two in the context of information being a vital resource to the manager/decision-maker).

Various functions of management are briefly defined as follows (1) Planning: It is the process of deciding in advance the courses of action (or strategies) to be followed, and when and how to undertake these. It is needed for committing and allocating the organisations limited resources for achieving its objectives in the best possible manner and for anticipating future opportunities and problems. (2) Organising: It refers to the formal grouping of people and activities to facilitate achievement of the firm's objectives. It is needed for assigning responsibilities, jobs, and hierarchy among personnel. (3) Controlling: Control is the means of checking the progress of plans and correcting any deviations that may occur along the way. A control is meaningful only when there-are defined responsibilities for activities and results. Control may be used to measure physical quantities (volume of output, number of manhours, number of units of raw material consumed per machine, etc.), monetary results (value of sale, capital expenditure, return on investment, earnings per share), etc. (4) Directing: It is the process of activating the plans, structure and group efforts in the desired direction. It is needed for implementation of plans by providing desired leadership, motivation and proper communication. The management can also be grouped into three hierarchical levels top, middle and junior. The functions of these categories can be studied by analysing TMJ (T-sTop; M-Middle and J-Junior). Top (or strategic) management establishes the policies, plans and objectives

of the organisation as well as a budget framework under which various departments will operate. Middle (or tactical) management has the responsibility of implementing the policies and overall plans of the top management. Junior (or operational) management has the responsibility of implementing day-to-day operations and decisions of the middle management to produce goods and services to meet the revenue, profit and other goals, which in turn will enable the organisation to achieve its overall plans and objectives. The different levels of management are important for two reasons: (a) Information needs tend to be different at different levels of management; and (b) Amount of time required for-any function varies considerably-with each group. Information Information can be defined as the data which is organised and presented at a time and place so that the decision-maker may take necessary action. In other words, information is the result/product of processing data. The conversion process of data into decision. It is clear that information consists of data that has been retrieved, processed or otherwise used, for informative or inferential purposes, arguments, or as a basis, for forecasting. For example, some supporting documents, ledgers and so on, which comprise source material for profit and loss statements, may be used by the decision-maker for profit planning and control, or for other decisionmaking purposes. In fact, the relation of data with information is that of raw material to finished product As mentioned earlier, information resources could supplement the existing list of 5 M's by introducing messages and moments-in the context of information resource

management. Information resources (in the sense of stored data of all types) are reusable. Information contains an element of surprise, reduces

uncertainty and triggers off action. It carries messages and when perceived by the recipients via any of die senses, il increases their state of knowledge or intelligence. For planning, information requirements of decision-makers can be classified into three broad types as enumerated below: Environmental Information Environmental information requirement can be further

classified and described as follows: Government policies. Information about Government policies or financial and tax affairs, political stability, etc. is required and may have a significant effect on future planning decisions. Economic trends. It includes information about (a) economic

indicators like employment, productivity, capital investment; (b) prices and wage levels which affect all organizations regardless of product or services; GNP level, trend and consumer disposable income. Technological environment. The information on technological changes or advancement is necessary for forecasting such changes in the firm and their probable effects on the same. It is also desirable to assess the effect of technical changes on new products and processes Factors of production. These include information about the source, cost, location, availability, accessibility and productivity of the major

factors of production such as (a) labour; (b) materials and spare pans; and (c) capital. Competitive Information Competitive information requirement can be classified and described as follows: (1) Industry demand. This refers to the demand forecast of the industry for the product manufactured or about the area in which the firm is operating. (2) Firm demand. This implies assessment of (he firm's capabilities, activities and potentialities to meet demand relative to the capabilities and actions of the competing firms. (3) The competition. This includes information about competing firms for forecasting own product demand and making decisions and plans to achieve the forecast-Such information falls into three categories; (a) Past performance. It encompasses information concerning profitability, return on investment, market share, etc. which helps to provide a yardstick for setting: performance objectives for future; (b) information Present activity. Under this heading comes

concerning. competitor's price strategies, advertising

campaigns, product mix, changes in distribution channels, etc. which help to evaluate one's own weaknesses or strengths; and (c) Future plans. Information concerning new products, R & D efforts, availability of raw materials, etc. which help to decide future plans comes under this head.

Internal Information It is the by-product of the normal operations of a business. Generally, it is historical or static in nature; it is after the fact data. Internal information is aimed at identification of the firm's strengths and weaknesses. It includes the following: (1) Sales forecast. Since all other internal plans of the firm are guided by the safes plan, it is considered as the dominant planning premise internal to the firm. (2) The financial plan. Information on financial or budget plan is important because it represents a quantitative and time bound commitment about the allocation of total. resources (workers, plant, materials, overheads, administrative expenses) of the firm. It provides information about a number of sub-plans of the firm and it acts as an important link between all activities of the firm. (3) Supply factors. Information concerning availability and

limitations of certain supply factors such as labour, capital, plant and equipment is important as these factors play a vital role in developing the financial and subsidiary plans for achieving firm's objectives. (4) Policies. Long-term basic policies on product range, marketing, finance and about personnel do not permit flexibilily in developing alternative courses of action in the short run. 2.3 SYSTEM Systems are diverse economic system, computer-system, decision-support system, communication system, transport system, educational system, solar system, etc. This means we live in an era of systems. But what exactly is meant by a system?

A system is a group of elements or components joined together to fulfill certain functions. In a larger context, a system is an assemblage of procedures, processes, methods, routine techniques, etc. united in some form of regulated interaction to form an organised whole. The systems are either natural or man-made. An input-output relation and inter dependence exists between the components (or sub-systems) of a man-made system. A system is made up of sub-systems. A sub-system which may be composed of further sub-systems. However, a system itself is part of a super system. This could be termed as the environment in which the system operates For example in an industrial (or factory) system has various sub systems such as production sub-system, marketing sub-system, personnel sub-system and financial-subsystem. These sub-systems in turn are composed of further sub-system. For example, a production sub-system could consist of sub-sub-system of production control, material control, quality control, etc. Again, the material sub-subsystem can be further broken down into 'black boxes' such as purchasing, stores, transportation, inspection, etc. This industrial system is a part (or sub-system) of the large economic system of the country which may be called as the super (or supra) system. The table: 2.1 below describe various sub-systems and their links with the systems and the supersystem. System Sub-system Usefulness Transport (Man-made) Air transport, To provide movement of goods Rail Road Computer transport, and passengers transport, Processing of date for

Water transport (Man- Physical

made)

components like information inputs, outputs, storage and Production of goods, services,

Business (Man-made)

connections Various

departments like earning of profit production, marketing, finance and

personnel Human body (Natural Various systems To keep human body alive and system) like digestive, provide strength

respiratory, circulatory, etc. Solar (Natural system) All planets To provide natural resources and basic necessities on earth Now, combining management, information and system, It could be seen that management information systems are sets of related processes, activities, individuals or entities interacting together to provide processed data to the individual managers at various levels in different functional areas. 2. 4 DEFINITIONS OF MIS While defining the Management Information Systems, following characteristics should be kept in mind: (a) Management information systems arc primarily meant for providing information from the data after processing them. The information systems do not generate data. The data are generated,

collected, recorded, stored, processed and retrieved after it has been generated by business operations in an organisation. The information systems follow the procedures designed for processing this data -which has been generated within the organisation; (b) Information systems are designed for the job positions rather than for individuals. Regardless of 'ho is the individual holding the job position, the information systems are designed keeping in mind the job responsibilities that the individual is supposed to perform and depends upon the information needs of the individual in the organisational hierarchy; (c) The information systems are designed for different levels of management they are supposed to cater to the information needs of decision-makers at top, middle and junior levels of management; (d) Information systems are designed for supplying information to managers in the areas of marketing, finance, production, personnel, materials, logistics, etc.; (e) Information systems should be integrated by way of database's. The redundancy in storage of data, processing of data and generation of reports is avoided byway of integration of information systems. Single point data entry and updation of master data files should be ensured to minimize chances of discrepancies in the data integrity; and (f) Information systems are facilitated with electronic

equipment such as computers. Definitions

The definition of the term 'Management Information System' varies from person to person. However, a few definitions are given here to make the concepts of MIS clear. 1. According to Schwartz, 'MIS is a system of people, equipment, procedures, documents and communication that collects, validates, operates on transformers, stores, retrieves, and present data for use in planning, budgeting, accounting, controlling and other management process. 2. Coleman and Riley state that 'an MIS (a) applies to all management levels; (b) is linked to an organisational sub-system; (c) functions to measure performance, monitor progress, evaluate alternatives or provide knowledge for change or collective action, and (d) is flexible both internally and externally. 3. Davis and Olson defined MIS as 'an integrated user-machine system designed for providing information to support operational control, management control and decision-making functions in an organisation. The information systems make use of resources such as hardware, software, men, procedures as well as supplies'. 4. Canith defined MIS as an approach that visualises the business organisation a single entity composed of various interrelated and inter-dependent sub-systems looking together to provide timely and accurate information for management decision-making, which leads to the optimisation of overall enterprise goals'. 5. Thomas R. Prince defined MIS as a computer based network containing one or more operating systems, provides relevant data to management for decision-making and also contains the necessary mechanism for implementing changes of responses made by management in the decision-making'.

6. Frederick B. Cornish defined MIS as 'structure to provide the information needed when needed and where needed. Further, the system represents the internal communication network of the business providing the necessary intelligence to plan, execute and control. 7. According to Jerome Kanler, 'MIS is a system that aids management in making, carrying out, and controlling decisions. 2. 5 MEANING AND OBJECTIVES OF MIS Management information system (MIS) is an integrated manmachine system which collects, maintains, correlates and selectively displays information in the proper time frame consistently, to meet the specific needs of various levels of management, in order that decisions could be made and action taken for fulfilling the objectives of an organisation. In other words, it is a system which (i) provides information to support managerial functions (planning, control, organising, operating); (ii) collects information systematically and routinely in accordance with a well defined set of rules; and (iii) includes files, hardware, software and operations research models of processing, storing, retrieving and transmitting information to the users.

An effective MIS has the following objectives: (1) Facilitate the decisions-making process by furnishing information in the proper time frame. This helps the decision-maker to select the best course of action, (2) Provide requisite information at each level of management to carry out their functions. (3) Help in highlighting the critical factors to the closely monitored for successful functioning of the organisation. (4) Support decision-making in both structured and

unstructured problem environments. (5) Provide a system of people, computers, procedures, interactive query facilities, documents for collecting, storing, retrieving and transmitting information to the users. Categories of MIS The MIS can be sub-divided into following four categories: (1) Transaction processing system (TPS). The system designed for processing day-today transactions in an organisation is called IPS. This system deals with collecting and processing a large volume of data which mainly helps junior level management in discharging their responsibilities (operational control). (2) Information providing system (IPS). This system is meant for processing information, making a summary of information, and providing exception reports. The summary reports help in giving at a glance the information available, while exception reports indicate deviations (if any) and the reasons for shortfalls in performance.

(3) Decision support system (DSS). It is sometimes described as the next evolutionary step after MIS. It helps in improving the analytical capability of the decision-maker by creating an interactive model of the real-life situation. (4) Programmed decision-making system. The word 'program* is derived, from the jargon of the computer field, where it is defined as apian for the automatic solution of a problem. Programs are simply a string of instructions tO accomplish a job .or a tat..:. In this information age, the systems for programmed decisions are created so that decisions are made by the system rather than a person. MIS and Organisation Structure Organisation structure and information needs are inseparably linked like the human anatomy (as organisation structure) and the nervous system (as information system). The knowledge of organisation structure and proper 'record of delegation of authority within the organisation are prerequisites of MIS. This actually helps in defining authority and responsibility, demarcating decision-making areas, and measuring objectives of each subsystem (or unit). 2. 6 MIS CONCEPT Management is the process -of getting things done through and with people.' A manager in an organisation gets the thing done by performing the following five basic functions, viz., Planning. Organising, Staffing, Directing, and

Controlling.

Managers plan by setting goals and objectives and lay down policies procedures, rules, programmes budgets, strategies and schedules to achieve the plan. They organise the (asks by dividing activities, assigning duties and delegating authority for effective., operation and achievement of goals. Putting right persons at the right job is undertaken in. an important function, known as staffing. The function of staffing comprises the activities of defining the requirements with regard to the people for the job to be done, selecting, suitable persons for positions and training and developing them to accomplish their tasks ' as effectively as possible. Directing process in business was identified by Henri Fayol with Command. However, the process includes the following function it: Communication Motivation, and Leadership.

Directing is important because in order to gel the pre goals and objectives, people manning the organisation have to be guided motivated and supervised by the manager. Managers control the performance of the work by setting performance standards and avoiding deviations from standard. To perform above functions, a manager has to take a variety f decisions. Thus, decision-making is a fundamental pre-requisite for each of the foregoing processes. Peter F. Drucker has rightly said that whatever a manager does, he does it through decision-making. In brief, decision-making is the essence of management.

Robert B. Anthony described three' levels of business activities carried out in operating an organisation. These three levels viz., Operational Control (Operating Management), Management Control (Middle Management), and Strategic Planning (Top Management) are portrayed in figure 2. 3.

FIGURE: 2. 3 MANAGEMENT HIERARCHY. The first level, strategic planning processes determines what markets or businesses the company should be in at present or plan to be in the near future. The next level, management control, includes processes or functions that facilitate the management of those processes delegated to the operational control level. An example of a management control process is production scheduling, where a system is established to schedule products through the various fabrication and assembly points within a factory. The feedback from the production scheduling process enables management to control the operation. The bottom level, operational control indicates processes performed to control the basic product or services produced by the company. It is concerned with individual tasks or transactions, such as procurement of raw material as per prescribed quantity and quality, selling of products to specific customers. In a bank

operational control activities includes physical sorting, recording, and posting of cheques. Top management establishes the policies, plans, and objectives of the company, as well a general budget framework under which the various will operate These factors are promulgated and passed down to middle management where they are translated into specific revenue, cost, and profit goals, Particularly if, each department works under a cost or profit centre concept. These are reviewed, analysed, and modified in accordance with the overall plans and policies until agreement is reached. Middle management then issues the specific schedules and measurement yardstick to operating management. The latter level has the job of Producing the goods and services required to meet the revenue and profit goals, which in turn will enable the company to reach its overall plans and objectives Information Information is data that is processed in a form which helps the management to take decisions Information contains an element of surprise reduces uncertainty and triggers off action. The relation of data to information is that of raw material to finished product It has been depicted in the following Figure -2.4.

FIGURE: 2. 4 RELATION OF DATA AND INFORMATION The analogy of raw material to finished product illustrates the concept (that information for one person may be data for another just as finished product from one manufacturing division may be the

raw material for another division. For example, Shipping orders are information for the Shipping room official, but they are data for the Vice (material) Because of this relationship between data and Information, the two words are often used interchangeably However, data, the raw material for information are facts and figures that are not currently being used in a decision process and usually take the form of historical records. Data may not be organised, may not add to our knowledge and may not surprise us. An example would be any one of the supporting documents, ledgers, and so on that comprise the source material for profit and loss statements. Different levels of management utilize sdifferent types of information as the three levels of management perform different functions in an organization. Different needs of information by three levels of management over a continuum with top management at one end and operating management at the other (figure 2. 5). Middle management, as always, falls in between, having elements of both.

FIGURE: 2. 5; INFORMATION NEEDS OF DIFFERENT LEVELS.

Systems A System is a set of elements joined together to achieve a common objectives). A system is made up of sub-systems which may be composed of further sub-systems. For our purpose the business organisation is the system, and the parts (divisions, departments, functions, units, etc.) are the sub-systems. Having discussed the three elements of MIS, let us now, understand its definition. The concept of MIS is inter disciplinary. That is why it has been defined differently by different scholars. While MIS has been visualised as an approach that conceives the business 'enterprise' as an 'entity, composed' of' various Interdependent subsystems working together to provide timely and accurate information for management decision-making. It has been viewed as a system, an assemblage of various facilities and personnel, providing information to support managerial decision-making process. The researcher have regarded MIS as a set of processes or procedures, which provides information for decision-taking and control within an organisation. Prince, Thomas R. has understood management information system as a computer-based network, containing two or more operating systems which feed relevant data to the management for decision-making purposes. Entirely functional definition of MIS have been put forward by Kanter, Jerome, as he defined MIS as a system/that aids management in making, carrying out, and controlling decisions. Thus, it is evident that a large number of experts in the field have envisioned MIS as a system. Among all these experts, Davis, Gorden, B. has defined management information system as an integrated man! machine system for yielding information to aid the operations, management, and policy-making functions in an organisation. The system utiiz computer hardware and software,

manual procedures, management and decision models, and a database. He clarifies that an integrated system does not mean a single, monolithic structure, rather, it means that the parts fit into an overall design. Earlier, when the concept of MIS was first introduced, many proponents envisaged a single, highly integrated .system that would bring together processing for all organisational functions. Some of the, experts had of certain doubts information regarding the to help possibility of management computerisation systems

planning and decisions especially strategic planning owing to unstructured decisions at the top level of management. Thus, Davis, Gorden, B. has advocated the concept of MIS as a federation of sub systems rattier than a single large system. However, the concept of MIS is an evolving concept Recently, two' such concepts that may be regarded as extensions of the MIS concept are Decision Support Systems (DSS) and Information Resource Management (IRM) have become popular. In other words, these concepts may be described as the next evolutionary steps after Management Information Systems. For the purpose of this study, we take the definition of MIS as follows: Management information system is a system having a combination of persons, machines, procedures and data-base, as its elements, which gather data from the intra and extra sources of an organisation; and alter processing these data, supply management information to the managers in an organisation, to support the.decision making process of the management. 2. 7 EVOLUTION OF MIS The digital computer was primarily designed for scientific calculations. However, ever since the use of computers for the American census in 1954, the commercial applications of computers have far exceeded the scientific applications. It is estimated that the

commercial applications account for as high as 80 per cent of the investment in hardware and software. A significant portion of such commercial applications aims at providing some form of information system support to the management of an enterprise, The concept of MIS and even the very term MIS evolved over the years. In the fifties and sixties, many organizations realized the potential of computers to process large amount of data speedily and accurately. The accuracy and speed of data processing of the computing equipment of that era far exceeded that of people who used to undertake data processing in those days. Typically, such data processing activities included wage calculation, material accounting, invoicing and billing. Subsequently, with the substantial increase in business, these clerical activities had to be performed very fast, using very large amount of data. Even the-use of a large number of personnel to cope with large scale data processing-was ineffective^ Increasing the number of workers could speed up processing, but the inherent deficiency' of inaccuracy in repetitively performing mundane data processing, which is a- characteristic of human beings, could not be improved. Organizations, therefore, visualized in the early computers, which were primarily programmable calculators, a potential to-overcome this deficiency. This led to the activity widely known as Electronic Data Processing * EDP), & term used to indicate the use of computers that used electronic* equipment (e.g., vacuum tubes and later on transistors) for processing a large* volume data. Obviously, such EDP approach capitalized on the ability of computers to perform accurate processing of repetitive data with practically no signs of fatigue, thus eliminating performance degradation exhibited generally by human beings when confronted with such data processing work, The focus of EDP was on record keepingan activity that is a statutory requirement in many organizations. The majority of the

items whose records had to be maintained were accounting data. So the finance and accounts departments took early lead in EDP activity. In fact, many EDP departments were under the administrative control of such accounting departments. A classic example of such a situation in the Indian context is the Indian Railways, where EDP departments were under the direct, control of the Financial Advisor and Chief Accounts Officer (FA & CAO). A natural extension of such accounting applications was the Payroll and Inventory Control; soon other financial services that were data dominated took to EDP easily. Insurance companies, like the Life Insurance Corporation of India, were the leading examples of EDP pioneers. Triggered by the need, a whole tot of specialized mechanical and electromechanical accessories for the computers were also developed, the chief among them being Card Punch Equipment, Card Readers, Card Sorters, and specialized printing equipment known then as Accounting Machines. The emergence of International Business Machines (IBM) as a huge multinational corporation was a direct fallout of such a momentum in EDP departments. . The next stage of development of MIS was concerned more with insight and analysis that would possibly be provided by the routine availability of such accurate and timely data. In the seventies, the digital computers underwent a fundamental change by the introduction of time sharing and interactive computing. Such a change along with large availability of discs and-the emergence of file processing systems and COBOL programming language, saw a discernible shift from data to information. The focus was not merely on processing of data per se; it was more on the analysis of corporate data. .While accuracy and timeliness were important, relevance, analysis and insight became the key words. The emphasis was more on the effectiveness of the analysis of the data rather than on the mere efficiency of speedy processing of data. Such a shift in emphasis was first conveyed through the term MIS. Management

information systems stressed informationoften, thought to be a refined form of data. The MIS philosophy underlined both the content information in contrast to dataand the focus of processing, i.e. management usage in contrast to speed: a clear evolution from the days of Electronic Data Processing. The use of MIS in this text goes beyond the meaning that was assigned to it in the seventies, but the word MIS itself is retained. This is because of the widespread use and acceptance of the term MIS more easily than any other possible substitute term. However, without an excellent record keeping mechanism provided by EDP, no meaningful analysis of data would have been possible. Therefore, even today, MIS presupposes an excellent record keeping function. Though it is no longer fashionable to use the term EDP, the need for accurate and timely processing of data should not be underestimated. Possibly, the blame for EDP falling into disrepute lies with the early EDP enthusiasts themselves; the EDP personnel were more interested in generating piles of data, accurately than with their ultimate use by management. As it happens in many other human activities, the means became an end by itself with the EDP enthusiasts losing sight of the end goal. The very effort of such largescale data processing made it impossible to process the data in a timely manner. The EDP staff were impressed with the spectacular progress made in the seventies by the computers in the processing capabilities. But it was forgotten that despite the amazing progress in computer technology, the data to be processed increased at a much faster rate than the rate at which the speed of .processing by computers increased. What was needed was a careful analysis of the type of data that had to be processed. Much of the data needed no processing at all. It matters little whether, they were processed speedily or not Probably, what went wrong with EDP persons .was-

their lack of appreciation of the levels of management The top management had neither the time nor the inclination to assimilate large volumes of data generated by EDP departments. The need was for ah information filter that could filter the data to suit the level of management. According to the MIS jargon, the management demand is for right information at the right time to the right people, whereas what EDP provides is mass information speedily disseminated to everyone! The eighties saw the Personal Computer (PC) revolution that is continuing today. In the seventies, 'the lop management relied on the staff departments of EDP and MIS to supply the-necessary information. Their access to information was always indirect until the arrival of the PC. The desk-lop metaphor of the personal computer changed the picture completely. As compared to the time- shared, character-based computing of the seventies, the PC of the eighties offered the following significant advantages: Direct end-user involvement Steady performance (no delay due to other users) User friendly and graphical user interface Immediate results Function oriented software like word processing, database, spreadsheet, software. Flexible access to corporate data. . These advantages were significant enough to create a new breed of managers who were willing to getting 'hooked on' to the PC. These early pioneers visualized the immense potential of direct interaction graphics, communication and presentation

of end users with computers in sharp contrast to the interaction through an intermediate agency of a programmer or system analyst. The most useful payoff due to such direct interaction was the what-if capability. The end user could do a direct analysis of a contingent situation and get an immediate feedback as to the potential impact of such a situation. In addition, a variety of analyses such as sensitivity analysis, impact analysis and scenario analysis could be performed by the end users directly. The easy to use analytical capability of the PC software like Lotus 1-2-3, the immediate availability of results, and the ready access to actual corporate data on the mainframe computer, which the PC could access on-line, made?" the executive realize the decision support capability of the PC. 'Suddenly, the computer was useful to the manager for' real world, on the spot. Decision making'! situations? The macro 'programming capability of the spreadsheet pioneered such analysis capability:' Such systems;which directly support decisions, came to be known as Decision Support Systems (DSS).' They were a new generation of systems with a new philosophy. Their goal was direct support to decision making in place of indirect support through information, which was the dominant philosophy of the early generation MIS. These DSS, had to be flexible in terms of access to data. To provide "what if analysis capability, they also had to provide easy access to modellingthough generally limited to spreadsheet modelling. Since DSS philosophy emphasized the role of the decision maker at the centre stage and the computer as a support tool, it was well received by the managerial community. Overzealous experts of MIS along with Artificial Intelligence (Al) enthusiasts had predicted in the seventies the replacement of managers by computers. Such a stance had sent shock waves among line managers and made them view the computers as a threat to their very existence. But the threat never really existed; it was just a poor projection by a handful of influential MIS and computing professionals. Fortunately, the DSS philosophy silenced any remote threat to managers from machines. On such a

positive note, thanks to the philosophy of DSS, several line managers took to computers more confidently. In fact, the DSS philosophy is another stage in the development of computer applications to business. The emergence of computer graphics provided further impetus to the acceptance of DSS as the data could be readily displayed in the form of several graphs and charts like bar charts, histograms, pie-charts, line graphs, etc. without much effort from end users. Even though the 60s and 70s witnessed a remarkable growth in artificial intelligence, especially in its sub-area Expert Systems, it was only with the arrival of powerful machines in the 80s these could be implemented. Until the 80s the theoretical developments could not be translated into useful, value adding products. The information and decision hungry managers of the 80s recognized the huge potential of the expert systems. Combined with the DSS philosophy,-the expert systems could supply a superior class of information support. Such systems came to be known as Knowledge Based Systems (KBS). The exciting developments in OR and management through the development of a large number of optimization models such as linear and integer programming, nonlinear programming, dynamic programming, network flows, queuing theory, stochastic analysis, multi object optimization and simulation models (discrete event simulation, continuous simulation, process simulation), and a large number of sophisticated algorithms had to await the arrival of PC revolution to find, widespread corporate wide applications. Without the power of desk-top computing and the subsequent less arduous access to corporate information, tangible benefits from the models, however sophisticated and powerful they may be, could not be derived.- In the past few years, the philosophy of DSS, combined with the power of operations research and management science models, transformed the "what if remarks analysis capability to "what is best"

analysis capability. Neither of them were as useful independently as their synergy could provide. What if analysis capability ensured that the decision maker was very much in the driver's seat as far as decisions were concerned. What-is-best analysis capability threatened to displace the decision maker by means of sophisticated models and hence ensured their slow acceptance by the decision maker. The synergy of what is best analysis and what if analysis resulted in the full benefit of optimization along with the easy acceptance by the decision maker. What if analysis became a natural sensitivity study of the optimum result, leading to furthering the utility of optimization studies. Such systems that truly integrate management information systems, decision support systems and operations research and management science models came to be widely known as Model Management Systems (MMS). The EDP aimed at the operational level of the management, whereas the MISIDSS (i.e. MMS) target at the middle-level management. Recently, attempts have been made to provide information support to top management as well. Such systems which provide information support to top management are known as Executive Information Systems (EIS). The focus of BIS is on direct user- machine interaction, particularly for users whose time value is extremely critical, e.g. the CEOs. Depending on the context, the actual system may use some combination of EDPIMIS/DSS/MMS/KBS, but the crucial factor will be the man-machine interface. Some of the interfaces that are being researched are: natural language interface, voice interface (i.e. processing and response), and other multimedia interface (including graphics, sound and video). 2.8 ORGANIZATIONAL STRUCTURE Since MIS largely deals with managerial applications, an appreciation of the theory of organizations is a necessary prerequisite for the successful application of MIS. in any organization, three

distinct levels of management are discernible: (i) the operational management largely concerned with the day-to-day operations; (ii) the middle management mainly involved with tactical decisions that have medium-range impact on the organization; and (iii) the top management whose main focus is on long-term strategic decisions that have far reaching long-term impact on the organization. To be successful, MIS in an organization should explicitly take into account this classification of the management levels. Since the summary information to be given to the tactical and strategic management functions must necessarily be culled out of operational information, the accuracy and timeliness of collecting and disseminating information is important at the operational level. However, at the tactical and strategic levels, relevance of information is the watchword. A relevant but slightly inaccurate data is far better to the strategic decision than accurate but irrelevant data. The goal must be to generate data that is both accurate and relevant. What is important is to appreciate the changing importance of data at different levels of management. The context decides the tradeoffs, particularly when cost considerations in data collection and data processing are involved. Historically, the failures of early generation data processing departments are attributed to the lack of appreciation of this subtle yet important issue. Some professionals term this process as the provision of information filter, meaning that only filtered information summarized from operational data must be presented to the middle and top management. Others put it more effectively in the form of emphasizing efficiency at the operational level and effectiveness at the tactical and strategic levels. In fact, there is a school of thought that believes that data processing serves the needs of operational management, MIS serves me needs of middle management, and top management cannot be supported by information systems at all! The point to be emphasized here is the importance of mapping organizational structure to the design of MIS for successful implementation. This point will be elaborated further in

Chapters 2 and 3. Recently, the information systems are also being viewed as strategic weapons in reshaping the organizational structure and the processes through Business Process Re-engineering (BPR). Information systems and Total Quality Management (TQM) are two of the key ingredients in the re-engineering process. Such a process could be a redesign of a particular activity, a major restructuring of an organization, or a complete transformation of the business goals and processes of an entire organization. Information systems play a key role in all these processes.' Obviously, then, a clear understanding of the organizational structure and processes is called for, before information systems supporting such re-engineering exercises can be redesigned, thus bringing into sharp focus the interplay between information systems and organizational systems. 2.9 COMPUTERS AND MIS While the conceptual MIS does not need computers as a prerequisite, any meaningful MIS today is a computer-based system. Since the major applications of computers today are for the design, development and application of MIS, to a distant observer, computer systems and information systems appear synonymous. But this is far from true. These are two disciplines that overlap and yet have quite independent existence. The following major differences between the two disciplines must be clearly^ maintained in order to get the maximum advantage from any MIS: 1. Computer component; Systems successful provide only the systems technology call for information

understanding of the organizational dynamics, processes, and control systems. 2. Information systems discipline is centred on peopleto be well-versed in this discipline one needs a number of human qualitiesthe ability to communicate, the ability to listen and

understand problems and resolve conflicts, to respect others opinions and value systems; one also: should have vision to set goals and plan strategies to achieve these goals. 3. Information systems is an applied area. It calls for problem solving skills, a knack of making quick and sensible assumptions to solve specific problems in a time-bound manner, often working under time and budget constraints. Computer systems, on the other hand, being a relatively pure area calls for a strong theoretical foundation in engineering and mathematical sciences to solve general problems. 4. Information systems are specific to organizational and managerial contexts. In a. sense their focus is on solving problems specific to enterprise management, though enterprises are sufficiently general in scope. Computing systems, on the other hand, are far more generic and address problems in contexts other than managerial, e.g. scientific exploration, education, and entertainment, Thus they are not limited by organizational considerations alone and go much beyond business and commercial activities. 5. Information systems call for a very high conceptual challenge by way of understanding individuals, organizations, and their complex interrelationships. The complex thought processes of vastly differing individuals, the subtle interpersonal dynamics between individuals, both in their personal capacity and organizational capacity, their attitudes, aspirations, goals, etc. have to be clearly understood before any information system is successfully implemented. Computer systems, on the other hand, call for a very high order of equally demanding challenges, though in an altogether different plane of-intellectual challenge. Computer systems

involve a fair degree of abstraction, analytical thinking, generalization and rigorous-analysis. 6. The tools of information systems are generally context specific. Many of the successful tools of the present generation of technology may not be successful in a different technological scenario. The mainframe and the minicomputer based legacy systems are readily -giving way to server-based computing with PC-based clients accessing the servers using client server technology. The tools of computer systems like database theory are far more context independent Even the change of technology only modifies them, not completely changes them. Being context independent, they have a far reaching and long-term impact It is imperative on the part of any MIS professional to view these important differences in the right perspective. 2.10 EVOLUTION OF MANAGEMENT INFORMATION SYSTEM Information system is a system of collecting, storing, retrieving and processing to ' data for at providing different appropriate levels of and timely information managers organizational

hierarchy for helping them in performing managerial activities' of planning, organizing,-controlling and decision making. It consists of people, procedures, methods, equipment and other resources that work together in a desired manner to provide necessary information support to managers with an objective to increase the effectiveness of management The concept of information system is not new. Even during early periods of civilization formation of governments demanded need for written record. Importance demanded need for written

record. Importance of keeping accounts of revenue and expenditure and need for stock taking in public administration was realized even in olden days. Governing a large empire by centralized control required some form of communication and information system. Every king had some system from which he received information relating to the state of affairs in every rook and corner of his empire systematized record keeping, effective communication system and hierarchy of authority are essential to the life of any organization. Information plays an important role in initiating and influencing most managerial actions and decisions. Collecting* recording, storing and processing data for getting information involve cost Because of constraints of time, space, manpower, facilities and other resources, it was difficult for managers to get all the information to get all the information they needed. So they used whatever" limited information they could get and relied more or their judgment, experience and intuition for decision making. TECHNICAL ADVANCEMENTS Before the introduction of computers, the respective

departments of an organization. Stored their own data. But after the advent of computers, the data pertaining to all important areas of the organization were also stored on the magnetic medium eg. magnetic tapes, hard disk etc by the EDP (Electronics Data Processing) department. Management requires information for planning, decisions making and control. Previously user department were custodians of data pertaining to their respective areas. The clerks and office assistant processed these data and provided information to the management. But gradually the top management realized the EDP department as a reliable alternate source of information pertaining to

all areas of organization from the EDP department. Some examples of typical information needed by managers are: Total amount spent on salary of employees of different department of organization. Amount spent on material List of high value items. List of ordering bills to be paid List of orders pending for supply etc.

The EDP department provided information regarding the sales in figures, production figures, accounting figures etc. So EDP managers of user departments and top management collectively planned the content and format of .information which were required for managerial functions. Systems were developed for providing information support for various managerial activities and functions. The system consisted of computer hardware, software, large collection of data stored on magnetic computer resources, procedures for collecting and entering data and people to operate the, system. Thus evolved the concept of information system. By keeping data in a central database, sharing of data of different department was made possible. This also removed redundancy and inconsistency in data. Thus evolved the concept of data base management system. A number of DBMS software packages like INGRE, ORACLE, SYBASE were developed to solve problems of managing large volume of data. To meet the requirement of small organization, small PC Dbase Foxbase, Foxpro were also developed. EMERGENCE OF MANAGEMENT INFORMATION SYSTEM

As information systems in organization are generally used to provide information support to managers at the right time to help them in taking better decisions and in effective utlisation of organizational resources. So it is very important for system designers to understand how information can really help in the process of management and decision making. So the concept of management, system, information and decision making together is called 'Management Information Systems'. Management Information Systems collects information from all its sources, processes it, stores it and supplies it to the required people at right time. It is defined as "an integrated system of man and machine for providing information to support operations management- and decision making functions in the organizations. Management Information System dues the following functions. Handles Voluminous data Complex analysis. Confirmation of validity of data and transactions. Quick search and retrieval Mass storage Communication with any destination through online. processing of data and multidimensional

Management Information System is not new; Only its computerization is hew before computers, MIS techniques existed to supply managers with the information that would .permit them to plan and control operations. The computers has added one or more dimensions -such as speed, accuracy, increased volumes of data that permit the consideration of more alternatives in the decisions. Because decisions making is such a fundamental prerequisite to each of the foregoing processes, the job of an MIS becomes that of

facilitating

decisions

necessary

for

planning,

organizing

and

controlling the work and functions of the business. Thus MIS provides information for making decisions regarding the integration of the organization through the process of management;

2.11 CHARACTERISTICS OF MIS A management information system has the following

characteristics: SYSTEM APPROACH The information system follows a system's approach. The system's approach implies a wholistic approach to the study of system and its performance in the light of the objective for which it has been constituted. This approach is anti-piecemeal in nature. In other words, taking a comprehensive view or a complete look at the interlocking sub-systems that operate within an organization. MANAGEMENT ORIENTED This is an important characteristics of MIS. For designing of MIS, top-down approach should be followed. Top-down approach suggests that the_ system development starts from the determinated of management needs and overall business objectives. The MIS development plan should be derived from the overall business plan. Management Oriented characteristic of MIS also implies that the management actively directs the system development efforts.

In MIS development, a manager should spend as good amount of his / her time in system design. To ensure that the implemented system meets the specification of the systems, continued review and participation of the manager is necessary. NEED BASED MIS design and development should be as per the information needs of managers at different levels, viz., strategic planning level, management control level and operational control level. In other words, MIS should cater to the specific needs of Managers in an organization's hierarchy. EXPECTATION BASED MIS should be developed on the exception based reporting principle, which means an abnormal situation, i.e. the maximum, minimum or expected values vary beyond tolerance limits. In such situations, there should be exception reporting to the decision maker at the required level. FUTURE ORIENTED Besides exception based reporting, MIS should also look at the future oriented. MIS should not merely, provide past or. historical information, rather it should provide information, on the basis of projection based on which actions may be initiated. INTEGRATED Integration is a necessary characteristics a management information system. Integration is significant because of its ability to produce more meaningful information. For example, in order to develop an effective production scheduling system, it is necessary to balance such factors as:

Set up costs Work force Overtime rates Production capacity Inventory level Capital requirements Customer services, etc.

A system that ignores any one of these elements, for eg. inventory levels, is not providing the management with an optimal picture. The cost of carrying excess inventory may more than offset the other benefits of the system. Integration means taking a comprehensive view of looking at the complete picture of the interlocking subsystem that operate within the company. One can start developing an MIS by attacking a specific sub-system, but unless its place in the total system is realized and properly reflected, serious short comings may result. Thus, an integrated, system that blends information from several operational areas is a necessary characteristics of an MIS. COMMON DATA FLOWS Because of the integration concept of MIS, there an opportunity to avoid duplication and redundancy in data gathering, storage and dissemination, system designers are aware that a few key source document account for much of the information flow. For example customer's orders are the basis for billing the customer for the goods ordered, setting up account receivables, initiating production activity, sales analysis sales forecasting, etc. It is prudent to capture and use this data throughout the functional areas.

The common data flow concept supports several of the basis tenets of system analysis. These include avoiding duplication, combining similar functions and simplifying operations wherever possible. The development of common data flow is an economically sound and logical concept, but it must be viewed in a practical light. LONG-TERM PLANNING MIS is developed over relatively long periods. Such system do not develop overnight. A heavy element of planning is involved. The MIS designer must have the future objectives and needs of the company in mind. The designer must avoid the possibility of the system going obsolete before its time. SUB - SYSTEM CONCEPT The process of MIS development is quite complex and one is likely to lose insight frequently. Thus, the system, though viewed as a single entity, must be broken down into digestible sub-system which arc more meaningful at the planning stage. CENTRAL DATABASE A central database is the mortar that hold the functional systems together. Each system required access to the master file of data covering inventory personnel, vendors, customers, etc. If the data is stored efficiently and with common usage in mind, one master file can provide the data needed by any of the functional systems, It seems logical to gather data once, to properly validate it and to place it on a central storage medium, that can be accessed by any other sub-system.

2.12 BASIC REQUIREMENT OF MIS MIS support decision making in both structured and

unstructured problem environment MIS support decision making at .all levels of the organization. MIS arc intended to be woven into the 'fabric of the organization, not standing alone. MIS support all aspects of the decision making process. MIS are made of people, computers, procedures, databases, interactive query facilities, and so on. They are intended to bf evolutionary adaptive and easy for people to use. The absolute need for the systems approach will continue to accelerate two major reasons: The increases complexity of business. The increased complexity of management

THE INCREASED COMPLEXITY OF BUSINESS This complexity can be attributed to four primary causes: The technological revolution. Research and Development Product Changes The Information Explosion.

THE TECHNOLOGICAL REVOLUTION

Transportation, communication, agriculture and manufacturing are among the making .industries undergoing vast changes in products, techniques output and productivity. The technological revolution is not a continuation of the Industrial Revolution. It is a vast and fundamental change in its own right as advanced mechanization and automation techniques are adopted and improved across a broad, range of industries. The future of this revolution is not entirely clear, but two things are quit certain; change will continue at an accelerated face and .this change will demand giant steps in improved management. It is fundamental that in order to cope with these changes, the manager of the future will require large amounts of selective information for the complex tasks and decisions ahead. Thus "the technological revolution will require a managerial revolution". RESEARCH AND DEVELOPMENT The breath taking rate of the technological change racing through all types of industry is due in large part to increasing expenditure for research and development For example, consider how the DC-6, a reciprocating engine airplane, was made obsolete in less than five years by the pure jets. Charles kettering, a General motors executives, once commented. "By its very nature research is a gamble but the only risk that is greater than doing research is not doing it. This comment was not intended to imply that all companies should perform research. However, all should be aware of its impact on their operations and should provide for better planning, better management and better information to accommodate the effects. PRODUCT CHANGES

Technological advances resulting partly from research and development, partly from growing customer sophistication, have resulted in the third course of complexity -produced changes. The modem organization is faced with the necessity to optimize return from a given product in a much shorter time. The model T ford may have been good for a product life span of 1(5 years, but todays automobile manufacturer must offer more than a thousand combinations of model color and power selections. The implication emerges that today's manager must keep abreast of the factors influencing his or her firm's products and future operations. This requirements demonstrates once again the need for a properly designed management information system particularly with regard to environment an environment that includes competitors who are themselves using up-to-date methods. THE INFORMATION EXPLOSION The information explosion has profound impacts upon the complexity of management' and organization. As a decision maker, the manager is essentially a processor of information. The modem manager knows that the ability to obtain, store, process, retrieve, and display the right information for the right decision is vital. This is after all the basic reason for an information system better decisions. To 'remain ahead of competitions and to keep pace with the technological revolution and its impact on the firms products or services, the manager must keep abreast of selected information and organize it for decision making. INCREASED COMPLEXITY OF MANAGEMENT

There have been four developments that when integrated with what we already know about managing, may give as a break through in improving the management process. These four development are, Information feedback systems Decision making
:

Management science The Electronics Computer

INFORMATION FEEDBACK SYSTEMS It explains the goal-seeking, self correcting interplay between the parts of a system whether the system is business, mechanical or otherwise. Essentially, feedback systems are concerned with the way information is used for the purpose of control and, they apply not only to business or management systems but to engineering, biological and many other type of system (eg) of information feedback system include the thermostat-furnace - temperature system, as well as the subsystems comprising the missile, the automobile, the body, the economic system, the inventory control system, and countless others. All have a vital trait in common; the output of the system leads to a decision resulting in some type of action that corrects the outputs which in turn leads to another decisions. DECISION MAKING A development of extraordinary importance to building a foundation for the system approach is the recent notion of automating or programming decisions. Some attribute this improved understanding of decisions and the decision -making process to the military prior to 1950, the

commander using 'factorial judgment and experience' made such on the - spot decisions as threat evaluation, weapon selection, enemy identification, altering of forces, and target assignment these and similar decisions were 'automated by formal rule and procedure, thus loading to the proposition that formal rules may yield better decisions for routine problems than those based solely on human judgment, given the constraints under which humans must make decisions.

MANAGEMENT SCIENCE A powerful tool of management science is simulation. Although this techniques was used relatively infrequently prior to 1970, it offers great potential break thoughts for applications of a mathematical model of the system: The behaviour of the model under manipulation simulation the behaviour of the real system to the extent that the consequences of different management policies, marketing assumption (or) resource alternatives can be forecast prior to final decisions. THE-WAY The fourth major development making the systems approach to management possible is the electronic digital computer. Without it, the vast amount of date handling connected with storage, processing and retrieval of information would not be possible nor could the arithmetic computations required in many problem solving situations be economically undertaken. It as the central element in an information system. The vital element in an information system is the human one; It is the managerial talent that designs and operates the system.

Three changes are now occurring in progressive companies on the basis of information systems: Management has become system oriented and more

sophisticated in management techniques. Information is planned for and made available to managers as needed. A system of information ties planning and .control by managers to operational systems of implementations.

2.13 MANUAL VS COMPUTERISED MIS Manual MIS include continuous human operations and

interventions and simple tools such as paper forms, pencils, filing cabinet etc are used. The human being is the earliest and still the most prevalent form of data processor. A simple model of the human as an information processor consists of sensory receptors that pickup signals and transmit them to the processing unit (Brain with storage) the results of the processing are output responses. The capacity of the human to accept input and produce outputs is limited. COMPUTER BASED MANAGEMENT INFORMATION SYSTEM Computer based MIS is defined as the information system that rely on computer hardware and software for processing and disseminating information. A MIS can exist without computer, but it is the power of the computer which makes MIS feasible. Without it the vast amount of data handling connected with storage, processing, and retrieval of information would not be possible, nor could the

arithmetic computations required in many problem - solving situation be economically undertaken. MIS - A COMPARISON The vital element in an information system is the human one. It is the managerial talent that design and operates the system. The need for decisions and judgement has made human beings an important element of all data processing system. But the world provides more inputs that the human processing system is able to accept. Such a problem can be better handled by a computer based MIS. An information system is composed of five components. In a manual system human beings performs the five basic function in a computer - based system, the functions are performed by equipment. The basic functions are Input Processor Storage Procedure Output -> -> -> -> -> Entering data into the system Processing the data (rearranging input data and processing files) Maintaining files and records Program for instructing the processor Preparing report output

The whole process can be illustrated by considering the functions or activities of MIS in inventory accounting systems. INPUT The input device for the manual inventory processing systems is the in basket of the inventory clerk. This device receives the input data to the system, which may be in various forms and media and is related to information surrounding inventory receipts and issues.

Receipts and issues may be recorded in writing by a store keepers, stamped on an invoice by a mechanical device, or purchased into a card. The resulting cards, invoices and variety of other input information affecting the inventory system are entered into the inbasket for processing and ultimate preparation of output. The function of entering data into the computer system is performed by an input device. Unlike the manual system with its human processor, the input to the computer must be in machineacceptable form. Normally tin's input takes the form of punched cards, magnetic media (tap, disk, diskette), and direct input from terminal keyboards. The input devices read or sense these coded data and make them available in a form acceptable to the computer.

The processor of manual system is made up of a control element (contained in the inventory clerk's brain), which keeps the proper relationship among the components of input, processor, storage and output. An additional element of the processor is the processor in the calculation or the arithmetic element, which performs the your mathematical functions of add, subtract, multiply and divide. The logic element of the processor, also in the clerk's, brain, compares two quanties to see if one is equal to, greater than, or less than the other. The central processor is the most significant component of the computer. The control section of the CPU (Central Processing Unit) controls the input/output units and the arithmetic / logic unit,

transferring data to and from storage and routing information between storage and the arithmetic / logic unit An inventory status report.

Output devices in computer produce the final results of the data processing. They record information from the computer on a variety of media, such as cards and magnetic media. They print information on paper. Additionally output devices may generate signals for transmission over teleprocessing networks, procedure graphic displays, micro file images, and take a variety of special forms.

2.14 OPERATION OF A MANUAL INFORMATION SYSTEM The human being is the earliest and still the most prevalent form of data processor. Despite the fantastic growth of computer applications, manual information systems still outnumber them in quantity of systems and information handled. People receive input data by seeing or hearing them. These data are then stored in the brain, which also acts as a control and logic unit The outputs from this type of information processing are oral or written reports and in some cases a variety of physical actions. The human mind, acting as a control and logic unit, can perform many operations on data: adding, subtracting, multiplying, and dividing; storing results; repeating the operations on different sets of data; comparing two items; outputting results in a prearranged manner; and revising the processing operations as a result of changed instructions.

Despite an ability to perform the foregoing processing tasks, the human remains .in unreliable processor. The human mind is slow in performing the arithmetical computations required and is rather erratic in applying rules of logic. Fatigue and boredom are among human frailties that cause from 1 to 10 percent of human error in computation and clerical tasks. On the other hand, where judgment is required, the human mind is indispensable. Judgment is needed to make decisions in data processing systems because of the difficulty of planning to handle all eventualities. In summary, human beings alone are inefficient data processors, but they become a vital element of all data processing systems because of the need for decisions and judgment. All the many information systems in the typical company (e.g., payroll, accounts receivable, billing, inventory, production scheduling, shipping) are fundamentally similar in that they possess the basic components, of any system: input, processor, and output. Examining a typical manual system will make the understanding of such a system easier and facilitate the transition to a computer-based system. Note that the components of same as those are 1. Input 2. Processor Arithmetic Control Logic 3. Storage Internal Memory

Working storage External Records and files. A Procedure or program for instructing the processor i 5. Output Generally speaking, there are two types of inventory control systems, whether manual or computer. The first is the elementary inventory accounting system, which merely adds receipts and subtracts issues from inventory to produce an up-to-date inventory of all items. The second, and more sophisticated type of system, computes demand based on prior sales or issues and calculates economic order quantities and reorder points. In this we will utilize the first type of inventory accounting system 10 illustrate both the manual information system and the conversion from manual w computer based. The manual system components are Input We see that the input device for the manual inventory processing system is the inbasket of the inventory clerk. This device receives the input data to the system, which may be in various forms and media and is related to information surrounding inventory receipts and issues. Inventory records are updated with receipts on the one hand and reduced with orders for the item on the other. Receipts and issues may be recorded in writing by a storekeeper, stamped on an invoice by a mechanical device, or punched into a card. The resulting cards, invoices, receipt documents, issue papers, shipping documents, and a variety of other input information affecting the inventory system are entered into the in basket for processing and ultimate preparation of output. Output can take the form of (1) updated inventory records, (2) an inventory status report,

or (3) other reports and documents related to inventory. Note that the input component will accept a variety of information formats. Processor From the standpoint of manipulating or processing the data, the processor of the manual system is the most important component It is made up of a control element (contained in the inventory clerk's brain), which keeps (he proper relationship among the components of input, processor, storage, and output An additional element of the processor is the calculator or the arithmetic element, which performs' the four mathematical functions of add, subtract, multiply, and divide. The logic element of the processor, also in the clerk's brain, compares two quantities to see if one is equal to, greater than, or less than the other. It is surprising to most people to discover that these five operations (add, subtract, multiply, divide, compare) comprise the entire processing ability of the computer. However, this ability is a fantastic one, as we shall see. The three elements of the processor component in the manual inventory accounting system can be summarized and illustrated: Element Control Processing Task Decides sequence and extent of processing among data contained in input, storage, Arithmetic Logic and output. Multiplies units issued by unit price and deducts from on-hand balance Compares on-hand balance with minimum inventory level and prepares status report Storage The third element is the storage. There are two parts to the storage: the internal (internal to the processor) and the external. The

internal storage in this manual system is the working storage represented by the pencil and whatever temporary record the processor (clerk) is working on. This internal storage is sometimes called memory because it is stored in and is immediately available to the processor (clerk). External storage is represented by the individual records for an item of inventory. When these individual records are combined they make up a file. Prior to performing any processing or calculation upon external storage, the processor (clerk) would have to retrieve the applicable records from the appropriate file. The classification, structuring, and organization of this external storage is very important to the design and operation of any information system, manual or computer based. In the illustration of inventory accounting, the inventory records may be organized by customer, class, project, or a variety of ways. As a general rule, the costs of classification vary inversely with the costs of using and retrieving the information. Program / Procedure Another essential element of this manual system is the procedure, which instructs the processor (clerk) on how calculations are to be performed or information processed. This is analogous to the program of the computer. The procedures manual may, forexample, instruct the processor to (1) multiply unit cost by units issued, (2) deduct units issued from balance on hand, and (3) deduct gross value of issue from dollar value of inventory. The clerk would then perform this processing on the input information, update the inventory balance (external storage), and prepare the required output report to go in the outbasket. Preparation of the output is the final step of the information processing system. Output

The reason we design and operate systems is to achieve some output In the case of the inventory accounting system, the outputs are two: (!) an updated inventory master file record and (2) an inventory status report. In the manual system, these outputs would be updated files and an inventory status report placed in the outbasket. 2. 15 COMPONENTS OF A COMPUTER SYSTEM Although many managers are awed and sometimes confused by the computer, its operation is essentially no more complex than that of the manual system just described. Indeed, if we make the transition from manual to computer-based system by drawing an analogy between them, there should be no difficulty in understanding the functions and operation of the computer. The elements of data processing as done manually by a clerk. The field of computers is called electronic data processing, and the computer is nothing more than an electronic data processor, with its components the same as those of the manual system described. However, it accepts data in the form of alphanumeric (alphabetic and numerical) characters. If we wish to convert our manual inventory system to computer, the input data would be the same for both systems; only its input form would be different. The computer processes these data. For example, it adds items received and deducts items issued to update the inventory record, but it does all this electronically. The alphabetic and numerical characters, normally received as electrical impulses sent from a terminal, are sensed and are represented in electronic form within the computer. The subsequent arithmetic or processing operations are accomplished electronically; hence the computer can be described as an electronic data processor.

The manual inventory control system previously discussed, when converted to computer application, might appear as the basic components of the computer system. A discussion of the components follows. Input The function of entering data into the computer system is performed by an input device. Unlike the manual system with its human processor, the input to the computer must be in machineacceptable form. Normally this input takes the form of punched cards, magnetic media (tape, disk, diskette), and direct input from terminal keyboards. The input devices read or sense these coded data and make them available in a form acceptable to the computer. Whatever device -is used, the data must generally be coded in a form compatible with the characters. The Central Processor The central processor is the most significant component of the computer. As in the case of our inventory control clerk in the manual system, it consists of a control section, which coordinates the system components, and the arithmetic/ logic unit, which performs the same functions (add, subtract, multiply, divide, compare, shift, move, store) as the clerk-calculator combination of the manual system. However, the CPU (central processing unit) of the computer accomplishes these tasks at fantastically increased speed and accuracy. This meager processing logic, accompanied by the five pimple functions, accounts for the almost infinite variety of tasks the computer can perform.

The. control section of the CPU directs and coordinates all operations called for by the instructions (programs) to I lie system. It controls the inputs / output units and the arithmetic / logic unit, transferring data to and from storage and routing information between storage and arithmetic / logic unit. It is by means of the control section that automatic, integrated operation of the entire computer system is achieved. The arithmetic / logic section performs the arithmetic and logic operations. The former portion calculates, shifts numbers, sets the algebraic signs of results, rounds compares, and performs the oilier tasks of calculation. The logic section carries out the decision-making operation to change the sequence of instruction execution, and it capable of testing various conditions encountered during processing. Storage Storage is somewhat like a huge electronic filing cabinet, completely indexed and accessible instantly to the computer. All data must be placed in storage before being processed by the computer. Storage consists of internal, which is a part of the processing component, and external. Note the similarity between manual and computer systems. Internal storage, frequently referred to as memory, is the characteristic that permits the computer to store, in electronic form, data from input devices as well as long series of instructions called programs that tell the machine what to do. These programs are similar to the procedures manual of the manual system. It is this memory facility that distinguishes the computer from devices such as calculators and bookkeeping machines, which, although they have input, output, and processing capabilities, cannot, store programs

internally within the processing unit. The program enables the computer to perform complex and lengthy calculations in order to process specific input data. To understand how programs of instructions permit the computer to process data, we must examine the concept of computer memory to see how information and instructions can be stored within the computer. The information can be (1) instructions (programs) to direct the processing unit, (2) data (input, in process, or output), and (3) reference data associated with processing (tables, code charts, constant factors, etc.). Because the computer memory is the storehouse of this information, it is important to understand how it is represented in memory. Integrated circuits are the technological base for most

processor memory today. The physical details of how semiconductor memory works are beyond the scope of this book. Very likely the current technology will be obsolete in 5 to 10 years, replaced by something faster, cheaper, and denser. However, the intuitive explanation of how memory works will probably survive. Consider a simple light switch: it must be on or off and there are no other states. In computer jargon, these states are referred to as 1 and 0, and this representation is called binary. Because each light switch can represent only two states, more switches are needed to represent information of any reasonable complexity. Unlike the decimal number system, where each position in a number represents a power of 10, the binary system of numbering represents each position by a power of 2. Moreover, in the binary numbering system we can use only Is and Os. Hence the binary number 1001 is 1 x 23 + 0 x 22 + 0 x 21 + 1 x 0 = 9. This is the manner in which numbers and characters are represented in the

computer memory. Binary numbers from 0 to 9 can be represented by the following table:

Binary 0000 0001 0010 0011 0100 0101 0110 0111 1000 1001

Decimal 0 1 2 3 4 5 6 7 8 9

Computer memory is made of fixed unit, comprising a certain number of light switches. We want to be able to represent in memory 10 decimal digits, 26 alphabetic characters, and 25 special symbols (comma, dollar sign, etc.). Binary schemes for representing these data vary, but all utilize a prearranged assignment of bits and groups of bits. This system of representation is important because of the need to arrange storage and locate it by address. Storage of computer memory is divided into locations, each with an as signed address. Each location holds a specific unit of data, which may be a character, a digit, an entire record, or a word. When a data item is desired, it is obtained from its known location in addressable storage units that are organized to provide data when wanted. There are several schemes for using the processor to assist the programmer in keeping track of the storage locations. These schemes provide data names, such as "update inventory" or "calculate net pay," to refer automatically to sections in the program designed to perform these calculations. Notice the similarity between these programs and the procedures manual of the manual inventory system described previously.

External storage (consisting of records and files, reference data, and other programs) is of two types: 1. Direct access. Disk, diskette, magnetic drum, and data cell devices providing random-order mass data storage that can be accessed randomly, without having to read from the beginning of the file to find the desired data. 2. Sequential Magnetic tape that is sequentially ordered and that must be read from the beginning in order to read or write a desired record. Output Output devices produce the final results of the data processing. They record information from the computer on a variety of media, such as cards and magnetic media. They print information on paper. Additionally, output devices may generate signals for transmission over teleprocessing networks, produce graphic displays, microfilm images, and take a variety of special forms. For the most part, basic business applications take the output form of a paper printout. The output from the inventory accounting system would be (1) a printout containing an inventory status report and (2) an updated inventory master file. System Alternatives The particular configuration of any computer system for a given use is a function of a number of variables such as transactions, storage, desired speed, cost constraints, and design sophistication, just to name a few. Table: 2.2 General Characteristics of Three Alternative Hardware Systems

Characteristic Processing Sorting Files per run Type processing Input cost (cards, etc.) Errors Inquiry capability Versatility

Punched Card Sequential High One Batch High Significant Very difficult Poor

Tape Sequential High One Batch Less Less Poor Better

Direct Access Optional Reduced Multiple Optional Less Less Great Best

To give the reader a "feel" for his or her own needs, we can very briefly examine the characteristics of three alternatives: a card system, a tape system, and a direct access system. The general configuration of these systems is indicated for two applications: invent. ,y and accounts receivable. The general characteristics of the three systems are shown in the above table. Data Communications No discussion of computer utilization would be complete without mention of data communicationthe marriage of data processing and. data transmission. A very few years ago, data communications was an obscure subject studied by only a few specialists. The airline reservations system was the best known example of actually using data communications. Today the field is a technological maze, with hardware products and software applications proliferating rapidly. Man- more people are involved with data communications today, and most large applications have substantial data communications requirements. Major users of data communications are listed in the table given below. The data communications process generally requires at least five parts:

1. A transmitter or source of information: This is usually some type of input/output device such as a typewriter, keyboard, or display. 2. A converter on the transmitting end: This converts the digital signals of the data transmission into analog signals for transmission over the network. Historically, converters were almost always supplied by "common carriers," such as AT&T or Western Union. A variety of manufacturers offer a wide range of these products today. 3. A transmission channel or carrier: The telephone companies and other commercial service enterprises offer private-line service at different speeds. TWX is the U.S. and Canadian exchange teletypewriter service, and .TELEX is a worldwide exchange service offered by Western Union. Other line facilities are WATS (Wide Area Telephone Service) and COMSAT satellite communications. 4. A converter on the receiving end: This converts the analog signal of the data link (transmission channel) back into a digital signal for computer use. 5. A receiver of transmitted information: This is the -computer and a variety of input/output devices. TABLE: 2. 3 Industry Type Organization Types of Applications Transportation Airlines, rail, truck, Reservation system, traffic and bu. Utilities Public control and dispatching, MIS. maintenance systems utilities, Communications facilities, MIS.

Manufacturing Industrial

common carriers All manufacturing Natural metals, machines,

Shipping, order processing. internal tow-sharing. MIS resources, Warehouse control, shipping,

chemicals, process control. MIS textiles, Point-of-sale systems, credit authorization, warehouse & control, MIS. Ls. Branch banking, money and toneclerical

Retailing

etc. All retailers

Service

Banks,

financial, information securities services, sharing,

transfers, automated

warehousing, lime - operations, credit authorization, sharing, insurance Government Military and public warehousing, quotation

services. Communications, command and control, MIS, law enforcement,

administration

logistics, public health and education, automation.

postal

Although the possible arrangements of terminals, converters, transmission channels, and computers are virtually limitless, there are only a few key ideas that the manager needs to understand. The main computer in this situation communicates with the terminals. The terminals can vary in their "intelligence" levels (how much processing i capability resides inside the terminal versus relying entirely on the computer for processing). Input and output are performed via the terminals and most processing occurs in the computer. The transmission channels may be local lines (wires within a building) or

remote lines (often telephone lines that can link up to any place we can reach via telephone). The converters are generally left out of data communications diagrams to simplify understanding; however, they are usually required to make the system work. If the terminals are capable of some processing on their own, it is a minimal example of distributed data processing; that is, the total processing that the system does is distributed over multiple hardware units. A second key possibility is an example of distributed data processing because the main computer and the other computers share processing responsibilities regardless of the intelligence of the terminals. There is a "master-slave" relationship because that is a main computer driving the system as a whole. The third concept a manager should be familiar with is called a "peer-to peer" relationship. Again, this is a clear example of distributed data processing because each of the computers in the ring shares in the processing load of the whole system. However, there is no main or host computer that is master of the situation, hence peer to peer. Sometimes the computers are assigned entirely different tasks, for example, payroll on one and temperature control on another. In this case, the data communications between them may be very sparse. On the other hand, they may be assigned highly related tasks such as billing and accounts receivable. In this case, they need to share data and communicate continuously. TABLE: 2.4 Component Input Processor Manual System Computer System Various manual transaction Punched cards or documents input from terminal Inventory control clerk with Central processing unit Memory of central

calculating machine and human logic Storage Internal Working storage of

External Procedure

inventory clerk Manual inventory records and files

Output

processing unit Master inventory files maintained on magnetic media Processing instructions Program for contained in procedures processing data manual contained in memory of internal storage Manually prepared statue Automatic report and updated master preparation of status files report and updating of master files

To summarize, one of the most important business applications of data communications and the computer is distributed data processing. This allows the processing required of a computer system to be distributed to the most convenient and logical place in the business; that is, computer support can be aligned with business needs and organization. For example, a central warehouse may support multiple retail outlets. Inventory control must be done at the warehouse to prevent multiple outlets from selling the same item twice. Billing and accounts receivable can be done at the retail outlets. Communications links would be set up between the outlets and the warehouse. 2.16 CONVERSION OF MANUAL TO COMPUTER-BASED

SYSTEMS To increase our understanding of computer-based management information systems, we continue our transition from manual to computer system by describing the steps involved in making a conversion or changeover from the inventory accounting system, assuming as we do so that a feasibility study has been made and that the system conversion is economical and feasible. The steps involved in the conversion are preparations of

1. System description (overview) 2. Input documents 3. Output documents 4. File design 5. Program logic (detail) 6. Computer program 7. System verification 8. Documentation System Description The system description is usually prepared after preliminary investigation and definition of the problem. The description is essentially a statement of the major inputs, outputs, processing operations, and files needed. The purpose is to show the logical flow of information and the logical operations necessary to carry out the particular design alternative chosen. Systems descriptions are in both narrative and pictorial form. Narrative The narrative description is an English language depiction of the operation of the system. It should describe inputs, outputs, files, and operations. It should be in that degree of detail that will allow users and computer technicians to understand the operation of the system and to utilize the narrative as a starting point for more detailed design. The narrative form of our simple inventory accounting system might run as follows: The activity is concerned with an inventory control accounting system for finished goods inventory. Transactions (receipts and

issues) are read from terminals, the relevant master record is found on disk and updated, and the new inventory status report is printed. Pictorial A picture allows us to condense greatly the narrative version of our system description. This symbolic form facilitates a quick analysis of the job being performed and provides a visual overview of the entire operation. Although there are numerous methods of depicting the system description, flowcharting is one of the most popular techniques still in use. Input Documents After the system description is completed, it is necessary to specify how the information will be put into a form that is acceptable to the computer. Volume of information, frequency, accuracy and verification requirements, and the handling of the information are considerations in the selection of input format Sometimes inputs have to be accepted in the form in which they are received from the outside. In this case, the task of conversion is merely one of preparing input in machine-usable form. The exact layout of input documents is necessary because the computer program is an exact and precise sequence of steps that operates only when data are located in prescribed positions. In our example, the input comes from terminals. The electronic impulses sent by the terminal are in computer-readable form. The computer stores this information in its memory for future processing. The terminal screen layout is for our inventory accounting example. The item number of inventory is represented by an eightdigit numeric field. For each transaction, the terminal screen is completely filled in. In addition to the item number, z five-digit

quantity field tells how many units are involved in this transaction. The nature of the transaction (price, territory, customer, etc.) is entered in the third field, which is an eight-character code. Examination of the input document reveals that it provides all the relevant information contained in the system description. The typical item description normally associated with inventory is not contained in the input document because it is already filed in storage. Output Documents Outputs are subject to much the same considerations as input documents, but the output format should be treated with additional care because it represents the purpose or objective of the entire operation. It is the output document with which management is almost exclusively concerned, and because of its critical nature, care should be taken in its design. Although the computer is capable of printing much more complex reports than our example, we show the minimum information required to meet the specifications of our system description and output requirements. File Design, The logic required to control the flow of data through the system is a part of systems design, and the flow is in turn dependent upon the design of data files. These two steps are closely associated and should be considered in conjunction with considerations of type of equipment, storage capacity, input and output media, and format. The character-by-character contents of every record are specified by the file record layouts. Since disk files are already specified for our example, we are concerned with the disk record layout.

The item number is an 8-digit field, the same as that on the input terminal screen. The item description consists of two 8-digit fields making up 16 alphabetic characters. This description is an integral part of the inventory file maintained on disk; there is no reason to include it on the input screen representing individual transactions. The file design of the disk is completed by the 8-digit item balance field. For the sake of simplicity we have not included several other elements of file design, such as price, unit costs, weight, minimum and maximum inventory limits, and so on. Program Logic Although there are numerous means of thinking through and documenting program logic, we will use flowcharts because they have been historically dominant and they are easy to depict and understand. The program flowchart is the programmer's logic of the detailed, step-by-step representation of how the computer program will accomplish the job. It is the "blueprint" of a program and is used to marshal and organize the facts for examination on paper, to outline problems, logic, and solutions; and to deal with the whole problem in systematic steps. The flowchart symbols for both programming and system flowcharting are shown in Fig. By comparing these symbols with the decisions and actions depicted in our flowchart for the inventory accounting system, we can see how the .computer will perform the logic of the application. After the program writes out anew, updated master record on disk, it loops back to read another transaction, and so on, until all transactions are processed. After the programmer has decided the exact flow of the program, he or she must then take steps to explain the logic used in

a language the computer understands. Stated another way, the flowchart of Fig. must be written as a sequence of instruction that can be complied (Translated from a programming language to binary notation) into machine-readable format. A sequence instruction that works together to perform a task is called program. The program is stored internally, and the processor has access to the instruction as required. The details of computer programming are complex and specific and beyond the scope of this brief investigation. We are concerned only with the general nature of how the processor is instructed to perform its operation on the input data to produce the output data in the desired format. In simplified form, an instruction to the processor consists of two parts: an operation code and operands. The operation code simply says, "Performs in a READ operation," "Perform an ADD operation," and so on. The operands give additional information to the processor. For example, being told to add is not enough; we must know what two things to add and where to put the answer. These last three pieces of information are called operands. All computer programs," no matter how large or complex, are really made up of lots of relatively primitive instructions like those just discussed. Table: 2. 5 Types of Application Program Packages Available for Purchase Database management Project control Electronic mail Badge control security General accounting Accounts receivable Accounts payable Payroll General personnel Forecasting Estimating Graphics Purchasing decisions Estate tax planning Federal tax preparation Traffic analysis Investment analysis Medical management Dental management Life insurance administration Mailing list control Sales for forecasting

Financial modeling Word processing Text processing Model testing and valuation

Wholesale distribution Inventory management Bar code reading Bill of material processing

Computer programming has made giant strides since the old days of "one-for-one" languages such as Easy Coder, Auto Coder, and Auto Tran. Today a large assortment of operator-machine languages is available. Until we are able to communicate with the computer in the English language (a day that will, surely arrive), most of our needs can be met from those programming languages listed. It is proper to digress here and note that many everyday business problems can be solved by purchasing a standard package of programs (rather than by writing the application program(s) yourself). The above table lists several of the program packages available. System Verification After the program has been written and run through the compilation process, it is placed in memory in binary or "machinereadable" form and is ready to process the terminal input, update the master file on disk, and print the required report. The computer will execute the instructions of the program in sequence until the program comes to a halt. Lest this step seem trivial, note that the probability of all programs working correctly the first time approaches zero. Test cases must be run against each program and all errors corrected. Then more test cases must be run against the whole system (all the programs put together) and any additional errors fixed. Only then is it reasonable to put the customers' actual transactions and the firm's real inventory files under control of the automated system.

Documentation Based on war story after war story, one might conclude that more systems fail for lack of adequate documentation than for any other single reason. Three types of documentation are needed: 1. For those providing input, a simple overview of the system, a clear description of exactly what input is expected, and a note about what input is not acceptable 2. For those running and maintaining the system, all the technical documentation generated during the development process 3. For those using the output, a simple overview of the system, a clear description of what the output means, and a note about its limitations. This documentation will make the automated inventory system understandable to everyone involved. 2. 17 TYPES OF COMPUTER-BASED APPLICATIONS An insight into the design of management information systems can be gained by considering three types or classifications of application. We are not concerned with the many classifications by function or process (e.g., payroll, purchasing, inventory control), but rather with those where batch (cyclical) processing is used applications that utilize the on-line or real-time capability of modern equipment, and applications designed primarily for making or aiding decisions. The state of the art in these applications and the effectiveness of each in providing management assistance for planning, operating, and controlling are important factors to consider when designing or

modifying a management information system. The characteristics of the three types of application can be compared:

Batch Processing Applications Batch processing is the classical method of processing data and is far and away the most frequently used MIS application. It entails the cyclical processing of input information in "batches." The time it takes to process the data and receive an output is known as "turnaround" time. The batch processing of checking accounts in commercial banks is a good illustration of this type of application. The turnaround time, or the minimum unit of time in processing checks, is one business day, since a depositor's account is considered satisfactory if it has a positive balance at the close of the business day. Thus, checks received from all sources are proved and sorted for processing against customers' accounts. The checks are "paid" by posting to accounts after they are sorted to the accounts on which they are drawn. Any checks that cause an overdraft by reasons of insufficient funds may be charged back to the source from which u was received. Most applications in the batch processing category involve the automation of routine functions, deal primarily with the data of the accounting system, and arc oriented to record keeping and historical information. Most, but by no means all, of these systems are used for

(1) payroll, (2) accounts payable, (3) customer billing, (4) general ledger, and (5) accounts receivable. Because most of the cost of maintaining information in a company is for the batch processing type of application, these systems offer perhaps the greatest potential for reduction of information handling costs. Because of the relatively larger amount of experience with these applications, considerable advances have been made in such large-volume, self-contained applications as payrolls, inventory control, accounts payable, and customer billing. Some of the more advanced work on improving batch processing applications involves the integration of such separate but related applications as the integration of inventory control and purchasing. Additionally, considerable advance has been made in the database concept of these applications whereby multiple applications are obtained from single-source, single-file integrated data bases. One consideration to keep in mind when developing batch processing applications is the subsequent difficulty involved in integrating a database from a variety of batch processing systems that were independently developed. Real- Time Applications Compared with batch processing, the real-time applications are very few, but they are highly publicized because of their exciting nature and their great potential for the future. These applications feature the computer's exciting capability for direct and instant access in which a dialogue is carried on between computer and user. Most current real-time applications are little more than on-line versions of previous systems, and most are primarily one-application oriented, with little integration between subsystems.

Characteristically, this type of application features remote terminal access with data transmission through telephone lines or some other means. Illustrative of real-time applications are those systems for airline reservations, room reservations, work-in-progress control in plants, inventory status ordering and reporting of geographically dispersed distributors, and credit status interrogation for a variety of users. Real-time operation can be defined as data processing in parallel with a physical process so that the results of the data processing are immediately useful to the physical operation. This definition causes some difficulty because of the varying elapsed times required to complete a transaction and the varying time required for data processing to be immediately useful. To illustrate, we can say that real Time the case of an airline reservation system involves the processing of an answer while the customer is on the phone. On the other hand we have systems that scan and match workers' identification badges and job tickets on a real-time basis but wait days or weeks to process paychecks. Generally speaking, real-time systems have these three

characteristics: (1) data will be maintained "on-line," (2) data will be updated as events occur, and (3) the computer can be interrogated from remote terminals or other devices. There is some doubt whether managers really need, this capability in more than a small fraction of their daily information needs. As a practical matter, more systems with real-time capability utilize both the batch processing and realtime modes for their operations. For example the U.S. Bureau of Employment Security management information system, the organization of the central data bank and the capability of the system to service many remote users by terminal. Users can "interrogate" the system as desired. Perhaps the best known real-lime application is the airline reservation system.

Decision Applications Although spectacular breakthroughs have been made in computer applications for command and control decisions, similar uses for management problems are few and quite limited. Nothing approaching decision systems such as the SAGE (Semi-Automatic Ground Environment) air defense system or the ones that guided Apollo's flight to the moon and the Columbia space shuttle flights have yet been designed for business use. Computer applications that make and execute low-level, routine decisions are relatively frequent. Examples are inventory reordering and certain types of production scheduling. However, for higher-order top-management decisions, available applications involve much interaction of the decision maker with the computer. This type of operator-machine interface may be called computer assisted decision making. The primary reason for lack of progress in higher-level decision making by management information systems is the difficulty of defining decision rules for business problems. Although management science techniques have been success fully applied to discrete parts of business activity, their application to higher- management decision processes is still an item for further research. Indeed, applications at higher levels are the forthcoming frontier of computer applications. With regard to computer-assisted decision making, several surveys indicate that the effectiveness of current and near-term applications in assisting management is, at best, below average. However, the majority of firms plan to devote a major share of computer effort to computer-assisted decision making for management in the future. One of the most rapidly growing applications for computerassisted decision making is the simulation or model. The corporate

model enables management, to (1) reduce the time required .to react to change, (2)'evaluate alternative courses of action with a full knowledge: of all pertinent factors, and (3) make longer-range plans by taking longer looks into the future. By posing "what if' questions to the model, the decision maker can explore different alternatives and weigh the consequences of each. In other words, he can simulate the effects of many decisions without having to wait for the results of the decisions in "real life." A simulation utilized very-effectively by Moore McCormack Lines, Inc., for scheduling and routing cargo vessels. Two alternative means of varying inputs will illustrate the model. Assuming that some parameters are fixed (i.e., current fleet, freight rates, commodity volumes, origin and destination patterns, operating costs), the following inputs can be varied to determine their effect upon operations: schedule patterns, vessel. assignments, and decision rules. On the other hand, the decision maker can assume that modes of operation are fixed and can then vary the following inputs to determine their effects: freight rates, annual volumes, operations costs, and origin and destination patterns. Under each of the foregoing assumptions and variations of fixed parameters and inputs, one valuable output from the model is a financial statement indicating the performance of each individual vessel based on the assumptions put into the model.

CONTEMPORARY APPROACHES TO MIS DEVELOPMENTS The study of Information systems deals with issues and insights contributed from technical and behavioural approach. Multiple perspectives on information systems show that the study of information systems is a multidisciplinary field; no single theory or perspective dominates: 'The' below figure illustrates the major disciplines that contribute problems, issues'-and solutions in the study of information systems.

FIGURE. 2. 6 INTEGRATIVE NATURE 110 In general, the filed can be divided into technical and behavioural approaches. Information systems are sociotechnical systems. Though they are composed of machines, devices and hard physical technology, they require substantial social, organisational and intellectual investments to make them work properly. Technical Approach: The technical approach to information systems emphasises mathematically based, normative models to study information systems, as well as the physical technology and formal capabilities of

these systems. The disciplines that contribute to the technical approach are computer science, management science and operations research. Computer science is concerned with establishing theories of computability, methods of computation, land methods of efficient data storage and access. Management science emphasizes the development of models for decision making and management practices. Operations research focuses on mathematical techniques for optimizing selected parameters of organisations such as transportation, inventory control and transaction costs. Behavioural Approach: A growing part of the information systems field is concerned with behavioural problems and issues. Many behavioural problems, such as systems utilisation, implementation and creative design, cannot be expressed with the normative models used in the technical approach. Other behavioural disciplines also play a role. Sociologists focus n the impact of information systems, on groups, organisations and society. Political science investigates the political impacts and uses of information systems. Psychology is concerned with individual responses to information systems and cognitive models of human reasoning. The behavioural approach does not ignore technology. Indeed information systems technology is often the stimulate for a behavioural problem or issue. But the focus of this approach is generally not on technical solutions, it concentrates rather on changes in attitudes, management and organisational policy and behaviour. 2. 19 PRE REQUISITES OF AN EFFECTIVE MIS There are several prerequisites for a modern, effective computer-based management information system. The first of these

is a management system the organisational arrangements, the structure and procedures for adequate planning and control, and the many other manifestations of good organisation and administration. Indeed, such a system is a prerequisite for progress in any endeavour. Second, there must existing data and information - information about the company's goals, resources, environment, policies, operations, plans, and performance against plans. These types of information represent knowledge about the company's plans and its managerial and operational processes. Third, to process these data, it is necessary have appropriate equipment that will. 1. Provide the capability for economic, rapid access to large-scale storage of retrievable data. 2. Process these data economically and at high speed. 3. Enter information into the system and retrieves and display it

These three activities are now often performed by special electronic communication devices and by today's computer and related hardware.

UNIT- 3 3 3.1 COMPUTER AND ITS EFFECTS ON MIS Computer are now affecting every sphere of human activity and bringing about many changes in industry, government, education, medicine, scientific research law, etc. In short we list below the reasons for the need of a computer. To save time, that is for quick performance To avoid mistake To lesser the intellectual strain To store data easily To get the results in a neat printed form.

A computer is defined as an electronic device that accepts input data, processes the data and provide the results. Prof. H.A. Simon views the computer as the fourth great invention to aid man in his thinking process and decision making ability. 3.2 TYPES OF INFORMATION SYSTEMS Information Systems

3.3 COMPUTER AND ITS IMPACT ON MIS MIS are the most common form of management support systems. needs. MIS provide a variety of reports and display to management!' MIS retrieve information about internal operations from database that have been - updated by transaction processing systems. They also obtain data about the business environment from external sources. Information products provided to managers include displays and reports that can be furnished. On demand Periodically, according to a predetermined schedule or They provide managerial endusers with information products that support much of their day-to-day decision making

Whenever "exceptional conditions occur An MIS produces information products that support many of the day to day operation. Managers and other decision makers use an MIS to request information at their networked workstations that support their decision making activities. This information takes the form of reports, and. immediate responses-to enquiries, web browsers, application program and database management software provide access to information in the internet and other operational database of the organization. 3. 4 COMPUTER AND ITS EFFECT ON MIS There are as many ways to use information technology in business as there are business activities to be performed business problems to be solved and business opportunities to be pursued.

Instead of calling it as management information, system, I wish to call it as Business information system for the foregoing discussion. Marketing

Interactive automation

Marketing

salesforce and

Advertising

promotion market research

Production Operations

Personnel

Manufacturing resource planning Manufacturing systems execution

Compensation analysis Employee skills inventory personal requirements forecasting

Order Processing Inventory Contro Accounts Receivable Accounts payable Pay Roll General Ledger Accounting

Cash Management Audit Management Investment Management Capital Budgeting Financial forecasting Finance

Above diagram illustration how information systems can be grouped into business function categories. Thus, information systems will be analyzed according to the business function they support to give you an appreciation of the variety of business information systems that both small and large business firms may use. Many organization are using information technology to develop crossfunctional information systems that cross the boundaries of

traditional business functions in order to reengineer and improve vital business processes. These organization view cross functional information system as a strategic way to use IT to share information resources and improve the efficiency and effectiveness of business process thus helping a business to attain its strategic objectives. COMPUTER AND ACCOUNTING Accounting information systems are the oldest and most widely used information systems in business. information They, record accounting system are based on the double entry look keeping

concepts which is hundred of years old and other more recent accounting concepts such as responsibility accounting and activity based accounting. Computer based accounting systems record and report the flow of funds through ' an organization on a historical basis and produce important financial statement as balance sheets and income statements. Such systems also produce forecasts of future conditions such as balance sheet of future, projected financial statements and financial budgets.' Computer based sales order processing systems provide a fast, accurate and efficient method of recording and screening customer orders and sales transactions. They also provide inventory control systems with information on accepted orders so they can be filled as quickly as possible. Computer-based inventory control systems thus help a

business to provide high quality service to customer while minimizing instrument in inventory 'and' inventory carrying costs;

Computer

based

accounts

receivable

systems

stimulate

prompt-customer payments by preparing accurate and timely invoice and monthly statement to credit customers. They provide managers with report, which help them to control the amount of credit extended and the collection of money owed. This activity helps to maximize profitable credit sales while minimizing losses from bad debts. Computer based accounts payable systems help ensure prompt and accurate payment of suppliers to maintain good relationship, ensure a good credit standing and secure any discounts offered for prompt payment. They provide light financial control over all cash disbursement of the business. They also provide management with information needed for the analysis of payments, expenses, purchases, employee expense accounts. Computer based payroll systems help business make prompt and accurate payment to their employees, as well as reports to management, employees and government agencies concerning earnings, taxes and other deductions. They may also provide management with reports analyzing labour costs and productivity. FINANCIAL INFORMATION SYSTEMS . Computer based financial information systems support financial managers in decisions concerning. The financing of business and The allocation and control of financial resources with a business.

Major financial information system categories include cash management and investment management, capital budgeting, financial forecasting and financial planning.

Cash management system collect information on all cash receipts and, disbursement within a company on a real time or periodic basic. Such information allows business to deposit or invest excess funds most quickly and thus increase the, income generated by deposited or invested funds. On line investment management services help a financial manager make buying, selling on holding decision for each type of security so that an optimum mix of securities is developed that minimizes risk and maximizes investment income for the business. Financial analysts typically use electronic spread . sheets and other financial planning software to evaluate the present and projected financial performance of a business. COMPUTER AND MANAGEMENT Managers and other decision makers use an MIS to request information at their networked workstation that support iJieir decision making activities. Web browser, application programs and data base

management software provide access to information in the intranet and other operational database of the organization. Data about the business environment are obtained from Internet or extranet database when necessary. Prespecified format designed are used by computer to provide managers with information on a regular basis. The competitive and dynamic nature of today's global business environment is driving demands by business managers and analysts for information systems that can provide fast answers to complex business queries.

Online analytical processing is a capability of management, decision support and execute information systems that enables managers and analysts to interactively examine and manipulate large amounts of detailed and consolidated data from many perspective. Decision support systems are a major category of management support systems.
>

They are computer based information systems

that provide interactive information support to managers during the decision making process. The American Analytical information management systems is a classic example. It was developed for American Airlines, but is used by other Airlines, aircraft manufacturers, airline financial analysts, consultants decisions by analyzing date collected on air line air craft utilization, seating capacity and utilization and traffic statistics. For example, it produces forecasts of airline market share, revenue and profitability arid helps airline-management make decision on aircraft assignment, route request, ticket, classification, pricing and so on. 3.5 LIMITATIONS 6F MIS FUNDAMENTAL WEAKNESSES There are some problems that are just looking for places to manifest themselves. These are fundamental weaknesses in the firm itself. When the company decides an MIS, these problems correctly recognize fertile soil and jump at the chance to be part of the project.

MANAGEMENT SYSTEM TO BUILD UPON For some reason many managers think that they can patch up a' company's shortcomings in basic management system as s bank-

aid. Unfortunately, this will not work.

If good planning and control

do not exist within the framework of a good organizational structure, no degree of sophistication with a computer is going to cure the basic ill. The MIS must be built on top of a management system that includes the organizational for adequate arrangements, planning and the structure the and clear procedures control,

establishment of objectives, and all the other manifestation of good organization and management. The lack of managerial and operational applications (as opposed to accounting and clerical applications) is serious, because it implies that .the process of management is not being performed well. It we can say that information is the raw material of decision making, and if information is not being generated, disseminated, and used for management than no system-manual or computer - is going to solve the problem. It is worth repeating that only the manager - user can establish, repair, or modify the management system prior to superimposing the MIS on it. The computer technician cannot do it because if his or her background and training, position in the organization and perspective of the situation. MANAGERIAL PARTICIPATION Of all the reasons for MIS failure, lack of managerial participation probably heads the list. Dozens of studies on hundreds of companies have concluded that the most striking characteristics of the-successful company is that MIS development has been viewed as a responsibility of management. This includes both top management and operating line management. The reasonable conclusion that managers must reach is that MIS is too important to be left to the computer technician.

This position is substantial if one economies the companies that have been successful with computer based MIS - Weyerhaeuser. IBM, Xerox, Pillsbury and ford to name a few. Their success is attributed directly to the fact that manager - users are required to become involved in the design of their own systems. Moreover, the presidents take a personal interest and participate directly in defining what work the computer should do for the company. Nothing less is acceptable when computers are becoming the largest single item c "capital budges and have such a widespread impact on all operating systems of the firm. ORGANISATION OF THE MIS FUNCTION Another significant cause of computer failure is the lack of proper organization of the EDP and MIS function when computers first burst upon the business scene in the late 1950s and early 1960s, the only practical applications were concerned with the automation of clerical work, accounting, payroll, inventory reporting and similar financial jobs. Following the classical organization principal of assignment of a service activity by familiarity, the overwhelming trend at that time was to assign the computer to the controller or the chief accountant. Unfortunately, this is where it has remained in many companies. The result has been a disproportionate emphasis on accounting and related clerical work. This development was a natural one because the computer gave the accountant an added dimension of importance. However, the result has been a reluctance on the part of the financial managers to share the machine with others. -Many have .forget-' on the first rule of staff employees, they exist to serve the line operations. RELIANCE ON CONSULTANT (OR) MANUFACTURER Some computer manufacturers and some consultants will try to sell the turnkey system, one that is designed and debugged and

ready for its buyer to push the button or turn the key. Although some complete packages exist, be carefull. In most cases, the consultant or manufacturer is concerned more with the machine than with management solutions. Before buying a "solution" from a consultant or manufacturer, be sure that it is the whole solution, that you understand it thoroughly, and that you understand your legal recourse when things do not work the way you expected. There are other good reasons for going slow in allowing consultant or manufacturers to make your computer and MIS decisions. First, there is a good chance that you will have to spend a great deal of time educating them in the operations of your company before they are in a position to make recommendations. Second, installing the system without substantial preparation is likely to result in some chaos. And third-and this is a general rule - if the buyer does not have the personnel capable of designing the organization MIS, it is unlikely that it will have the expertise to operate that were designated and installed by the outsider. COMMUNICATION GAP It is unlikely that for the foreseeable future the computer technician will be able to speak the language of management, and managers for the most part are not prepared to speak the language of the computer. The result is a communications gap that sometimes causes a design standoff. Technicians have title appreciation of the process of

management or of the problems of managers, operations of the machine is their thing. They measure their performance by how many shifts the computer is running .and how much printout or output they can generate. Given the choice, technicians will give the user all the data contained in the system pertaining to the user's problem. Thus the sales manager who asks for the sales performance report is likely

to get computer printout in a stack tow feet high. What he really wants is an exception support that highlight significant variance from plan. Characteristically, there are three stages in the development of an MIS, each stages depending on a fragile process of communications. These stages and the typical communication breakdown are shown. Development Stage Designer asks user Typical Communication

Breakdown what User is not accustomed to rigorous self-analysis and cannot adequately

information is needed

express information needs. Designer works out a plan Designer convert what he thinks he and gives it to programmer heard from the user into flow charts and trapping of systems design,

altering Programmer system

information needs in the incorporates interpretations, his own

process. implements Programmer ideas and

further

altering user's needs. Final results frustrate hostile system. The negative impact of this situation on MIS success is great There simply is no substitute for extensive honest conversation between the MIS developer and the MIS user. the or user, who becomes the

worse,

Sabotages

THE PEOPLE INVOLVED Whether we are talking about the management team, the MIS specialists, or the people who are doing the company's main work, one criterion is overriding; there is no substitute for competence. The performance of employees can be compared as follows: Good performers are an order of magnitude more productive than-average performers. Given tools from the stone age and no light to work by good performers will produce good results. Average performers can be made productive only in the right environment. Average performers are infinitely more productive than poor performers. In fact, poor performers produce negative work, that is someone else's time is spent, fixing poor performers messes. The moral of the proceedings paragraph is that you can guarantee success with your MIS if the key management spots, the key MIS roles, and the key user positions are occupied by good performers. The degree to which the project will probably fail: If the key managers involved are poor manager, the MIS will almost certainly be a failure. If the key MIS roles are occupied by poor performers, a respectable result is possible only with extra time and extra management involvement. If the key user position are held by poor performers, more education and selling is required and the user interface to the MIS must be enhanced greatly to increase correct input and to make the output "more easily understood. There is no substitute for competence. Hire only good performers. They, are, well worth the price.

3.6 DATA PROCESSING Data are the facts given from which others may be inferred. Data is in raw from and is not usable as such. The data item must be rendered usable by subjecting them to some processing. Any manipulation or data such as arithmetic operation, classifying, sorting aggregating and .averaging is called as Data processing. Data processing include even the presentation of information and its effective use by the user. According to chambers handbook of commercial terms, defines Data processing as the processing of individual data items in order to produce information which can be used in office system and computer applications like recording, classifying, sorting, storing retrieving, summarizing, analyzing and communicating activities in addition to calculation, comparison, decision - making and logic. Methods of Data Processing: Manual Processing Punched Cards Electro - Mechanical Device Computer Processing

To being with all data operations were done manually. It was followed by the use of Electro - Mechanical Devices such as typewriter, time clocks and cash registers in Data processing: They are, Thereafter punched card equipment came to be used. Data was punched on paper cards and such cards were arranged into a file,

reducing manual intervention. Last stage was introduction of computer in Data processing. OPERATION OF DATA PROCESSING SYSTEM Data processing functions can be divided into five sub functions whether it is performed manually or electronically. Data entry Data manipulation (Rearranging input data and processing files) File Maintenance Developing and putting in place procedure to help data processing staff as to what type of data is to be collected, when show they have to be used, etc... Presenting or communicating the informations.

These operations car be done manually and also can be computerized. PROCESSING MODES Batch processing Single Transaction Processing On-line Processing On-line / Real time processing Distributed Processing

BATCH PROCESSING Most organization handle a large number and variety of .transactions, every day such as cash sales, credit sales, sales commission, customer credit, consignment sale, advertising etc in marketing area. An efficient way to process these transactions is to collect all transactions of the same type for a particular period of time and process them sales transaction of a day of a particular product are processed once in a day or period. All these transaction are entered into the system at one time. This enables data processing personnel, to better control the entire leads to more efficient scheduling of computer time. Batch Processing is fundamentally associated with records that are maintained on punched cards, :magnetic tapes and magnetic disks. SINGLE TRANSACTION PROCESSING In this method each transaction is entered single into the system. There is no delay due to waiting to accumulator a batch of transaction. ON-LINE PROCESSING The term on-line refers to the fact that input, output files, data files and related equipments are connected to the computer such that a transaction may be entered at once or information may be retrieved immediately any time. ON-LINE / REAL TIME PROCESSING

In the transaction is processed single and as it occurs it is said to be processed in on-line, real time mode. It means that the files for the transaction type are kept on-line, that is electronically connected to computer arid transaction is processed quickly. Air line reservation. DISTRIBUTED PROCESSING This arose out of the need to channel data processing power to where data actually arise and where it can be processed more effectively. That is some processing level officers by installing computers there rather than centralizing it at the head quarters, the detailed information required for daily operations remains at the local level and the summary information required at higher level for planning and controlling overall operation is forwarded to the central computer. MANAGEMENT INFORMATION SYSTEM VS. DATA PROCESSING A data processing system processes transaction and produces reports. It represents the automation of fundamental, routine processing to support operations. Prior to computer, Data processing was performed manually or with simple machines. A MIS is more comprehensive, it encompasses processing in support of a wider range of organizational functions will also include transaction processing as one of the its functions. WHAT DOES IT TAKE TO MAKE A DATA PROCESSING SYSTEM INTO MIS? Can a rather mundane Data processing system be an MIS if a simple database, retrieval capabilities. This is not a useful question. MIS is a concept and an orientation towards which an information system design moves rather than an absolute state. Therefore the significant issue is the extent to which an information system adopts

the MIS orientation and supports the management functions of an organization. The answer is usually a matter of degree rather than a simple yes or no. Once 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 essential part of routine transaction processing and reporting. Further, an MIS orientation so as to improve decision making and achieve improved organization effectives information resource are also used as a mean of achieving a competitive advantage. 3.7 DECISION SUPPORT SYSTEM The definition of "Decision Support System that is used in common practice is An interactive computer-based system that helps decision makers utilize data and models to solve unstructured problems. To appreciate the importance of what is being described, it is necessary to go back and examine the nature of traditional data processing systems and information systems that organisations have been using since the early 1960's. Data processing systems, recall, simply substitute computer processing for human processing. Payroll, accounts payable, inventory and airline reservation systems are all examples of applications tat would be classified as data processing. An information system would typically take the form of a predefined report, say, a profit centre performance report. Any information coming out of the data processing would be produced by, summarizing the data flowing through the systems. The information produced by the information system would be very static

and rigid in nature. If a manager or other user wanted to ask a question of either type of system that had not been completely anticipated, the following process would take place. First the questioner would have to make a request to the information system department to have a program written to answer the question. Frequently this process would also require that the requestor have the budget to pay for the services of the information system department. Once these hurdles has been passed, the next step would be to design the program, write it, test it and deliver it in a operational form to the requesting party By this time several months typically have passed. (Frequently more than were originally estimated and often at a cost higher than originally estimated). Even more frustrating to the user is the case in which the MIS group comes back to say that the data required to answer the question is "not in the system". In such cases, a system lo capture the data into the proper format is so expensive and/or time-consuming that the user decides to retain the manual test drawer system presently in use. The problem with traditional systems and with the traditional way of developing systems include all of the following. 1. The system are not "user-friendly" for the user to get anything out of them, the use of a technical intermediary the programmer is required. 2. The technology with which the programmer must work is rigid and hard to change, with the result that a great deal of them and effort is needed to respond even to simple requests.

3.

The systems tend to support routine questions but do not service unusual request or address high level decisions.

4.

Many of the systems do not provide for interactivity between the user and the decision maker in a way in which problem exploration can take place.

3.8 INTERACTIVE SYSTEM FOR DSS Because of the nature of the problems addressed by DSS, an interactive system is required/ In other words, the system supports the decision maker by facilitating the problem exploration process. This is done in many cases by providing a system which suggests solutions to the decision maker along with a rich body of data about the consequences of accepting the solution. In this way the decision makers can evaluate the outcome of taking a particular course of action and if a short coming exists can modify the solution and try again. In this way, the solution to one trial may suggest to the decision maker what ought to be changed before another try is made. A scenario of this approach would be as follows. Suppose the decision maker, supported by a DSS, first explores the data associated with a particular problem. From this analysis phase, a first solution" is postulated. The decision maker inputs this solution to the DSS and performance results are generated. Evaluation of these result shows that short comings exist and perhaps even suggest why these have occurred. The decision maker then would go back to the analysis module and would modify the solution and try again. This interactive process would be repeated until a satisfactory solution had been generated. DICKSON'S HIERARCHY OF DSS

In systems of this type, the emphasis is upon providing aids to the process used to make a decision. Structuring the process with an interactive system that leads the decision maker through the decision is one example of this sort. Using imbedded optimization models or "what if capabilities is another feature characteristic of DSS. The decision is still up to the human but support is provided by the system to explore the problem. USES DATA AND MODELS In order to accomplish this task, a DSS must have access to data and must contain algorithms or processes to assist the decision maker. In some cases, these DSS subsystems act independently and in others they are integrated. The subsystem of the DSS must maintain the data and provide easy access to it Consider the use of a DSS in which the user simply wants to retrieve a single data item, an inventory level of some raw material. This type of request is the simplest form of an access of data. A more complex case would be the generation of an ad hoc report- As an example, suppose a manager wanted a report o all the firm's customers living in the states of Iowa who, in the last six month, had purchased more than$ 10000 of particular class of product. These two examples one simplex and one complex illustrate data functions that ought to be available in a decision support system (DSS). The modelling subsystem of the DSS would support analytical functions. Take the case of a managers wishing to project the company's financial picture under several economic conditions and with several product pricing strategies. Another example would be a case in which a bank wanted to correlate the activity in checking accounts in terms of transitions per month with the number of years

the account holder had been doing business with the bank. This case would require formal statistical analysis. The use of sophisticated mathematical programming algorithm to assist in an assets allocation planning would be a third example of modeling. In a final example the use of modeling may not be obvious but it is involved. The difference is that in this case the model is built around capturing expert knowledge in contrast to utilising a mathematical process as in the pervious cases. Suppose in this case that a commercial loan officer at a bank is faced with making a rather substantial loan to a manufacturing company. This officer might have built into a decision support system the decision advice of a predecessor, a person with 40 years experience with the bank in making commercial loans. An "expert" Decision Support System could have been created in which the experienced loan officer's decision making procedures could be replicated by the system. In this way, the present decision maker would have the "advice" available from the expert. In the discussion above, the examples are such that the data and modeling subsystems are independent. In actual operation, these frequently must be integrated. A common example would be a one in which a highly complex, logical selection of data was performed using the data subsystem and then this data was used as input to the modeling subsystems. EASY TO USE: Although this feature was not mentioned in the definition presented above, user-friendliness is a corner stone of the DSS approach. Where as traditional data processing system require a programmer to obtain information from the system for the user, the same is not the intent regarding DSS. A user or user representative

acquires information from a DSS by using English - like statements or by using what is called a "query language" or a "report generator". In contrast to procedure - oriented languages like COBOL, PL/1 or FORTRAN, DSS are based upon fourth-generation languages that are very high level in nature. In fact, one statement in these languages may be the equivalent of from several to over a hundred statements in one of the procedural languages. Additionally, these system prompts and help commends to make system use easy for a technical novice. Such languages contain commends with substantial power. An example would be the command FIND, which can be enhanced with logical structures. Using this command, a user night input a statement such as FIND ALL CUSTOMERS WITH PURCHASE > 1000 IN MARCH AND WITH ORDERS < 10 OR WITH ZIP CODE = 5XXXXX TO 63XXX The result would appear in a preformatted report or in a report defined by the user on the spot using a powerful DISPLAY command. Data - oriented commands, modeling commands involving statistical analysis and/or projection of data and commands for display (including graphics) are designed under the DSS philosophy to be easy enough the use that managers and professionals will be able to develop their own system. Moreover, using these language, the enduser has access to data and information without resorting to a programmer and without the delays involved in developing traditional data processing system. APPLICATION

One emerging and quite important new application area will be the use of DSS, which are just coming into use on a broad scale. Managers will be able to activate simulation models which have access to relevant portions of the data base to aid them in decision making. It will be an interactive, trial-and-error type of activity where the. manager can experiment and see projected results of alternate action plan. This single application area may produce more benefits to a company then the sum of the other computer application combined. USER DEVELOPMENT IN DECISION SUPPORT SYSTEM. A study reported by Stephen Alter in the MIS Quarterly focused on the prevailing wisdom concerning system implementation. "Implementation will be most successful if the potential users really want the new system and if they participate actively in the development". The author obtained data from 56 case studies of data support system (DSS) in use within organisation. The data was gathered by conducting structured interviews with both implementers and users of each organisation. The result show that in 31 of 56 systems, users did not initiate the system and in 38 of the 56 systems, users did not participate actively in its development. Only 12 of the systems were consistent with the prevailing wisdom of having both user initiature and user participation. While it is surprising that more systems did not follow the accepted techniques for implementation success, the study definitely supported the prevailing wisdom. There were more problems with systems where users had low initiation, conversely the more successful system were those that users initiated and in which they participated.

Two general hypotheses have been presented. The first is that the operating mode of many successful managers runs counter to the image of a thoughtful, reflective decision maker. The second is that user initiation and involvement are necessary ingredients in the design and implementation of a successful system. A conflict arise when one tries to build on these hypotheses. Management involvement is essential; yet the very style and characteristics of top managers suggest on aversion to Management Information System (MIS) and computer - based system. 3.9 MIS & INFORMATION RESOURCES MANAGEMENT Change from information system Management to

information resource Management ( ISM - IRM ): The management of IS in many organization is experiencing a transition from computers and database information processing to information as strategic resource and to an expanded role of information IRM. REASONS FOR THE SHIFT IN EMPHASIS TO IRM Stage of development of the information system function. Technological developments. Why is information considered an organizational technology. This has resulted in an expanded responsibility for the IS executive. This expanded role is often termed

Resource? COMPONENTS OF INFORMATION RESOURCES 4 different components:

Information content Information technologies Information - related personnel Information related facilities

INFORMATION CONTENT Includes definitions, characteristics, and uses of information. INFORMATION TECHNOLOGIES Hardware and Software. As new information technologies are developed, organization incorporate them into their operations. Examples: distributed networks, office automation, electronic mail, telecommunications. People: Personnel involved in collecting, transmitting and working with information, arc valuable assets who should be managed as other components of information resources are managed. Eg: Technical staff, Support staff, end users, Knowledge workers, information professionals, information supplies / Vendors. INFORMATION - RELATED FACILITIES Physical facilities (Building, libraries, computer center) and information facilities (Archieves, communication centre).

Organisational and Technological Component in information resource management

DATA ADMINISTRATOR The person who has the central responsibility for an

organization's data. DATABASE ADMINISTRATOR: Database professional who creates the database and carries out the policies laid down by data administrator. PRINCIPLES OF FIRM The IS department should be managed like any other department of the business. The main purpose of IS is to help the organization meet its goals and objectives. IRM is the responsibility of all managers, regardless of their discipline / functions.

The commitment of the top management is the key to realize the full potential of information resources. Information is used as an strategic v.vapon to gain competitive

advantage, to help managers in decision making and communicating, and as a power tool. WHAT IS IRM? The study of managing information and its allied components is referred to as IRM. Still because of the infancy of the field, a universal definition of IRM does not yet exist. Following are some of the definitions that point-out the diversity of IRM definitions. IRM is the management (Planning, organization, operations and control) of the resources (human and physical) concerned with the systems support (development, enhancement and maintenance) and the servicing ( Processing, transformation, distribution, storage and retrieval) of information (data, text, voice, image) for an enterprise. - Schneyman, 1985 IRM is the process within the information management arena that serves the corporate interest. IRM seeks to harness information for the benefit of the organization are usually manifested by its corporate goals and objective.

"IRM is the managerial link that connects corporate information resources with the organisation's goals and objectives". - Burk and Horton, 1988. "IRM, simply put, is the belief that information is an asset that should be managed rigorously and can contribute to the success of business". - Kerr, 1991 "IRM is the managing of information resources - a major strategic responsibility of both managerial end users and traditional IS management for the benefit of the entire organization.

- O Brien, 1990. We prefer the O'Brien definition since it stresses the role of the end users while noting the strategic importance of IRM. WHY IS IRM IMPORTANT? IRM is the engine that is driving the information economy. It is having and will continue to have a profound impact on business management, Competitive advantage, and productivity. IRM is an integral part of corporate strategies and can be used by organizations to gain competitive and advantages in their markets. Goals of IRM: Treating information as a corporate asset, which must be properly utilized, in order to increase the profitability and strategic positioning of the firm.

Aligning information - related planning to corporate strategic planning. ( Marchand & Horton, 1986).

Extending

the

responsibility

for

managing

information

resources to all management levels and all functions areas (Marchand & Holton, 1986; McNurlin &Sprague, 1989). Recognising and encouraging the position of a chief information officer. Unifying the integrating existing information technologies in the company ( Gray etal. 1989, Lytle, 1988). Exploring new information technologies and applications for the company ( Kerr, 1991). FUNCTIONAL COMPONENTS OF 1RM Data Processing Telecommunications Office Automation

ORGANISATION OF IRF (INFORMATION RESOURCE FUNCTION)

There

are

number of

of

alternative systems

in

centralization functions

Vs.

decentralization

information

because

centralization 01 decentralization can be applied independently to the functions within information systems. FACTORS FOR DECENTRALIZED CONTROL Many organizational units require information resources tend to prefer to have those resources directly under their control. Availability of low-cost technology. Backlog of development work. User control over operations Organisational Behaviour.

Pscyhological value of unused information Information is often collected and communicated to persuade. Information use is a symbol of commitment to rational choice. FACTORS FOR CENTRALISED CONTROL Staff professionalism Corporate database control Technical competence and research Comparative cost advantage

ORGANISATIONAL FORMS FOR INFORMATION SYSTEMS: (Functional, product, Matrix) are also applicable to the

organization of information resources. These can be also centralized or decentralized depending on the size of each organizational setup.

DISTRIBUTED SYSTEM OPERATIONS In systems operations, there are 3 elements that may be centralized or decentralized. Hardware location Processing control

Location of data Managing scarce information system icsources. Management of Information systems personnel. Management of End-user computing.

3. 10 MIS AS AN EVOLVING CONCEPT When the concept of MIS was first introduced, many proponents envisioned a single, highly integrated system that would bring together processing for all organizational functions. Others questioned whether it was possible to design adequate computerbased information' systems to support management planning and decision making functions, especially strategic planning.' They questioned the-value of applying advanced information technology to an ill-defined judgmental process. Over time, the com of a single, highly integrated system was demonstrated to be too complex to implement. The MIS concept is now that of a federation of subsystems, developed and implemented as needed but conforming to the overall plan, standards, and procedures for the MIS. Thus, rather than a single, global MIS, an organization may have many related information systems which serve managerial needs in various ways.

MIS as a concept continues to evolve. It is related to, but not equivalent with, data processing and other information systemsrelated concepts. Two such concepts that can he considered extensions of the MIS concept are decision support systems (DSS) and information resources management (IRM). An emerging trend consistent with the evolution of the MIS concept is end-user computing. MIS versus Data Processing A data processing system

processes transactions and produces reports. It represents the automation of fundamental, routine processing to support operations. Prior to computers, data processing was performed manually or with simple machines. A management information system is more comprehensive; it encompasses processing in support of a wider range of organizational functions and management processes. However, every MIS will also include transaction processing as one of its functions. What does it take to make a data processing system into a management information system? Can a rather mundane data processing system be an MIS if a simple database, retrieval capabilities, and one or two decision models are added? This is not a useful question. MIS is a concept and an orientation toward which an information system design moves rather than an absolute state. Therefore, the significant issue is the extent to which an information system adopts the MIS orientation and supports the management functions of an organization. The answer is usually a matter of degree rather than a simple yes or no. 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, of course, an essential part of routine transaction processing and reporting. Furthermore, an MIS orientation means information resources are utilized so as to improve decision making and achieve improved organizational effectiveness. Information resources are also used as a means of achieving a competitive advantage. 3.11 THE CHANGE FROM INFORMATION SYSTEMS

MANAGEMENT TO INFORMATION RESOURCES MANAGEMENT The management of information systems in many organizations is experiencing a transition from computers and data-based information processing to information as a strategic resource and to an expanded role for information technology. This has resulted in an expanded responsibility for the information systems executive. This expanded role is often termed information resource management (IRM). The term usually includes the related activities of data processing, data communications, and office automation. Reasons for the Shift in Emphasis to Information Resources Management There are to reasons for the shift in emphasis from information processing to information resources management. One is the stage of development of the information \ systems function: the other is based on technological developments. The Nolan stage theory, presented in Chapter 14. described stages of information system use in organizations. In the six-stage version of the theory, the idea is presented that alter the first three stages of initiation, contagion and control, there is a transition from management of computers to management of organizational data resources. The 5 that follow the transition are integration, data administration, and maturity. In the maturity stage, the application portfolio mirrors organizational processes, there is joint information

systems-user accountability for information resources, and there is a match between information system structure and organizational structure. The technology explanation for the shift to information resources management is that c which in the past could be managed separately are now highly interdependent and should be the responsibility of a single organizational authority. For instance, the technologies for voice and data telecommunications were separate. Now an organizationally efficient telecommunications system must consider both forms as highly interdependent. Office automation, when first introduced, typically referred only to the replacement of typewriters by word processors; now office automation is highly interrelated with both data processing and telecommunications, Therefore, there is an organizational theory basis for assigning all three functions to a single organizational function, namely, information systems or information resources. The Information Resources Function The component activities that make up the overall information resources function. The three general components are the following: 1. Data Processing. In a traditional information systems environment, information resources are synonymous data processing. In organizations where information systems base a broader charter, data processing continues to play a significant role. Development of major applications, ongoing operations of 'production" systems operation of the corporate database, and cost control over major system expenditures (i.e.. mainframe computers) are part of data processing.

2.

Telecommunication: Traditionally data communications have been the responsibility of data processing operations, while voice communications in 3) support were assigned elsewhere. (discussed The in advances Chapter communication technology

corporate-wide

telecommunications

capabilities that integrate voice and data communications. Data communications are also an integral component of both data processing and office automation applications. 3. Office automation. This component typically began as the word processing function under the responsibility of office administrators who were separate from data processing. Intelligent workstations (discussed in Chapter 13) integrate word processing with data processing and frequently involve access to the corporate database. Local area networks and wide area communications automation are key components and for integrating office functions providing

access to data processing facilities. The Information Resources Executive The management of information as a corporate resource requires a high-level organizational executive. This executive has been called the 'management information systems director," the "information resources executive," or the "chief information officer." The position of this executive responsibility in the organization varies, but there is evidence that it is moving away from reporting to a functional authority (e.g., production) or control authority (e.g., -accounting) to becoming an autonomous organizational unit, either one or two levels below the chief executive officer.

The responsibility of the organizational unit headed by the chief information officer in the "mature" information resources environment may be characterized as the following: 1. Operational responsibility for central data processing and data communications systems. 2. Coordination of organization-wide information systems

planning, use, and evaluation. 3. Maintaining infrastructure for technical services and assistance to all organizational Units. 4. Acquisition and dissemination of knowledge and expertise regarding new technology, of including testing the research and development applications. 5. Establishment and enforcement of standards and guidelines for all major information system applications and databases acquired throughout the organization. 6. Aiding of adequate placement of information systems expertise and responsibilities in areas of decentralized information application control. 3.12 ORGANIZATION OF THE INFORMATION RESOURCES function high-risk, leading-edge

FUNCTION There are a number of alternatives in centralization versus decentralization of the information systems function because centralization or decentralization can be applied independently to the functions within information systems: system operations, application system development, and overall planning and control. Alternative

organization designs for these three functions within information systems will be described with emphasis on advantages and disadvantages of each. It is important to keep in mind in the discussion of alternatives that a major consideration in the selection of an alternative is fitting the information system organization to the overall organization. In many cases, this consideration will dominate technical and operational factors being explained in this section. Also, centralization versus decentralization should not be considered absolute alternatives but extreme points along a continuum from highly centralized resources to highly decentralized. Pressures for Centralized versus Decentralized Control of Information Resources. All other factors being equal, organizational units requiring information resources tend to prefer to have those resources directly under their control, thus ^encouraging decentralization. There are, however, other pressures favoring a centralized authority. Pressures for decentralized control: Availability of low-cost technology. Personal computers, intelligent workstations, and terminal plus software for end-user computing permit many applications to be user-developed that previously required centralized development and permit many tasks to be useroperated and user-controlled that previously required centralized operation. Backlog of development work. The shortage of qualified information systems professionals combined with increasing user demand for new major applications has created a three to five-year backlog of new development in many organizations. Users' perceptions that centralized information systems management is

unresponsive to their needs makes acquisition of user-area hardware and user-function development of application* more attractive User control over operations. Having direct control over their own information systems operations is very attractive to users, particularly if information systems play a measurable role in their performance. Users may be willing to pay increased costs in return for control. Increased experience of users with computing, primarily through personal computing, increases their confidence in being able to develop, implement, and maintain their own systems more quickly and easily than through the centralized information systems function. Organizational behavior. As explained in Chapter 8, there are psychological and organizational behavior reasons for the accumulation of information (even if not needed). Some of the same reasons may explain pressures for local control of information resources. These include: Psychological value of unused information. Knowing it is there if needed or "just in case" seems to have a positive value. Information is often gathered and communicated to persuade (and even to misrepresent). This function is most easily performed by information systems under Ideal control. Information use is a symbol of commitment to rational choice. Local control of information resources thus represents local competence. Pressures for centralized control: 1. Staff professionalism A large development and operations support staff provides challenging work, creates an environment of shared expertise and learning, and provides

alternative career paths. It also makes standards for information system development and operation easier to enforce. 2. Corporate over data database control. The philosophy and own security. databases behind Userare

development of a corporate database is centralized control accessibility, systems with integrity, their designed

incompatible with the global database approach. 3. Technical competence and research. A central unit can specialize and thus develop sufficient expertise to evaluate technologies. It can also function as a research unit for high risk, leading-edge pilot projects that an individual user would not be able to undertake, In a highly complex technical environment, systems professionals with highly specialized skills are required? Such specialists could not be supported economically in a decentralized organizational unit. 4. Comparative cost advantage. When extra communications costs required with decentralization are included, the net comparative cost advantage of centralized facilities may relatively small. Each system must be evaluated to determine whether or not there is a cost advantage: it cannot be assumed. The cost advantage from centralization of personnel with technical expertise persists. Alternative Organizational Forms for Information Systems The basic organizational forms described in Chapter II

(functional, product, and matrix) apply to the organization of information resources. Each of these forms may be implemented in a centralized environment; modified forms may be appropriate in a

decentralized

environment,

depending

on

the

size

of

each

organizational unit The most common organizational structure for information systems is a functional organization. Personnel are grouped by the function they perform such as application system development and operations. Figure 20-4 shows a typical functional organiza tion, There are three managers reporting to the manager of information systems: a system development manager, an operations manager, and a technical services manager. Within systems development, a functional organization will have managers for separate development functions such as systems analysis and applications programming. Under technical set vices, there may be functions, with managers, for program maintenance, communications network services, and systems programming. Under operations (not shown), a possible functional breakdown is data preparation and data entry, data center operations, and data control. The advantage of a functional organization is specialization of personnel. In information systems, specialization is important for training and maintaining technical competence. As the organization grows, there can be fairly narrow specialization to meet specific technical requirements. The disadvantage is the narrow view promoted by specialization. Alternatively, the information systems function may be

organized by product; this could typically be appropriate in an organization which is also product-oriented. For instance, a major consumer products firm has a food products division, a clothing division, and a cosmetics division. Each division operates autonomously under an umbrella corporate management structure; each division also has its own data center and system development staff.

The advantage of product organization is that information systems tend to be more expensive to user needs because they report to user management. The disadvantages end to be the difficulty of user management supervising a function that employs a technology they do not understand well and the difficulty of providing career development opportunities for information systems personnel. Specialization is reduced h the smaller information systems units, arid variety in work assignments is limited Also, there may be significant problems of coordination if the organization has an organization-wide database, major applications that cross organizational boundaries, or organization-wide systems such as a data communications network. The matrix organization is an organizational structure approach to the problem of coordination when the information system function is dispersed among different organizational units. Each information systems function reports to the management of the organizational unit it supports: it has a "dotted line" relationship to a central information systems director who provides technical direction, coordination, standardization, etc. The matrix organization can he applied to all parts of the information systems function or only to some. For example Figure 20-5 illustrates a matrix organization in which each major business function has its own application development staff: a manage, of application development for a function reports directly to the manager of that function and reports on a dotted line basis to the corporate information systems. In this example, only application system development is decentralized: the functions of system operations and technical services are centralized. The issue of centralization or decentralization is not 'either or." There can be various combinations of centralization or decentralization. Using system operations and system development as the two major parts, both or either may he centralized or

decentralized. Within system operations or system development there arc centralization decentralization alternatives. Centralization-Decentralization of System Operations There are three elements of system 'operation that may he centralized or decentralized computer hardware location, computer processing control, and location of data. There are a number of factors that may affect the location of computer hardware (other than organizational fit mentioned earlier):

Factor Affecting Location Comments Economics of scale for As mentioned earlier in the chapter, computer equipment historically, economies of scale,

strongly favored large, centralized computers. This is no longer true. In fact, considering communications

costs as well as overhead required for operating a large complex computer, there may be diseconomies of scale for hardware; large, central

computers may be justified by the need for speed and power but not by Integration of Processing lower cost per unit of processing. If there is significant integration of processing performed for different locations or': functions (i.e.,

applications

are

highly

interdependent), a central computer facility Date Communication costs reduces the problems of

incompatible hardware interfaces. Data communications costs reflect the type of processing, the configuration of equipment, and the distances Dispersing

between

locations.

equipment may increase or decrease communication costs depending on all Technical support operations expensive of these factors. to There must be a certain level of

computer technological expertise to support the use of computer equipment, and the level of expertise tends to be higher with larger, more complex hardware configurations. The large installation requires on-site expertise; be smaller of

installations Hardware Installation Risk

must

assured

access to expertise when needed. A company with a single, large hardware installation can maintain adequate security, but the entire data processing capacity of the

organization is at risk in the event of disasters such as fire, tornado,

explosion, riot, etc. it is more difficult and costly to arrange backup for a single large installation than for

smaller ones. With multiple small installations, work can be shifted

temporarily to where there is. unused capacity if one installation is out of service. There are a number of alternatives for hardware location and control. The list below is arranged in approximate order from highly decentralized to highly centralized. Distributed computer hardware with no central with control over

configurations and no communications Distributed over computer hardware central control equipment configurations.

Distributed computer hardware with communications network for communicating between hardware at different locations. Distributed computer hardware for local processing and a central computer for larger jobs. Distributed computer hardware with communications network controlled by a central computer that allocates jobs to local computers. Centralized computer hardware with remote job entry stations for input output.

 Centralized computer hardware with remote terminal access to specify jobs to run. Centralized computer hardware with remote terminal access only for input and output The distributed hardware configurations tend to provide local processing control, but central computer hardware can also allow local processing control, A central computer with remote job entry equipment essentially allows the remote site to send a job when it is ready (although the schedule for the central computer may constrain this). The remote site may also receive its outputs (i.e., reports) directly through its on printer. Online processing of database query on a centralized computer may be user-controlled through their own terminals. Another aspect of .system operations that can ho centralized or decentralized is storage of and access to data. As with hardware, there arc a number of alternatives for achieving central or local storage and control. They are arranged below in approximate - order from decentralized to centralized. Each distributed computer has its own files, and there is no interchange or central control. Each distributed computer has its own files, but there are organization-wide standards on naming, integrity checks, etc. Each distributed computer has files, but the data can be accessed by other computers.

 There is a centrally controlled network of distributed files and databases. A file or database is assigned to a local computer, and data records are transferred to other computers as needed. There is a central database with subfiles downloaded to local computers for local use; file changes and transaction data are sent to the central computer for updating of the database. A central computer has all files and databases. The ultimate decentralization is for each user to have a microcomputer and files. However, individual users have need for data developed by transaction processing. This data may be downloaded from the computer used for transaction processing. The management and control of end-user computing is discussed in a later section of the chapter.

Centralization-Decentralization of System Development Centralization-decentralization of application system

development is achieved through the organizational location of systems analysts and programmers or other control mechanisms. Locating systems analysis personnel within the user organization has the advantage of making the analysts more responsive to the needs of the using group. In general, they can design applications and interact with operating personnel much better than systems analysts coming in from outside groups. Managers tend to be more responsive to information processing if they have someone on their staff with whom they can work. Some offsetting disadvantages are the fact that systems analysis personnel who operate in decentralized units tend not to have the amount of cross-fertilization of ideas, the training, or the opportunity for specialization that occurs in a centralized group.

Development of technical expertise and a career path in information systems is difficult. Standards are also more difficult to enforce than when a centralized group is used. If systems analysts remain in a centralized group, project organization may be used to gain some of the advantages of decentralization. Each application to be developed is organized as a project with a project leader and systems analysts assigned to it. The advantages are reduction in communication difficulties between project phases and [the focusing of responsibility for system success on a single group. In addition, the project team helps users identify which analysts are responsible for 'their" projects. Having a user as a member of the project team is commonly suggested as a way to increase user input and user responsibility for the final product. Companies with a large development staff can organize their analysts into permanent project teams responsible for all projects in a particular user division. This arrangement has advantages and disadvantages similar to those of the decentralization alternative; the responsibility for hiring and reassigning staff remains with information systems management so training and provision of career paths may he facilitated. Another common mechanism for maintaining a centralized development group while improving responsiveness to user needs is the role of a user liaison. A person in this position typically reports to a centralized function hut may have "dotted line" responsibility to the user group for which he or she is responsible. The reverse is also to possible. The user liaisons most important task is transaction communication of user requests into data processing specifications and of data processing "jargon" into terms understandable to the user. The user liaison typically does, not do-any actual system design or programming but may he actively involved in the definition stage

of

project

(Feasibility

study

and

information

requirements

definition). 3. 13 ALLOCATING SCARCE INFORMATION SYSTEM

RESOURCES A significant management task is the allocation of scarce resources. In the case of information systems, there are more demands for information resources than can he provided. There must he some mechanism for allocating them. This will often be a part of the information system planning process, bin allocation often takes place outside of formal planning. The two major alternatives are a central authority method and a decentralized authority method. Central Authority for Resource Allocution The central authority approach lo resource allocation is to assign the allocation to a central person or body. The central person can for example, be the chief information systems executive. This executive has a broad information resources view and may be able to make allocations that improve overall organizational information resources; however, there are many political factors in such allocations and coalitions of managers within the organization may not be recognized by the information system executive. The use of a central body that reflects the political environment of the organization is illustrated by a steering committee. It .is made up of representatives from major users and therefore can take into account overall needs of the organization and yet operate within the political constraints. The steering committee may have difficulty in assessing the technical importance of applications and in balancing the portfolio with projects having a range of risks as well as benefits.

The central authority approach is consistent with a service center concept for information systems. Users are not permitted to turn to outside services. The chargeback mechanism, if it exists, is geared to full or partial cost recovery but does not reflect market demand for the services requested. (Chargeback systems are discussed in the next (section.) Final approvals of system development priorities are centrally controlled by the steering committee or information systems management. One significant advantage of this approach is that it facilitates integration and an overall balance of development of information system applications; it also facilitates close adherence to an overall MIS master plan. Some central control is necessary for implementing an organization-wide database. Decentralized Authority for Resource Allocation Rather than a central authority trying to decide among competing projects, an alternative is to provide users with the basis for making such decisions. This requires a chargeback system that makes users responsible for their own information system costs. Under a chargeback system, users are charged full or partial cost for system operations and new application development. The algorithms for establishing costs for services are complex and vary widely depending on the objectives of the chargeback system. Among these objectives are: 1. Meet the basic accounting objective of cost recovery 2. Ensure equitable computer resource allocation among users 3. Satisfy contractual or legal requirements 4. Regulate the demand for scarce computer resources 5. -Assist management in planning 6. Decentralize control of information resources to user

There are a variety of methods for handling information systems costs. They can be classified into five alternatives: b Overhead (no chargeback). All costs are absorbed by the information systems function. Allocation of expense. Time reporting or CPU records are used to arrive at a rough percentage of use for each department. Usually 100 percent of all costs are allocated. Standard resource rates. Users are charged by type of service used according to a fixed rate schedule established in advance. Standard rate per unit processed. Users are charged a prespecified rate for particular units of input or output, i.e. transactions processed, online inquiries, reports requested. Fixed price. Users pa a fixed fee for usage of a block of time on a dedicated system or for new system development here the final product is relatively well defined. It can be seen that not all the methods of chargeback result in decentralization of planning and control to users. A chargeback system whose objective is simply to provide a cost recover}' function will probably use allocation of expenses or, at most, standard resource rates. In order to serve decentralized planning and control,

chargeback system should have the following characteristics: Understandability: Users should be able to associate costs with specific activities.

 Controllability: Charges should be under the control of the user/manager. Accountability: Costs and utilization of information system costs should be a factor in user employee performance evaluation. Cost/benefit incidence: The user receiving the bill for services should also receive (directly or indirectly) the benefits of those services. In order to have these characteristics, a chargeback method for system operations should be based on a standard rate per unit processed, such as transactions, inquiries, or reports; fixed price is generally appropriate for development. A user should be able to cancel production of a report, for instance, and see it reflected in the bill for services. Such a system is very complex because actual costs may vary widely depending on transaction volumes and other demands on the system. Furthermore, if the information 5 steins function is organized as a profit center, rates charged must reflect market rates since users have the option of utilizing external resources. A good example is the use of fixed prices for new system development. The internal development group must submit a "hid" which is realistic in terms of actual cost but is also attractive relative to external resources (both in cost and in time to completion). Thus different goals of chargeback systems may be in conflict and cannot he met by the same method. A method which adequately allocates all data processing expenses will most likely not meet the criterion of being an adequate tool for user planning and control. On the other hand, a system which establishes standard rates and/or fixed prices relative to market rates may not allocate all costs.

Many

chargeback

systems

are

implemented

based

on

allocation of expense using standard resource rates in order to give users feedback on their expenses. There is some evidence that such an approach may be dysfunctional. Users frequently do not understand the charges, which are often based on such items as Cpu utilization and disk storage costs. Even if they do understand the charges, they do not know how to affect those charges through system usage. Information systems are usually seen as expensive but necessary. Chargeback systems that are implemented for purposes other than to affect user requests for information services probably do not result in more effective decentralized planning and control of those services. The decentralized, chargeback approach is consistent with a profit center concept for information systems in which the center operates in parallel with an outside competitive market. Prices for services are competitive with alternative services external to the organization, and users are free to "shop around" for a better price. Furthermore, information systems may sell its excess capacity (machine or human resources) to users outside of the organization. In keeping with the profit center strategy, all decisions regarding system development priorities are decentralized to users, and they have responsibility for cost-justifying their decision to loc .1 management. One disadvantage of the profit center approach is the difficulty of accommodating it to a corporate In database fact, the or corporate of telecommunication requirements. development

nonintegrated divisional databases should be expected. Furthermore, it is difficult to reconcile user-controlled decisions to an information system master plan. Finally, users must be considerably sophisticated about information systems in order to determine their own information system needs and evaluate competitive alternatives for meeting them.

3. 14 MANAGEMENT SUPPORT SYSTEMS Management support systems focus on managerial uses of information resources. These systems provide information to manage for planning and decision making. The information provided by these systems is based on both the internal and external data using various data analysis tools. They also offer a choice to the user to select out of these tools for the purpose of data analysis. These systems serve the information needs of managers at middle and top levels in the managerial hierarchy. There are three types of management support systems, namely: a) Decision Support Systems, b) Executive Information (support) Systems and c) Expert Systems. 3. 15 DECISION SUPPORT SYSTEMS Decision support systems (DSS) are designed to support the decision making process of managers to improve their effectiveness and thereby efficiency of the enterprise. They are based on the premise that managerial judgement cannot be replaced by any computer based solution However, by offering the support of data and models, it is possible to improve the decision making process even in the case of semi-structured and unstructured problems. The basic purpose of DSS is to extend the capability of a manager's decision making process by supporting tools and data made available to him under his direct control DSS neither presupposes specific information requirements and predefined tools for analysis for different types of decisions nor does it impose any solutions on a manager Thus, it gives flexibility to the manager to decide the input data, tool of analysis, depth of analysis and reliance on the outcome of analysis for decision making DSS offers an interactive environment for users and thus permits manager to experiment with data and

models to develop the optimal decision making strategy in a given situation. DSS are also described as interactive information systems that help managers utilise data analysis models to solve unstructured problems. DSS uses tecchnologies that may be termed as its building blocks. Types and features of DSS DSS may be data oriented or model oriented. The data oriented DSSs have greater input of data retrieval and data analysis. The model oriented DSS has powerful facilities for simulation of decision scenarios by estimating the outcome of an action and generating suggestions. In fact, it is difficult to find a DSS exclusively for data retrieval and analysis or, simply, for modeling. In fact, most DSS contain a mix of both types of facilities. DSS have the following features that make them distinct from other types of information systems: DSS does not aim at any specific type of decisions. It has the flexibility of use in various unexpected decision situations. The user friendly interface of DSS makes it different from other types of information systems. Once a manager has used a DSS for sometime, its irregular use does not adversely affect the ease of use. The report generators and graphic facilities in DSS provide better ways of representing the information generated by use of models in DSS. These facilities add value to the information.

 DSS offers any user complete control over the system. The input, method of processing and output are controlled by the user. Benefits from DSS An Information system must have its own justification to be a candidate worth considering for .inclusion in the applications portfolio of an enterprise. The justifications are generally in terms of the benefits in generating information to assist in external reporting and managerial decision making process. The benefit that a DSS can offer includes: Evaluation of a larger number of alternatives as the facilities in DSS reduce the time and effort in collecting and analysis of data for different alternatives. Modelling and forecasting becomes easy for managers using DSS enabling them to get more insight into the business processes. Usefulness in intra-group and inter-group communication because it makes it possible to explain to others, how one has arrived at a particular conclusion. The rationale assigns respectability to conclusions and earns the backing of others in the enterprise. Facilities for quicker analysis of data for unstructured decision making, thereby, improving the speed of response in unexpected decision making situations.

 Quicker spotting of variances and exceptions. Frequent users of DSS have found that DSS enables them to anticipate outcomes with the help of efficient ad hoc query facility. In-depth analysis of data and therefore, more effective use of data resource. Applications of DSS: DSS have found success in enterprises of medium to large size and in decision scenarios requiring in-depth analysis of internal and external data. The success of DSS depends, to a large extent, on top management support, regularity and length of use, training of managers and variety of decision making situations. If the business process is simple and repetitive in nature, DSS may not be able to justify its costs. DSS applied to structured decisions only add to costs and confusion. DSS have been found to be useful in decision areas where flexibility in data and modelling is required for better decision making. The typical areas of application of DSS in production and finance functions of business are: Production: Procurement analysis, cost estimation and analysis, production planning and scheduling, make or buy decisions, inventory planning and control, manpower loading, etc. , Finance: Capital budgeting, financial planning and analysis, tax planning, strategic financial planning, budgeting, cash and working capital management, debt and equity financing analysis, foreign exchange risk management, financial performance analysis, variance analysis, etc. The decision support systems are developed using a process different from the traditional system development process as they are supposed to process internal as well as external data. They need to be independent and interactive.

3. 16 EXECUTIVE INFORMATION SYSTEMS DSS are designed to cater to the information needs of managers at middle to top levels. They relate to rule-based work doing modelling and analysis of data in order to make it useful in decision making. However, at the top of managerial level, there is a need to focus more on packaging and delivery of information than on generation of information. The top manager deserves better environment for information access than that provided by DSS. The top executives need fast access to up-to-date, concise information and exception reports with facilities to personalised information and analysis. The information systems designed to cater to such needs of top executives are called Executive Information Systems (EIS) or Executive Support Systems. These systems act as electronic briefing systems and offer tremendous flexibility in use. EIS uses internal as well as external information and offers an interactive and a user friendly operating environment. APPLICATIONS OF EIS Executive Briefing: EIS offers up-to-date information on different aspects of the executive's interest. The briefing is, generally, rela.jd to the performance of various profit centres and offers status reports on various activities of die enterprise. Though a certain amount of briefing takes place in DSS as well the information conies as and when it is asked for, from the databases. In EIS, the information is automatically downloaded periodically from databases in the form of finished reports. This automatic downloading ensures that executive does net remain out of touch for long during the days of extreme pressure of workload. Personalised Analysis: EIS offers facilities for data analysis using the models of user's choice. Spreadsheets and statistical techniques

are available in EIS for asking. The difference, here, is that EIS not only helps the user in analysis of data, but also in interpretation of the outcome of the analysis. Exceptions Reporting: An important component of EIS is the exception reporting module. EIS caters to this requirement of executives effectively and forewarns the executive of the substantial variations from the plans. They permit, with varying degrees, further investigation into the reasons for deviations and possible impact of proposed salvage operations. This ability to probe into the matter to get a little more than just the exception makes EIS a very useful tool for the executive in the efficient discharge of his functions. Model Based Analysis: EIS has facilities for model basid information analysis and this feature is common with DSS. But, the model based analysis in EIS is different from that in DSS in the sense that the input data in EIS is limiled and obtained from both internal and external sources. It may be noted that EIS is not an isolated collection of computer reports of information for executive. EIS is a set of integrated tools and technologies woven into the total information system environment of the enterprise. It may be noted that EIS supports all the users and not necessarily the top executives of the enterprise. All those who_ help top executives should have access to EIS and it must cater to the information needs of all such people. DSS and EIS: Some of the facilities in EIS are also found in DSS and, as such, the line of distinction sometimes becomes blurred. The overlapping cannot be ruled out in such systems. Benefits of EIS: EIS offers the following benefits to a business enterprise:

a) Information support for strategic decisions: EIS helps executives in relying more 6n!! facts than on intuition and business judgement for their strategic decisions. b) Changing the focus: A top executive's frequent queries regarding a set of critical success factors have an impact on the priorities of people at lower levels of management. Thus, it is easier for an executive using EIS to pass on the message to function managers regarding the need to maintain quality standards, just by making frequent queries from EIS regarding the quality of products. The executive's queries can set the thrust of activities in the enterprise and thus change the priorities in the enterprise. EIS is said to be one of the important information systems that present an opportunity for the top management to get a real feel of the usefulness of information systems in strategic decision making. Such a system in an enterprise, is between also likely to important promote in understanding between top management and IT professionals and improve communication these players development of IT infrastructure. Successful EIS can provide the visibility and credibility to information systems as a whole and help in implementing other information systems in the enterprise. Critical success factors in EIS implementation EIS intends to provide first hand knowledge to top executives regarding the potential benefits of information systems in the enterprise. Therefore it is necessary to ensure that EIS, once planned, must be implemented successfully. The problems of implementation in EIS can be numerous but a few of the common ones are as follows:

a) Difficulty in system specification: The target users of EIS are neither clear about their specific information requirement nor have the time to chalk out the specifications of the information system. The users, thus, deserve a few options to try out before they are able to specify the services required by them. Prototyping is considered to be a better strategy in the design of EIS. b) Large volumes of data: Ad hoc Query facilities demand access to a large volume of data. The satisfaction of such queries may Require use of statistical tools processing bulk data before it can meet the requirement of information in the query. This may take time and the response of the system may be slow. It is, therefore, essential to anticipate the broad issues on which the-queries are likely to focus and information regarding such issues may be regularly generated and stored separately for access to EIS. c) Resistance from lower levels: EIS is likely to face resistance from the people at almost ail levels and more from managers at lower levels. It is so because now the boss has access to latest information regarding the day-to-day functioning in each department even before the departmental heads have gone through and understood it. Rochart anticipates serious implications of such access to databases on the politics of data ownership among the managers. However, a data base manager can address this problem by carefully handling distribution of data.

d)

Management styles: It would be difficult to implement CIS in

the case of enterprises having an IT averse culture. Some top executives do not favour use of IT in decision making. They have more confidence in their business judgment and wish to leave data analysis either to their subordinates or to the domain experts who help them. This problem is quite serious. Therefore, EIS in such environments are aimed at top positions. They are limited, in scope, to services where the success rate is known to be very high. Once the confidence in IT and EIS is generated EIS may add more services to itself e) Increased size and cost: If the manager finds an EIS useful,

he expects his subordinates also to use it. Those who do not use it, find it very difficult to live upto the expectations of their boss in so far as awareness regarding the business environment is concerned. Thus, the EIS gets overloaded and costs climb up sharply because the number of users shall grow in geometric proportions. Thus, implementation of EIS should be undertaken very carefully. It is advisable to select an opportune time for implementation. People resist changes more when the going is smooth and are more willing to try out something new in a crisis. Therefore, the most opportune time of EIS implementation is when people are searching for new solutions to their problems. Pilot installation is considered the most suitable installation strategy for EIS. A selective approach is better in the initial stages of EIS design and new services are added in EIS only after the initial model is successful. User involvement and support are critical in the successful implementation of EIS. 3.17 EXPERT SYSTEMS

The increasing complexities and dynamism in the emerging business environment require greater interaction of functional managers with the experts so as to get timely advice. These experts would not only sift information from vast pools of diverse information, but also use their expertise to offer advice. Traditionally, the expertise available in an organisation has provided an important basis for achieving, improving and maintaining its competitive position. All other things being equal, firms without comparable expertise are at a disadvantage. Human experts may not be able to cope with the new challenges, given the constraints of time and complexities of the new environment. Besides, there may not be uniformity and consistency of advice for a given decision situation over a period. This is so because of the obvious inability of human beings to capture the impact of various decision variables all the time. The Information Fatigue Syndrome and the limitations of human experts in the changing business environment have resulted in increasing popularity of business expert systems (BBS). These systems simulate human activity and keep capturing and systematising business knowledge, extending the decision making capabilities of expensive and scarce human experts, so that others can use their decision experiences. They offer the advantage of flexibility in capturing and representing information of different types in diverse form. A business expert system receives a problem from the user, identifies its data requirements, analyses the relevant data against the decision rules (contained in a knowledge system). Once the problem is solved, the system through its inference engine reports, the solution to the user and is also able to explain its line of reasoning in reaching that solution. A business expert system can act as an aid to managerial effectiveness by providing advice. Its solutions/advices are always consistent, uniform, thorough and methodical. It functions as a standardised problem solver. The business expert system is able

to explain the line of reasoning it uses for solving a problem. A user can stud the rationale and is free to accept, modify or reject the solution. Unlike other expert systems in the field of medicine, engineering, etc. the objective of the -business expert system is not to replace evaluation by human experts) by the computer program. Rather the objective is to acquire the expertise of the human expert and make it available in standardised form to human expert(s) and others in the organization. They work out strategies to use knowledge in the application areas so as to develop plausible solutions to the problems. The typical areas of application of expert system in business include: Make or buy decisions New product launch decisions Determining credit limits Product development Investment counseling Performance evaluation Incentive systems Customer query Project evaluations Production scheduling Routing decisions

Building blocks of business expert systems Although the expert system methodology has been developed over the last two decades,

it is still in its Infancy when viewed from the viewpoint of a business manager. Thus, there is no standard model for a business expert system. Hols apple identifies three basic components of BES namely user interface, inference engine and knowledge system. A user poses a problem before the BES using the user interface. The inference engine tries to understand the problem, structure it in such a way so that the knowledge system can be used to solve it. Then it uses the knowledge system to seek solutions to the problem. The knowledge system consists of stored reasoning expertise and is addressed by the inference engine to seek solutions to the, problem.. The knowledge system may consist of knowledge representation tools such as rule sets, databases, spreadsheets, frameoriented structures, case bases, semantic nets, texts, graphics, etc. The inference engine may interact with users to get more details regarding the decision making environment. Procurement options A business expert system is a complex system and requires long-term commitment on the part of an enterprise to be able to deliver goods. Due to the dynamics of business, the usefulness of the BESs may be reduced because of changes in the business environment. Some of the BESs can become obsolete even during the development stage if they are not properly planned. It is essential to be aware of the procurement options, so that the development time and cost could be reduced and a balance between flexibility and efficiency could be maintained in the system. Broadly, there are three procurement options for BES: a) Acquire a fully developed system: A number of ready-made

BESs are available for different types of problems identified in the list of applications of BES mentioned earlier. These ready-made solutions have all the three components fully developed and are in a ready to use state. They have the advantages of being economical, well tested

arid quicker implementation but in many decision situations they are not suitable. b) Acquire artificial intelligence shell: The artificial

intelligence shell consists of a rule set manager and an inference engine. The rule set manager is provided with the expertise represented by various knowledge representation tools. Once the expert knowledge is represented, it rules set is tested on the past information and once found correct, the shell becomes usable with the help of the inference engine. This option gives the flexibility for a manager to define his own rule sets and get a custom made BES operational in a short period of time. However, such shells that are available in the market have their own areas of applications that they are most suited for. c) Custom built system: In case the first two options appear to

be infeasible or are considered advisable due to the uniqueness of the problem, one may opt for custom made BES. They cost more and take a longer time, but, are very useful in unique or specific kinds of decision making situations. Benefits of expert systems BESs are expensive, both in terms of money and time required to develop them. It is, therefore, necessary to be aware of the benefits of BES so that cost benefit analysis could be done before venturing into acquisition of BES. Following are the potential benefits of BESs: a) Coding of expertise: The significant benefit of business

expert system is that it helps in formalising/codifying the reasoning ability of an organisation. In the process of development of BES, attempts are made to represent expertise in the form of rules, frames; cases, text and graphs. This leads to compilation of knowledge regarding the expertise so far held firmly to chest by the

experts. Such a store of expertise can provide a basis for better training of human experts in the organisation besides leading to better decision making. b) Enhanced understanding of business process: It enhances

the understanding of the decision making process that may in turn lead to improvement in the process. During the development process, the existing ways of decision making are identified and reviewed. This helps in improving the decision making process. Frequent interaction of experts with BES is a great learning process and results in mutual enhancement of each other's problem solving capabilities. c) Timely availability of expertise: BES is able to provide

expertise when a human expert is not available. These systems do not have problems of availability that is quite common among human experts. BESs are available to users for consultations at odd hours, have no prior engagements, do not proceed on leave for one reason or the other and do not resign from the enterprise to join a competitor. d) Easy replication: The marginal cost of replicating a BES is at other places having similar decision making

insignificant Once a BES is successful at one place, it can be replicated environments, without loss of time or opportunity. e) Eliminates routine consultation requests: BES can help a

human expert in reducing his work load by directing the routine type of consultation requests to BES. This enables the human expert to concentrate on more challenging problems that are not solved by BES. f) Consistency: BES offers consistent and uniform advice en

problems. Their advice does not suffer from overlooking some factors,

forgetting some of the steps, personal bias or temperamental problems. g) Line of logic: BES offers a line of logic used along with the

solution. This enables manager to critically examine the solutions and find out whether the line of reasoning used is valid or not This helps the manager understand the strength and weaknesses of the solution and apply his business judgement to arrive at decisions. h) Strategic applications: The benefits of BES help in product and service differentiation and reduced costs. They also help in developing niche markets where competitors without such systems may not be effective. Thus, BBSs can provide the strategic edge to an enterprise. Critical success factors in implementation of BES. The critics of BBSs provide numerous reasons for the impracticability of BES. The criticism in most of the cases is not unfounded. It is essential that the problems relating lo development and implementation are anticipated and necessary precautions are taken to ensure success cf BES. The following factors may be kept in view in this connection: a) Cost effectiveness: Most of the BESs arc very expensive and

sometimes it is economical to use human experts. It is necessary to keep the cost of BES low to ensure that the cost is justified by the potential benefits. The first two procurement options help in keeping the cost of BES at lower levels. b) Selective in scope: The more ambitious BES may require a

longer duration of the development process and heavy costs. It may be remembered that not all decisions offer the same rate of return on investment in BES. One should be selective in including applications in BES and a comprehensive BES, perhaps requires a lot of information system expertise. The artificial intelligence technologies

are still evolving and it may be economically viable to have wider scope for BES. c) User friendliness: BBSs are very complex systems having

powerful techniques for data analysis. They require a lot of training effort before they can be effectively used. It is, therefore, necessary to have more user-friendly user-interface and more explicit and unambiguous menu structures. d) Multi-user environment: Most BES are stand alone systems.

However, many a time, decision expertise is an outcome of collective and group activity. BBS having multi-user environment are likely to be more successful than stand alone systems. What a manager needs to know about BES uses multiples of knowledge engineering tools of which many may be beyond the comprehension of an ordinary functional manager. However, as a user of the BES, a manager need not know the technical details of the knowledge system. What he needs to know regarding BES is: The opportunities for application of BES in one's business activities and relative potential of each application in fomalisation of knowledge. Basic BES technologies and their favourite areas of application Feasibility of using artificial intelligence shell Role of BES in supporting people in their activities Technical and economic feasibility of BES.

The potential benefits from BES are quite fascinating. Perhaps, what is required is to develop cost effective tools for building up the BES and willing participation by domain experts in the development process that is evolutionary in nature. Limitations of business expert systems BESs have proven their potential benefits in many applications and quite a few have been very successful. However, there are a few limitations of BESs. These limitations are due to the assumptions that BESs make regarding: The availability of a willing domain human expert who is able to articulate knowledge and has a proven record in making effective decisions. Such experts are rarely available, particularly in new domains where knowledge is also in a state of evolution. The decision making environment is simple, well structured and not subject to frequent changes. In reality, decision making takes place in complex, dynamic and a multi-dimensional environment. As a consequence, articulating knowledge is very difficult. The BESs lack flexibility that is needed in the light of the dynamics of business. Multi-dimensional decision making environment makes group decision making essential. Getting an expert who understands all the dimensions of the business problems is becoming increasingly difficult. It may be remembered that BESs are well suited for limited type of applications and are not for totally replacing human experts. As a consequence, BESs are losing their popularity. They are considered suitable for limited type of applications. The new artificial intelligence-tools such as neural networks, fuzzy logic, case based reasoning, etc. are being added to inference engines to make them more suitable for changing needs of business. Side by side, attempts are being made to use the Al tools for developing add-on software to

per form limited functions. These add-ons are termed as intelligent agents. 3.18 INTELLIGENT AGENTS Intelligent agents are software components that perform a part of the process using a knowledge base. They work generally with shared information systems and operate in a semi-autonomous manner. These programs communicate with users and the information bases to perform self contained tasks. These programs are integrated into different applications to enhance the information analysis services of the information system. These agents are being used for a variety of applications such as: a) Detection and alarm systems: The intelligent agents are

being used to establish a system of detecting exceptions in the data bases, communication systems, etc. and issuing necessary alarms to the concerned users. 'Management by exception' would find a new dimension in managerial activities when such intelligent agents start delivering information. b) Information search engines: Intelligent agents are also

being developed to function as information search engines for replying to the queries received from different types of users. For example, a ministry may get a number of requests for information, everyday. Intelligent agents can interpret the requests and sift information from the database and send the reply in the appropriate form to the user. Similarly, intelligent agents could add value to the Railways information system by proper management of passenger enquiries regarding various operations. An intelligent agent links the Internet, the internal network and CD-ROMs to search, filter and deliver personalised information. A smaller version of such search engine is already available in LOTUS-NOTES.

c) Desk top applications: As the availability of intelligent agents becomes common on PCs, they would act as personal meeting managers, personal librarians, personal financial advisors, etc. These agents would automatically arrange telephonic contact with clients, fix appointments and issue alarms to ensure that the appointment is not ignored inadvertently These agents would look for write-ups on subjects of interest from Internet magazines and collect information from other sources including electronic libraries and CD-ROMs to provide information that one gets with the help of secretaries, today.

New Information Analysis Tools

Intelligent agents use a variety of information analysis tools. These tools not only, sift information from heap of data but also deliver the information in a meaningful way. The important among these tools are data mining, data mapping, data visualisation, neural networks, etc. a) Data mining: Data mining refers :o examination of large of data for trends and patterns, establishing cross

volume

relationships among various factors that may hitherto remain hidden in the heap of data. It involves drill down techniques to break down higher level figures (may be summary figures) into lower levelfigures. The traffic lights' provide alert signals when exceptions are encountered. Data mining finds its applications wherever there are complex and subtle relationships between individual products or services that are not easy to identify but have significant implications for revenues and profitability. A notable feature of data mining is that it analyses the entire available data instead of picking up samples for analysis.

Data mining made its debut in retail commodity marketing and it was quite natural. However, it has applications in other business activities as well. It can help managers establish relations among various factors influencing different decision variables. Data mining as a technique is still in its infancy. It holds a great promise particularly because it can help in identifying opportunities and enable managers to react quickly to the current opportunities and impending dangers. b) Data mapping: Data mapping tools provide graphical view of

the information superimposed on a map of geographical area or territory. They can provide quicker view of the geographical spread / concentration of the demand for the products and customers' preferences, expectations and market sentiments. They can also help in identification of local factors influencing market behaviour at different points of time. Such mapping tools can be of great help in improving comprehension of voluminous data information as it has been found that a large proportion of data stored is ge: graphical in nature. However, mapping tools need to be enriched with more details regarding the characteristic features of each geographical area and the associated similarities of neighbouring areas. c) Data visualisation tools: These tools primarily aim at

representing data with the help of three dimensional visuals. These visuals may be histograms that may be navigated for further details of its component data, with the help of; any pointing device like mouse. The visual may take more imaginative shapes such as spherical balls of varying sizes and colours or any other shape that may be directly related to the subject matter or behaviour of data. Data visualisation tools have the ability to summarise data in such a way that the users take less time to visualise the situation. It helps in focusing on the currently relevant part of data and enables the user to explore for more in case it interests him. Data visualisation

techniques should also help in simulation, sensitivity analysis and answering 'what if questions. To get a glimpse of their applications in financial management, let us take an example of the classical ratio analysis for measuring the performance of an enterprise. Ratio when used carefully, can contribute a lot in providing an insight into the state of affairs. But, a large number of ratios relating to an enterprise with varying interpretations when compared with industry and country ratios would be too cumbersome and resist comprehension of intricate relationships. Visualisation techniques can help in putting them in the right perspective. A three dimensional visual putting the values in the form of coloured balls/boxes and the components lower level values contained in the bigger balls representing high level values can help in better understanding of relationships and comparison with corresponding industry and country standards. For example, a banking company yield on performing assets may be calculated and shown along with the concerned values of Cost of funds; Market interest rate; interest tax/other taxes, Asset mix; and Financial risk along with the industry ratios in the form of two dimensional table or array of ratios. Alternatively, the company's ratio is shown as a ball on a colour monitor along with the industry's ratio in distinguishing colours and proportionate sizes. By hitting with the help of a mouse at each ball, the user car, break open the ball to give five additional balls. Each one of these balls represents one of the factors listed above. The sizes of these balls are associated with their relative significance in determining the value of yield on performing assets, both for the company and the industry. d) Genetic algorithms and neural networks

Genetic algorithms are also being recognised as effective tools for analysis of financial data. These tools establish decision rules and patterns from the past data and help in hypothesising various situations. With the availability of advanced tools of fuzzy statistics and high speed computing facilities, genetic algorithms are now finding new applications in financial modelling.' Neural networks try to emulate human brains with the additional strength in arithmetic accuracy in processing large volume data using complex algorithms. These net-works when confronted with relevant data, dig out patterns in data and develop models, test them, forecast future events and learn from mistakes.' These intelligent agents have the potential of enabling managers to anticipate changes in business environment more promptly so that they can change their strategies well in time. In this way, they help in improving the adaptability of the business processes. Most of these tools try to analyse information on real time basis and thus the most recent scenario is presented to the manager without much of technical analysis done by himself. Software giants like Oracle, 'Cognos and Comshare' have

started offering intelligent agents as add-ons with their traditional application products. Some of the others offer independent software tools Tor data management, modelling and information presentation. However, at present, these tools are very simple and in their primitive form. 3.19 RECENT DEVELOPMENTS IN INFORMATION TECHNOLOGY In our hectic life in this fast moving world information technology is making our life easier. In a fraction of a second many

number of developments are taking place in the field of information technology. Some of them are listed below. PERSONAL ACCESS SYSTEM (PAS) PAS is a widely deployed and highly successful wireless access platform based on the PHS (Personal Handy Phone System) standard, a TDD - TDMA based low-tier micro cellular wireless communications technology operating in the 1880 to 1930 MHZ range. PAS offers you more advantages than what you get as a basic telephone subscriber. The technology gives a complete set of basic and supplementary voice and advanced data services, which makes possible simple and rapid service deployment You can easily add and delete subscribers and maintain entailing low operational expenditure. THE PAS SCENARIO

The modular and scalable feature of the technology makes it viable in different topologies, with cost - effective solutions. These features will replace your conventional coreless by a telephone instrument that is comparable to the smallest cellular phones available in the market The system comprises of compact, lightweight, remotely owned base stations called 'radio ports' that can be mounted on your telephone poles or on one side of a building, deployed at strategic locations through the network. The result is a wide variety of economical subscribers. Services offered by PAS platform are basic voice services supplementary voice services, SMS, Mobile internet access, e mail services, etc.

TOOTH PHONE

British engineers James Auger and Jimmy Loizeau say they have invented a 'tooth phone'. The tooth implant works like a mobile phone and looks like the devices shown in spy thrillers. The 'tooth phone' has a tiny vibrator and a radio wave receiver implanted into the tooth during normal dental surgery, the implanted does not yet have is own microchip but Auger says the technology ha been tried and tested, and a Working phone could be set up any time. "With the-current size of microchips is feasible. They are how small enough to implant in the tooth", he said. Sound enters the tooth as a digital radio signal and is transferred to the inner ear by bone resonance. This makes it possible for information to be received anywhere, anytime, without anyone overhearing it. With the tooth phone, financial traders can get the latest stock market bulletins during a movie and politicians can hear tips discreetly from advisers while being quizzed by rivals. AFTER THE NET IT'S THE GRID

Today, the internet is changing to become a computing platform called the Grid. It means that when you boot up your PC or some other internet - enabled device, you will have access to not just your desktop resources but also to a much more, powerful virtual computer, which is an aggregation of computing power, store, applications, .data, I/O devices and so on, distribute all over the net.

Grid computing takes the internet evolution to the next logical step, allowing the creation of virtual organisation that share resources among multiple entities, something that the scientific and educational community ahs already started doing. The attraction o Grid computing to commercial organisations is this: -the opportunity access greater computing power at a fraction of the current, cost -of technology. Reason enough for any CEO or CFO to give Grid computing a second look. E-MONEY

Digital money is the ultimate and inevitable medium of exchange for an increasingly worried world. With e-cash, you will no longer need to carry a wad of bills in your pocket or hunt for exact change. Instead, you might carry a credit-card-size piece of plastic with an embedded microchip that you will 'load' up with e-money you but with traditional currency. Or, you might store your digital coins and dollars - downloaded over-phone lines from your, bank or, other issues of e-money on your PC or in an electronic 'wallet', a palm-size device used to store and transmit e-money. This digital money will let you shop online, sending money to a merchant over the internet, or perhaps paying for a movie on demand over an interactive - TV network. A theory has been put forward that there will be at least one universal currency that can be used on any website. or at any shop anywhere in the developed world. As the internet gradually becomes the standard platform for most commercial activity, this global currency will soon become the currency of choice, causing the dollar, euro and yen to disappear.

In a world of strong electronic signatures, encryption, and integrated systems, there may no longer be any need to put money in a bank and many people may choose not to do so, keeping control of it themselves. Banks will be force s to add many new services or go out of business. With every bank today laying great significance on online transactions, that is bound to become a reality. WIRELESS INTERNET SERVICE The answer to mobile Internet access is WLAN standard 802.1 Ib. This will help the laptop users to connect directly to a local area network at 11 mbps while enabling the viewing screen and capability of your laptop. It means you can access the internet anywhere, without the need the internet anywhere, without the need for wires or cables.

BRAINY CAMERAS In about half a second, the human brain will analyze its current environment, and then deride whether or not one thing or another is worth taking any notice of. Exactly how the brain does this is still somewhat mystery, but we do know that the more sensory input provides, the more likely the brain will pay attention. Researchers arc now hard at work building computer programs that can function in the same way. Now there's a camera in the works that uses a computer simulation of this specific brain process, and is close to mimicking it. Funded by the office of Naval Research, researchers at the University of Illinois have built a movable video camera that is aimed at targets detected by a stationary view camera that watches for motion ,a and microphone pair that listens for sound.

These in turn are linked to a standard desktop computer that has been programmed with a simulated neural network. This neural network mimics how the human brain's superior colliculus does its mental mapping, and then uses sound and sight to put in all in perspective. BURN OUT

Tens of thousands of microchips used by large Internet companies suck up electricity nearly as quickly as power plants can produce it. A single server farm can slurp a staggering 150 megawatts, about a quarter of the entire output of an average power plant. There's another problem, too. Almost all the power tat flows into a microprocessor flows back out in the form of heat, and chips are getting too hot to handle. Today's high-performance microprocessors give off roughly three times more heat per square centimetre than a hotplate so where can engineers make savings? Ironically, the best approach to making chips more efficient is to install in them the habits of lazy people. Thus the microprocessors of the near future are likely to, put things off to the last nanosecond, work only as hand as they have to, juggle several tasks at once and doze off whenever they can get away with it. The first of the slothful silicon chipshave just hit the market and use only a faction of the power consumed by standard microprocessors. And researchers are even working on chips that need no electrical power at all. COMPUTER CAN FOLLOW YOU EVEN WHEN YOU'RE OUT OF SIGHT Researchers at the University of Amsterdam (UVA) have come up with.-a method of video manipulation which makes it possible to

follow an object even if its contours change or it moves out of sight. The system is based on computational rules that can be carried out on a PC. The program looks for parts of an image that are the same way. These parts together form an object, for example a person, animal, car or plane. The program has no difficulty dealing with a multi-coloured object in motion because all the points move in the same sight. The new method unravels view images into separate objects that can be cut, altered and analysed. Pervious video manipulation systems were only able to alter colours to some extent or to cut a recording into individual sections that can be edited into a different order. AUTOMATIC INTERNET PC ACTIVITY RECORDER Recognizing that internet filtering, software is inadequate and inconvenient, spector-soft decide that the best way to put parents in control is to allow them to .see exactly what their kids do on the copter by recording their actions. With spector, a parent sees everything the child sees. If a child tries to change the parents' checking account, or visits adult-oriented web sites, or is approached by a stranger on the internet, the parent will be able to see that by playing back the recorded screens. Internet filters don't solve the problem. They fail to-filter out all the ad. stuff, and they prevent users from doing completely legitimate tasks by producing far too many false positives", states Doug Fowler, Vice President of marketing for spectra soft. "In addition, filtering programs require constant updates, and that is extremely inconvenient. Spector dissent try to stop the user from direction. The program uses the pervious images to continuously predict what an object looks like, even if it is out of

doing a by thing. Instead, it records their actions. That places the issue of responsibility directly on the user. When a child or employee knows their actions my be recorded and viewed at a later point in time, they will be much more likely to avoid inappropriate activity. SMART QUILL: COMPUTER PEN THAT RECORDS WHAT YOU WRITE. Researchers have unveiled a futuristic 'computer pen' that stores in its memory what the user is writing. The prototype, called smart quill, has been developed by World leading research laboratories run by BT (formerly British Telecom) at Martlesham, eastern England. It is claimed to be the biggest revolution in handwriting since the invention of the pen. The stylish device, unlike conventional handheld computer, has no keyboard. It links to a printer, mobile telephone, modem or a personal computer via a special electronic in well, allowing; handwritten notes to be stores on its hard disk. It can function as a diary, calculator, calendar, contacts database, alarm, note taker and calculator and can receive e-mails and pager messages. Unlike the Apple Newton, which also uses a pen, the Smart quill does not need a screen to work. The really clever bit of the technology is its ability to read handwriting not only on paper but on any fiat surface horizontal pr vertical . A tiny light at the tip allows writing in the dark. Smart quill can even translate invisible writing in the air this is achieved through a unique technology called accelerometer that monitors hand movements and can also be used as a 'virtual hinge'

to scroll around the small screen on the pen and detect left or righthanded use. COMPUTERS CONTROLLED BY THE HUMAN EYE

Soon computers and any other household devices will guess the owner's will by a slightly sent gesture or a processed brow. The first thing to understand the meaning of owner's face expression is that the computer needs to see the face. For that it must be equipped with a view camera, preferably colour. Secondly, it needs a database of standard images. The third component is a special program, which can catch the image from the camera and watch the changes. Imagine a situation, when a man controls a computer with eye movements. In this case, the database is to contain eye images. The camera takes a face expression of the man, who is sitting by the computer and transfers it to the program. The program scans the image, compares it with an eye model from database and finds the region on the face, which looks similar to the model eye. Further, the program will only watch that region. It means that the program will compare every new image with the previous one and perform corresponding actions. For example, if the man has turned, the eye image on die face has changed. However, that change was smooth and has taken several frames, so the program could count that the eye image now looks somewhat different. If the eye has completely gone out from the view, then the program will look for it in next frames by comparing them with the model. NEW COMPUTER SYSTEM BEATS HUMANS AT GUESSING GENDER FROM FACE AND VOICE CUES A new computer classification system developed by pen state computer scientists can correctly identify a person's gender based

only on eyes, nose, mouth and voice cues better than human beings can. The new system, which is the first computer system to combine both face and voice cues, has potential for use in security systems, market research and human/computer interaction systems as well as other applications. For eg. the systems could be used to signal when unauthorized individuals tried to enter a restroom, fitting room or dormitory. Law enforcement agents or private citizens could also use it as part of a system designed to scan videotape to find images of a particulars individual. The new system could also be used to collect market research data automatically, for eg. on how many women and how many men sat behind the wheel of a specific car at a car showroom or selected white versus red chrysanthemums at a garden center. NEXT UP FOR WIRELESS COMMUNICATION: THE COMPUTER CHIP ITSELF The Silicon chip may soon join the growing list of devices to go wireless, a development that could speed computer and lead to a new breed of useful products. A beam of researchers headed by a university of Florida electrical engineer has demonstrated the first wireless communication systems built entirely on a computer chip. Composed of a miniature radio transmitter and antennas the tiny system broadcasts information across a fingernail - sized chip. The fastest chips on the market, used in the Pentium at a speed of 2 gigahertz, meaning they perform 2 billion calculation per second, already achieved on an experimental basis. Many experts believe even 100-gigahertz chips are feasible.

The increase in speed will be accompanied by an increase in chip size. While today's average chip is about 1 square centimetre, or slightly under half an inch, the faster chips anticipated in the next two decades are expected to be as large as 2 or 3 centimetres, or about 1.2 inches on-each essential the same time. RESEARCH COULD ACCELERATE COMPUTING TO SPEED OF LIGHT Researcher at the university of Toronto have discovered a new technique to form tiny perfect crystal that have high optical quality, a finding that could usher in a new era of ultra-fast computing and communication using photos instead of electrons. These crystals called photonic crystals, could greatly improve both speed and bandwidth in communication systems. . RESEARCHER RELEASE COMPUTER INTRUSION DETECTION SYSTEM WITH CONFIGURATION COMPONENTS A team of computer scientists at the University of California at Santa Barbara (UCSB) have created and released a comprehensive computer intrusion detection system - a powerful tool to counter cyber - terrorism. We are all familiar with Cyber assaults caused by infections agents such as warms, viruses and the flooding that leads to denial of service. Worms, such as the recent Red, are self-contained infections agents, while viruses attach to another program. Denial of service attacks, like those on CNN among others in Feb 200, flood servers with spuricous service demands leading to denial of request by legitimate users.

So far, the worms, viruses, and denial of service attacks that have made headline have been also missions devised by hackers to create mischief. THE NEXT GENERATION OF COMPUTERS WILL BE TIMELESS

Time is running out for the clocks that make our computers tick. Scientists have developed a new generation of hardware and software based on the simpler designs of the 1950s. Asynchronous, or clock-free systems, promise extra speed, safety, security and miniaturisation. The new designs work well in the laboratory and are only awaiting the development of software tools so that they can be produced commercially. Because computers of the 1050s were relatively simple, they could function without clock. Since the advent of faster and more complex systems in the 1960s all hardware design has been based on the principle of the clock a micro electronic crystal which emits rapid pulses of electricity to synchronise the flow of data. In modern PCs, this is at the heart of the Pentium Processor. But computer systems are now so complex that clocks are imposing limitations on performance. The electrical pulses, travelling at the speed of light, are not fast enough to keep accurate time as they visit tens of millions of transistors on a single chip. The result is that errors begin to occur in data. The phenomenon is known as metastability, a fundmental and insoluable problem which is causing increasing difficulty for designers who have to balance the demand for speed and-complexity of systems with the need for reliability.

PIXIE ROBOTS

The robots of the future will be hand at work, but their supervisor may need a microscope to keep tables on them. There mini robots currently under development are being designed to make nearly 10,000 movement per second. Researvher at the Massachusetts Institute of Technology ( MIT) envision fleets of wireless robots, each no bigger than a coin, performing all sorts of manufacturing tasks on a molecular scale. These robots, dubbed 'Nauo Walkers', could be put to work for synthesising new drugs and chemical, inspecting DNA, and aiding a wide range of biology and biotechnology research projects. When most people think of factory robots, they probably have in mind the kind used on Car-manufacturing assembly lines. But most robots employed today are performing minuscule tasks behind the scene in other industries. The Nano Walkers are controlled via an infra red link is installed in their bodies. A Camera monitors their position and directs them to general location of their work, usually on a tabletop. Nauo Walkers are currently in the research phase, and MIT is seeking partners to lest them in the workplace. POCKET YOUR PRINTER The Korean venture company woosim system Inc has

developed a portable mini-printer that can print documents from mobile devices even while conducting business outside the office. The palm-sized (138 x 88 x 24 mm ) printer is small enough to slide into the inner pocket of a jacket. It can be applied to various fields of

business, including point of sales, retail, transportation, warehouses and distribution. WRIST CAMERA WATCH We needn't keep things at our fingertips from now on. We can use our writs watches, instead. Because watches don't simply tell time anymore. They snap digital photos. They control the stereo and the television set. They measure barometric pressure, record 30second messages, deliver stock quotes and weather reports from the internet.

UNIT -4
4. I COMPUTERS AND COMMUNICATION An insight into the design of management information systems can be gained by considering three types or classifications of application. We are not concerned with the many classifications by function or process (e.g., payroll, purchasing, inventory control), but rather with those where batch (cyclical) processing is used applications that utilize the on-line or real-time capability of modern equipment, and applications designed primarily for making or aiding decisions. The state of the art in these applications and the effectiveness of each in providing management assistance for planning, operating, and controlling are important factors to consider when designing or modifying a management. information system. The characteristics of the three types of application can be compared:
Type of Application Batch Degree of Implementatio n Greatest Greatest Use Integration of Decision making Very limited subsystems Planning Orientatio n Historical and accounting Decision assistance Moderate Poor Integratio n of Database Limited Decisio n Making Limited

BATCH PROCESSING APPLICATIONS Batch processing is the classical method of processing data and is far and away the most frequently used MIS application. It entails the cyclical processing of input information in "batches." The time it takes to process the data and receive an output is known as "turnaround" time. The batch processing of checking accounts in commercial banks is a good illustration of this type of application. The turnaround time, or the minimum unit of time in processing checks, is one business day, since a depositor's account is considered satisfactory if it has a positive balance at the close of the business day. Thus, checks received from all sources are proved and sorted for processing against customers accounts. The checks are "paid" by posting to accounts after they are sorted to the accounts on which they are drawn. Any checks that cause an overdraft by reasons of insufficient funds may be charged back to the source from which it was received. Most applications in the batch processing category involve the automation of routine functions, deal primarily with the data of the accounting system, and are oriented to record keeping and historical information. Most, but by no means all, of these systems are used for (1) payroll, (2) accounts payable, (3) customer billing, (4) general ledger, and (5) accounts receivable. Because most of the cost of maintaining information in a company is for the batch processing type of application, these systems offer perhaps the greatest potential for reduction of information handling costs. Because of the relatively larger amount of ^experience with these applications, considerable advances have

been made in such large-volume, self-contained applications as payrolls, inventory control, accounts payable, and customer billing. Some of the more advanced work on improving batch processing applications involves the integration of such separate but related applications as the integration of inventory control and purchasing. Additionally, considerable advance has been made in the database concept of these applications whereby multiple applications are obtained from single-source, single-file integrated data bases. One consideration to keep in mind when developing batch processing applications is the subsequent difficulty involved in integrating a database from a variety of batch processing systems that were independently developed. REAL-TIME APPLICATIONS

Compared with batch processing, the real-time applications are very few, but they are highly publicized because of their exciting nature and their great potential for the future. These applications feature the computer's exciting capability for direct and instant access in which a dialogue is carried on between computer and user. Most current real-time applications are little more than on-line versions of previous systems, and most are primarily one-application oriented, with little integration between subsystems. Characteristically, this type of application features remote terminal access with data, transmission through telephone lines or some other means. Illustrative of real-time applications are those systems for airline reservations, room reservations, work-in-progress control in plants, inventory status ordering and reporting of geographically dispersed distributors, and credit status interrogation for a variety of users.

Real-time operation can be defined as data processing in parallel with a physical process so mat the results of the data processing are immediately useful to the physical operation. This definition causes some difficulty because of the varying elapsed times required to complete a transaction and the varying time required for data processing to be immediately useful. To illustrate, we can say that real time, the case of an airline reservation system involves the processing of an answer while the customer is on the phone. On the other hand we have systems that scan and match workers' identification badges and job tickets on a real-time basis but wait days or weeks to process paychecks. Generally speaking, real-time systems have these three characteristics: (1) data will be maintained "on-line," (2) data will be updated as events occur, and (3) the computer can be interrogated from remote terminals or other devices. There is some doubt whether managers really need this capability in 'more than a small fraction of their daily information needs. As a practical matter, more systems with real-time capability utilize both the batch processing and real time modes for their operations. For example the U.S. Bureau of Employment Security management information system, the organization of the central data bank and the capability of the system to service many remote users by terminal. Users can "interrogate" the system as desired. Perhaps the best known real-time application is the airline reservation system. DECISION APPLICATIONS

Although spectacular breakthroughs have been made in computer applications for command and control decisions, similar uses for management problems are few and quite limited. Nothing approaching decision systems such as the SAGE (Semi-Automatic

Ground Environment) air defense system or the ones that guided Apollo's flight to the moon and the Columbia space shuttle flights have yet been designed for business use. Computer applications that make and execute low-level, routine decisions are relatively frequent. Examples are inventory reordering and certain types of production scheduling. However, for higher-order top-management decisions, available applications involve much interaction of the decision maker with the computer. This type of operator-machine interface may be called computer assisted decision making. The primary reason for lack of progress in higher-level decision "making by management information systems is the difficulty of defining decision rules' for business problems. Although management science techniques have been success fully applied to discrete parts of business activity, their application to higher- management decision processes is still an item for further research. Indeed, applications at higher levels are the forthcoming frontier of computer applications. With regard to computer-assisted decision making, several surveys indicate that the effectiveness of current and near-term applications in assisting management is, at best, below average. However, the majority of firms plan to devote a major share of computer effort to computer-assisted decision making for management in the future. One, of the most rapidly growing applications for computer-assisted decision making is the simulation or model. The corporate model enables management to (1) reduce the time required to react to change, (2) evaluate alternative courses of action with a full knowledge of all pertinent -actors, and (3) make longer-range plans by taking longer looks into the future. By posing "what if questions to

the model, the decision maker can explore different alternatives and weigh the consequences of each. In other words, he can simulate the effects of many decisions without having to wait for the results of the decisions in "real life." A simulation utilized very effectively by Moore McCormack Lines, Inc., for scheduling and routing cargo vessels. Two alternative means of varying inputs will illustrate the model. Assuming that some parameters are fixed (i.e., current, fleet, freight rates, commodity volumes, origin and destination patterns, operating costs), the following inputs can be varied to determine their effect upon operations: schedule patterns, vessel assignments, and decision rules. On the other hand, the decision maker can assume that modes of operation are fixed and can then vary, the following inputs to determine their effects: freight rates, annual, volumes, operations costs, and origin and destination patterns. Under each of the foregoing assumptions and variations of fixed parameters and inputs, one valuable output from the model is a financial statement indicating the performance of each individual vessel based on the assumptions put into the model. 1.2 GLOBALIZATION OF THE ECONOMY- GLOBAL VILLAGE The 1980s will be remembered as the era of economic globalization. Competition became global with emerging industrial nations offering lower-cost or higher-quality alternatives to many products. American businesses suddenly found themselves with international competitors. On the other hand many American businesses have also discovered new and expanded international markets for their own goods and services. The bottom line is that, most businesses have been forced to reorganize to compete globally.

A related phenomenon has been the trend toward industrial consolidation. Business headlines have been dominated by news of corporate mergers, acquisitions, and partnerships. In many cases, these acquisitions were international or intended to stimulate internationalization of products-arid services. How does economic globalization affect systems analysts? First, information systems and computer applications must be internationalized. They must support multiple languages, currency exchange rates, international trade regulations, accepted business practices (which differ in different countries), and so forth. Second, most information is systems ultimately by the require information language consolidation for performance analysis and decision making. Such consolidation barriers, complicated exchange aforementioned transborder currency rates, information

regulations, and the like. Finally, systems development itself is complicated by the need for systems analysts who can communicate, orally and in writing, with management and users that speak different languages, dialects, and slang. Opportunities for international employment of systems analysts should continue to expand. Another international business trend will have an increasingly significant impact on systems analyststhe outsourcing of the programming effort. Traditionally, systems analysts wrote business specifications and technical designs to be implemented by local applications programmers. But many businesses have discovered that other countries offer competent contract programming services at a fraction of the cost of traditional programmers. Hence, they outsource the programming and testing work overseas. But this outsourcing option creates new pressures on the systems analyst whom provide extraordinarily complete, consistent, and precise specifications to the contract programmers - to a degree never before expected.

Empowerment Many organizations have responded to the above-described business trends by downsizing their workforce. In particular, most businesses targeted middle management as a source of bureaucratic inefficiencies and high costs. As a result, there are far fewer managers than in any recent era of business. Given fewer managers and the same amount of work (or more), remaining managers have been forced to rethink decades of management style based on authoritative chains of command. In its place, die, new watchword is empowerment. Empowerment is the business trend of driving the authority to make decisions downstream to nonmanagers and teams. Through empowerment, individuals and teams are allowed to make decisions that would have normally required considerable bureaucratic approval. To succeed, the remaining managers must make every effort to encourage this decision making, and also stand behind the decisions. The team must also be held accountable for the decisions made. This will increasingly be accomplished through a compensation approach that puts some percentage of everyone's salary at risk, meaning dependent on the team or organization's performance. Systems analysts can expect greater degrees of empowerment in their assignments. More importantly, empowerment will stimulate the user community to play more active and participative roles in systems and application development projects. 4.3 ONLINE INFORMATION SYSTEMS

The

study

of

information

systems

through

broad

band

connection, satellite, a network or through a view chat This online information systems provides information about all aspects. Information providing on the demand of the subscriber. This online information systems may be of study program, a graduation program or sharing of data through internets, extranet and internet. SHARING OF DATA The data base store data and information extracted from selected operational and external databases. The database has most needed info-nation by a manager or any end users. This database can be accessed by the ONLINE ANALYTICAL PROCESSING (OLAP) systems. This network model can access a data element by several paths. In an organisation departmental records can be related to more than one employee record. Thus in an organisation data can be shared through internet, intranet and extranet. ONLINE LEARNING XLRI-A CASE STUDY This online information system provides online courses through internet, broad band satellite connection.

The recent online course is provided by XLRI, (Xavier Labour Relations Institute) joined hands with Hughes Escorts communication limited. Their main course is on BUSINESS MANAGEMENT. Hughes Escorts is the Indian Operations of US - based communication major, Hughes network systems, which is a wing of Hughes electronics. This job is being done by Directing Global education which is joint venture between Hughes network systems and one touch knowledge systems. This job arrangement with Hughes Escorts to offer Management training on satellite platform will take the expertise of XLRI faculty beyond the borders of their concern. This information has live videos, voice and data transmission to classes through Hughes broadband satellite network. Interaction is through voice and data. This course is conducted across through four metros, Trichy, Bangalore, Hyderabad, Chandigarh, Pune, Kochi, Coimbatore and Madurai. This course is targeted at working executives. COUNTRY STUDIES

This country studies by online service is from 1988 onwards. In this, the study of every country is made. B-B (Business - Business E-Commerce). Despite all the buzz, we still don't know about what makes B-B. There is a growing realisation that

B_B will take years to mature, and the rate of adoption even if companies deliver a huge value equation improvement - will be gradual because it requires systems and individuals to act in fundamentally new ways. The next thing after B_B s enabling technologies to incorporate more sophisticated back-end integration systems, financing options and logistical support. In India, NASSCOM puts the value of online B-B transactions at Rs. 400 crore in 1999-00 of total E - Commerce of Rs.450. But the question is how much B-B E-Commerce is really Happening in India? It is hard to quantify in terms of real numbers with no established data available in specific reverence to the Indian context. But there is a possibility of this business assuming a huge proportion in future. B-B has been happening all through and a new channel has been opened with the advent of the Internet. Obviously organisations will switch over to this channel for the cost - effectiveness it provides. The market is emerging in the country and it will be a boom time in the next year. 4.4 INTRODUCTION TO INTERNET One of the most significant developments in the late 1990s that has changed the perspective of present day manager is the emergence of information superhighways. As the highways carry the traffic to far- flung areas at a high speed, the modem information super highways carry information all over the globe. These information superhighways carry a variety of information like numbers, text, graphics, voice and full-motion video. The present

day, global information superhighway is popularly known as Internet or simply the Net. The Internet means different things to different people. It is so because it has a variety of applications and it offers an ocean of opportunities for business. In short, Internet is an abbreviation for the Inter network system, that-is, a network of computer networks. It was during 1969, when the US Department of Defence, through their Advanced Research Project Agency (ARPA), developed a net work of computers using telephone lines and named it ARPANet, the seed of Internet The ARPANet allowed access to various academicians and military personnel through their sites located at different places. With gradual advancement in networking technology' and availability of lot of information on the ARPANet, more and more computers started getting connected to it. A critical minimum mass for the Internet was ready In 199O, ARPANet came to an end and the Internet became the most potent and uncontrollable communication force to reckon with. The Internet is a unique network. It is not administered by any international body Instead, there is a voluntary society of Internet users called Internet Society, that aims at promoting global exchange of information through the Internet. Its Internet Architect Board (JAB) is responsible for the technical management and directing the Internet. The entire support to Internet comes from the Internet enthusiasts who volunteer to contribute their mite in its growth. The Internet architecture has three basic layers, namely, Internet Backbone, Internet Service Providers and the end user. The Internet backbones are high speed networks connected to each other and Internet service providers are connected to any one of the backbones with high speed data transfer lines. The end user, generally, dials up the Internet service provider to gain access to the Internet.

INTERNET SERVICES A variety of services are available oh the Internet Some of the popular ones that have business applications may be classified as: File transfer protocol (FTP): FTP is a tool used to transfer information contained in files from one computer to another. E-mail: The electronic mail (e-mail) is a parallel mail service, similar to the post office service, that carries messages between users. E-mail can reach its destination anywhere on the earth within few seconds to a few hours. Chat Internet: Chat is a multi-user, real-time communication sys tern that enables multiple users to take part in conversation over the Internet Bulletin board service (BBS): The bulletin board service is a kind of broadcast service that permits people to express their views to other Internet users and promote free exchange of opinions in public. INTERNET WORKS When two or more networks are connected, they become an internet work, or internet Individual net works are joined into internet works by the use of internetworking devices. These devices which include routers and gateways. The term internet (lowercase I) should not be confused with the Internet (uppercase I). The first is a generic term used to mean an interconnection of networks. The second is the name of a specific worldwide network.

Figure.

Internet work (internet)

World Wide Web ( WWW) The World Wide Web is repository of information spread all over the world and linked together. The WWW uses the concept of hypertext. In a hypertext environment, information is stored in a set of documents. The documents are linked together using the concept of pointers. An item can be associated with another document using these pointers. The reader who is browsing through a document can move to other documents by choosing (clicking) the items that are linked to other documents. A hypertext available on the Web is called a page. The main page for an organization or an individual is known as a homepage. Information about one specific subject can be undistributed or distributed. In the first case, the whole information may consist of one or more Web pages on the same server. In the second case, the information is made of many pages distributed on different servers. Uniform Resource Locator (URL)

If a client needs to access a Web page, it needs an address. To facilitate the access of documents distributed all over the world, WWW uses the concept of locators. The uniform resource locator (URL) is a standard for specifying any kind of information on the Internet. URL defines only three things: method, host computer, and pathname. Method The method is the protocol used to retrieve the documentThere are several different protocols that can retrieve a. document, among them gopher, FTP, HTTP, news, and TELNET. The host is the computer at which the information is located. However, the name of the computer can be an alias. Today, Web pages are usually stored in computers given alias names that usually begin with www. Path

Path is the pathname of the file where the information is located. Note that the path can contain slashes that separate directories from subdirectories and files in the UNIX operating system. Browser Architecture

There are many commercial browsers that interpret and display a Web document. Almost all of them use the same architecture. The browser is usually is made of three parts: controller, client programs, and interpreters. The controller gets input from the keyboard or the

mouse and uses the client program to access the document After the document has been accessed, the controller uses one of the interpreters to display the document on the screen. The client program can be one of the methods (protocols) described before such as HTTP, FTP, gopher, or TELNET. The interpreter can be HTML, CGI, or Java, depending on the type of document Documents in the World Wide Web can be grouped into three broad categories. The category is based on the time when the contents of the document are determined. Static Documents

Static documents are fixed-content documents that are created and stored in a server. The client can only get a copy of it; in other words, the contents of the file are deter mined when it is created, not when it is used. Of course, fee contents can be changed in the server, but the user cannot change it. When a client accesses the document, a copy of the document is sent. The user can then use a browsing program to display the document. HTML Hypertext markup language (HTML) is a markup language for writing Web pages. It is called a markup language because the only thing it does is let the browsers format the Web pages. The idea came from the book publishing industry. Before a book goes for its final printing, a copy editor reads the manuscript and puts a lot of marks on it. These marks tell the designer how to format the text For example, if the copy editor wants part of a line to be printed in boldface, he or she draws a wavy line under that part; if the copy editor wants a part of the line to be in italics, he or she draws a straight line under it.

Let us explain the idea with an example. In HTML,, to make a part of the text to be displayed boldface, we must include the beginning and ending boldface markup tag in the text. The two marks, <B> and </B>, are instructions for the browser. When the browser sees these two marks, it knows that the text must be boldface. A markup language like HTML allows us to embed formatting instructions in the file itself. The instructions are stored with the text. In this way, any browser can read the instructions and format the text according to the workstation being used. One might ask why we do not use the formatting capabilities of word processors and create-text that is already formatted and save this formatted text. The answer is that different word processors use different techniques or procedures for formatting the text. For example, imagine that a user creates formatted text using a Macintosh computer and stores it in a Web page. A user who is using an IBM computer is not able to receive the Web page because the two computers are using different formatting procedures. Using HTML lets us use only ASCII characters for both the main text and format ting instructions, in this way, every computer can receive the whole document as an ASCII document. The main text can be used as the data, and the formatting instructions can be used by the browser to format the data. Dynamic Documents Dynamic documents do not exist in a predefined format. Instead, a dynamic document is created by a Web server whenever a browser requests the document. When a request arrives, the Web server runs an application program that creates the dynamic

document. The server returns the output of the program as a response to the browser that requested the document. Because a fresh document is created for each request, the contents of a dynamic document can vary from one request to another. A very simple example is get ting the time and date from the server. Time and date are types of information that are dynamic. They change from moment "to moment. The client can request that the server run a program such as the date program in UNIX and send the result of the program to the client. CGI Common gateway interface (CGI) is a standard for building dynamic Web documents. It is a model in the sense that it defines the type of language to be used in preparing the document. Today, most of the CGI programs have been created using shell scripts in UNIX. Note that the browser in the client machine does not have to know anything about running the script. The script is run at the server site. Active Documents Dynamic documents are produced when they are called. However, they are produced at the server site, not the client site. For many applications, we need the program to be run at the, client site. These are called active documents. For example, imagine we want to run a program that creates animated graphics on the screen. The program definitely needs to be run at the client site, where the animation must take place. In this case, the program is created, compiled, and stored at the server site. However, when the client needs it, it requests a copy. A copy of the program, in binary form, is sent to the client. The interpreter at the client site is responsible for running the program. Java To enable the use of active documents, Sun Microsystems, Incorporated has defined a technology and a language called Java.

Java is a combination of three components: programming language, runtime environment, and a class library. The programming language is used to create programs at the server site. It is an object-oriented language that has many similarities to C++. The runtime environment component is used at the client site to run the program in binary form. The class library is a collection of predefined objects to make object-oriented programming easier. Java uses the term applet to define an active document program. The term distinguishes active programs from regular programs. TELNET

This tool enables users to login to another obliging host computer on the Internet. The host computer may permit guests to input data. World Wide Web (WWW): WWW is perhaps the most popular service that offers access to the vast ocean of cyber published information. The information is published by a variety of contributors, such as news and magazine groups, libraries, trade and manufacturing bodies, corporate bodies, voluntary organisation, individual enthusiasts, etc. To search the information published on WWW search engines such as Yahoo! and Gopher are used. DOING BUSINESS ON INTERNET

It is difficult for a business manager to ignore the Internet, more so when a large number of business billboards and advertisements contain the Internet address. The hype that the media has created regarding the Internet draws the attention of business community. In fact, now Internet is far more for business and less for academics and research. The role reversal has taken place in less than five years. Today, the profile of Internet users is

dominated by business users and the contents of WWW are full of write-ups for or from business community. But, to be able to identify business opportunities and harness the potent power of the Internet, it is necessary to find out what it has to offer for business. Each of the Internet services mentioned above have a lot in terms of business opportunities. Broadly speaking, the business opportunities on the Internet can be of two types: The Internet-augmented business: The Internet can help in augmenting the existing or future business activities. The Internet is being used as an important input in the communication scheme of business enterprises. The Internet can help in- widening the markets and enable a manager overcome the problems of scattered activities over the globe. The Internet-based business: The Internet offers new business openings and thus helps in creating a business of offering services on the Internet that were not hitherto a business at all. With the help of Internet, one can create a virtual company and do a completely new business. However, there can be various degrees of Internet involvement. Elderbrock and Borwankar identified five such degrees of Internet involvement. To be able to use the Internet for. augmenting business and doing Internet-based business, one needs to understand the Internet from the point of view of business opportunities. The Internet may be viewed as: (a) Communication site: Internet sites permit people to

communicate with others using the services such as e-mail, chat and bulletin board systems. The nature of relationship among those communicating may be different and thus, the communication may be one to one, one to many or many to many depending upon the

nature of relationship and the purpose of communication. In business environments, the communication may be between two different groups of people, such as seller and buyer, borrower and lender, company and shareholder, company and employee, etc. or it could be between the members of the same group such as people working in the enterprise, shareholders, customers, vendors, investors, companies in the same industry or located in the same geographical area or having some common business interests. Whatever may be relationship between the persons who are communicating, the Internet can offer an effective mode of communication. (b) Publishing site: The Internet may be viewed as a real estate

offering opportunities for real-time publishing of information and as a source of information. The information, in case of seller to customer communication, may relate to product technical specifications, price list and other marketing details including terms and conditions. Similarly, communication between company and share holders may relate to financial performance of the company, projection of the prospects of the company, details regarding dividend and other claims of shareholders, achievements and pitfalls of company's business, etc. (c) Transaction site: The Internet may be viewed as a site that

facilitates transactions. It permits customers to place order, makes payment and check account status at any point of time without actually visiting the price. A variety of transactions can take place on the Internet and in feet, electronic commerce is likely to be one of the major business applications of the Internet COMMUNICATION MODEL The communication model of Internet focuses on the

communication services on the Internet. Although, Internet was

meant originally foe communication only, the electronic publishing of information became the darling of the media. The communication facilities and the features, and business potentials of these facilities went out of the limelight Still, communication is the most common business application of the Internet. The business applications of the communication model of Internet can be classified into four broad categories: (a) Communication centres: The communication centres

maintain virtual space where communication can take place. These centres serve as meeting or convention halls providing facilities for people to identify and communicate with others. The business of communication centres is very simple. The communication centre identifies a target group of users looking for communication opportunities in terms of locating others who would be having interest common with them. These centres offer facilities for identify such interested persons and facilitate their communication on payment of a nominal membership fee. One such example is Match.com service on WWW. This communication centre offers a matrimonial match making service to single adults and its revenue comes from membership fee paid by match seekers. These communication centres can offer value-added services such as sending messages, gifts and greeting on special occasions on behalf of members. Similarly, job hunters are another target group for communication centre business. A complete placement service can be developed on the Internet using the communication centre concept. The list of such target groups is as wide as one's imagination. A communication centre may use simple e-mail service or may combine it with real time conversation (Internet chat). (b) Customer support service: An Internet-augmented business

application is the development of customer support service. More and more companies are now realising that the increased competition has

made the customer more choosy and demanding in terms of aftersale service. With product becoming more complex and technology based, the queries on telephone from customers are increasing. For routine type of customer queries regarding the product, Internet based customer support communication system can ease the burden of over-loaded telephone lines. It can also minimise the chances of mishandling of calls from irritated customer by the personnel in the company. The customer support service may use simple e-mail service or may support it with real time problem solving environments. Such a service is very useful in case of industrial products, consumer durables, computer software and services industries. In fact, most of the software giants are now planning such customer support services online. (c) Discussion forums: Discussion forums are services that

enable members of the forum to express their view regarding the common interest that binds them into this group. Although such a forum may not be directly related to main business activity, the role of customers' forum, distributors and business partners' forum, shareholders' forum, depositors' forum, etc. cannot be ignored in building strategic barriers in a competitive market. The community building is a form of communication that links the enterprise with core groups on whom the business activity is based. This type of community building also reinforces the company's commitment to the expertise development and promoting the interests of various communities associated and contributing to the survival and growth of the company. (d) Collaboration systems: Collaboration systems are

communication tools to facilitate communication among the persons who are collaborating in a common business project. These tools are popularly known as groupware. Most of the applications of groupware are for internal communication, generally, among the members of the

same team or department. They are primarily meant for tracking the progress of some group activity and providing online information that may be required by a member of the team. A typical application of groupware may be the communication service that permits the software development team to interact with clients and seek further information group regarding the One system of the requirements successful and business is activities. Multi-site projects may require groupware for better intracommunication. groupwares NetMeeting-It enables real-time text and voice communication over Internet permitting file transfers, sharing whiteboards and software applications in addition to the exchange of views. Importers world over are finding whiteboard sharing as a useful tool in defining design specifications for the merchandise. (e) Other communication services: There are many

communication service business opportunities, such as audio/video conferencing and telephony services, event programming arid net casting services, etc. These services earn revenue from membership and/or advertising. PUBLISHING MODEL

The Internet may be viewed as online publishing industry. T-e online information publishing has come off age with the advent of World Wide Web (WWW), the hottest component of the Internet. The digital publications on WWW are different from the traditional paper- based or other media-based publications and have their own niche areas of business applications. The electronic publication may take the form of (a) reformatted print publications (a newspaper such as The Economic Times available on the Internet), (b) exclusive electronic publication (such as SALON which does not have paper print counterpart), and (c) multimedia publications (capable of beaming

real-time audio and video contents). The revenue of this business is mainly advertisement in the electronic newspaper or magazine. The distinguishing feature of electronic delivery of news and views is that it is personalised. The news and views are pre-filtered for the search criteria defined by the user. This makes it easy for the user to concentrate on important areas of interest. It helps user in getting more information on the relevant issue than to wander over the entire pile of information to locate if there is anything of interest to him/her in the whole lot. It provides opportunity to be subject specific than being publication specific. With the help of search engines (such as 'Yahoo!'), it is now possible for users to locate the news and views on a subject of interest and store the relevant details for reference at convenience. The Internet-augmented application of the publication model is the publication of public data-bases. These databases offer company, industry and economy level information. The publications are generally contributed by the promotional agencies, trade associations, regulatory authorities, etc. These are quite useful in product development and market research. Technical specification databases, financial market databases, corporate performance databases, potential buyers mailing list and profile databases are some of the examples of such databases that are now adding value to the Internet publishing model. TRANSACTION MODEL

The Internet may be viewed as a complete tool for commercial activity. The transaction model visualises the Internet as a virtual market place where a large number of buyers and sellers are roaming about to transact. The concept of cybermarket is now taking a concrete shape and electronic commerce is a reality.

The Internet offers features that can provide a competitive edge to the marketing manager in marketing the products. The World Wide Web (WWW), which is the most popular component of Internet, may be conceptualised as hypermedia information storage system, which links resources around the world. It offers a relatively inexpensive communication medium. The advantage with this medium is that it offers interactive environment, global reach 24 hours a day with facilities to update the broadcast any moment. From the marketing point of view the .com domain of the WWW is like a giant international electronic trade exhibition hall. Setting up a web site enables a manager to run an information server that can be used for describing the product features. The e mail drop boxes can be used for meeting the queries raised by potential customers. The customers can fill up on-screen order forms and get online information. The information may relate to the product specifications, price, etc. It may ordinarily take long time and may cost a lot in terms of stationary and postage expenses. The web sites also offer facility of regular feedback from customers regarding the products and services. These sites also enable the marketer to get a response to the proposed product innovations quicker. 4.5 WEB AS INTEGRAL PART OF MARKETING STRATEGY Most people think of online catalogues and malls when they hear about electronic commerce. But the Internet is a complete cybermarket and has to be treated as an integral part of the strategy for marketing of goods and services. In fact, a large number of transactions that take place on the Internet are service oriented. The transactions relate to investment services, travel services, Catering and food services, consultancy services, banking services and even matrimonial services. However, with the delivery services improving

and payment systems getting online, the exchange of both goods and services on the Internet are likely to grow at a phenomenal rate. Web can be useful in almost all the stages of marketing process. These stages are as follows: Recognising need for a product Acquisition of information regarding availability Developing specification of the product Purchasing the product Post-purchase review.

The marketing manager attempts to trace the customer passing through these stages and uses various modes of communication, such as advertising and personal selling. The Internet can be used as both advertising and personal selling medium, and can establish effective communication links with customers at each stage of purchase. Strategy for Using Transaction Model of Internet As the advertisement cost on WWW is relatively very low, companies sometimes do not bother to identify quantifiable objectives of their presence on the Internet. Lack of systematic approach in this regard, in most of the cases, has resulted in reliance on intuition and business judgement. Many companies picked up their advertisement materials used in magazines and placed it as such on the Internet. As a result, their web sites ignore the specific strengths and weaknesses of Internet as a medium, rendering the presence on the Internet less effective. In fact, a well drawn out strategy is essential to succeed in marketing on the Internet. The following marketing strategies and tactics are recommended for different marketing objectives that may be laid out in this regard:

(a)

Making surfer aware: The first objective of any marketing

policy for Internet presence would be to make the potential and present customers aware of the company's web site. It is suggested that advertisement and other public publications including product packing's of the company should contain reference to the web site address. This will help in not only making the reader aware of web site but also enable him to locate the site whenever he is surfing on the Internet. (b) Maximising hits and visits: It is necessary to ensure that the number of hits on the web sites are maximised. Hit on the Internet is parallel to drawing the customer's attention to the roadside bill board. This is achieved through advertising on popular web sites and by simplify access to the web site. To ensure that even the casual hit by the customer is converted into a serious visit to the site, computer graphics, sound, video and other important elements of the presentation are used effectively. (c) Converting visit into transaction At this stage, it is necessary to ensure that a dialogue is established between the visitor to the site and the marketing department. The quality and speed of response need to be improved. The ordering process should "be simplified and it should be possible for the customer to select from the alternative modes of placing order, in addition to the direct ordering on the Internet itself. Many web sites offer facilities for just writing on the order-form available on the web site itself. Similarly, it should be possible to select the convenient mode of payment, say, through electronic money, credit card, etc. With many credit card companies offering payment services on Internet, through what they call Secured Electronic Transactions-(SET) payments on the Internet will become even more convenient.

(d)

Encouraging repeat orders: To be able to cause repeat

orders, it is essential to keep the communication channel between the customer and customer support personnel in the company live and convenient. The customer needs to be updated on the improvements in product and pricing. Keeping the customer updated on the status of their order is another objective that can be achieved with less of costs and pain on the Internet. The web site must be updated for any new product or improvement announcements, special and seasonal discount offers, etc.

4.6

SECURITY OF DATA ON INTERNET The transaction model of Internet's business applications is per

haps the most sensitive model in so far as the security is concerned. Since a lot of commercial information is made available and transmitted through Internet, data security becomes a critical issue. This issue takes wider dimensions when we handle electronic cash/electronic wallet exchanging hands as a result of Internet based trans actions. The general security issues of the Internet have been tucked to the next chapter that takes an integrated view of security environment in IT infrastructure. However, at this point, the specific security issues regarding the execution of payments through Internet deserve special consideration. The security issues for enterprises aiming at electronic commerce are becoming cause of serious concern in view of the press reports of serious security break- in to Internet servers. At present, there are a few methods for securing transactions on the Internet.

Secured hypertext transaction protocol (S-HTTP) This scheme has the features of authentication of user and encryption of information. It also has the feature of digital signature as proof for establishing that the data were not stolen or tampered with. In addition to this, there is a non-repudiation system to prove that the message was actually sent by the sender. These features make the SHTTP as a secure transaction system. The advantage with this scheme is that it has the usual functionality of HTTP that is used as communication protocol in accessing web sites. Secure sockets layer (SSL) This is a security layer applied below the level of actual web server. This enables it to be applied to both the HTTP and TCP/IP protocols. It has the features of authentication, encryption and data verification but lacks the non-reputation feature. Netscape Communications has included this layer in its Commerce Server. The Microsoft's Internet Information Server and the Internet Factory's Commerce Builder also use SSL. Unfortunately, SSL is far from being flawless as the encryption algorithm used in it is not robust. Private communication technology (PCT) Microsoft's PCT uses SSL as the base but has improved the authentication by introducing a second key specifically for authentication. Fortezza In addition to encryption and authentication using password, Fortezza uses secure token process. Each user is as signed a token, a unique identification recorded on a microprocessor what installed a smart card. To be able to use a token, one needs to key-in one's password. Additional hardware meant for reading the token from the smart card is required to provide access to network. However, its use is by far limited to the US Government users. The system is unlikely to be a part of widely used general purpose security tool due to its high cost of implementation.

It may be noted that the user must also have an Internet browser that supports the secure transaction tools mentioned above. In addition to secured server option for the security of transaction, the other non-web server based options are: Encryption: Some of the transactions on the Internet are secured by encryption using encryption software" that is used before the message moves out of the sender's computer. At the receiver end, the message is decrypted before use. During the transmission stage, the encrypted data is a meaningless set of zeroes and ones. However, even the encryption has not proved to be fool proof. In fact, there are published methods for unauthorised decryption of encrypted data within a period as short as a few hours. Firewall: Firewalls are hardware or software solutions that restrict the traffic from any unsecured network such as Internet to a private network. Sometimes, the firewalls are also used to restrict the users of private networks to only select Internet services such as e-mail. The basic function of firewall is to protect private information and reduce unnecessary traffic in the private network. For the purpose of such an isolation of private network a variety of techniques are used, ranging from filtering based of IP address to blocking users from direct access to public network. Holding companies: Some of the Internet marts' gather the credit card information through some means other than the Internet and provide an identification/registration number to be quoted at the time of placing the order. The only difficulty in such a case is that spontaneous buying is hampered in the absence of previous registration. Electronic cash: A more futuristic solution to payment problem on the Internet is electronic cash that eliminates the credit card number,

the most sensitive part of information in Internet transaction, from the transaction. Once the credit worthiness of the customer is established, the customer can make purchases. The seller's account is credited along with the corresponding debit to customers account that is settled periodically or has a cash deposit in it. Digicash (www.digicash.com) calls the customer's account as wallet. The electronic cash or electronic wallet systems are generally linked to banks for maintaining the record of cash and debits and credits. Virtual checking: In this method, the customer authorises the seller to draw a cheque for the amount of purchase on his banker who is approached by the seller, later, for collection. Checkfree (www.checkfree.com) and Netchex (www.netchex.com) are the companies offering these services along with a few others on Internet. Unfortunately, there is no single solution to the security of transaction on Internet, which may be considered to be foolproof and does not hamper the transaction as well. Perhaps, a combination of some of the features of the security tools and options mentioned above shall offer a dependable solution for Internet security. It will take some more time before the security standards for payments through Internet -become mature enough to win the confidence of Internet users and shopper in particular. 4.7 LEGAL ISSUES IN INTERNET The basic philosophy of the Internet is the freedom to share information. The Internet has been free from government regulation right from its inception, and all attempts to regulate it have found stiff resistance both from industry and Internet enthusiasts. But, with increasing business applications of Internet, the regulation on business is likely to find its place on Internet as well. It is very likely that the electronic commerce shall not be excluded from national and international regulatory framework for business. In fact, due to the

special features of the Internet technology and transactions on the Internet, special provisions shall have to be added to control the abuse of this powerful business communication tool. Due to the lack of ad equate experience to. fall back upon, not all the possible abuses and appropriate regulations can be identified at present. However, some of the issues that warrant attention of the legislators to ensure fear less business on the Internet are identified below. Taxation: Taxation is one issue that occurs to legislators at the first instance when it comes to business regulation. Internet business may be subjected to tax as other business activities. But, normal business activities are taxed in the country and are subject to the tax laws of the country where they have 'permanent establishment". Most of the Internet transactions take place on web sites connected to Internet. As Internet has no unique physical location, such transactions give rise to the controversy as to where the transactions are taking place. For example, an Indian doctofoffers medical advice on a web site located in New York to a client in Paris and payment is made through a credit card. The advice was given when he was traveling in a border city .of some part of Europe. Where is this income of the doctor to be taxed? Similar tax problems would arise in the case of business enterprises which are functioning without any physical presence in any of the countries of location of buyer or producer of goods and services. The problem would be more complex where the transaction involves delivery of m formation and other de-materialised commodities and in cases where one of the countries is involved, such a transaction attracts no tax liability. The international tax treaties shall have to be revised io include provisions for taxing such type of transactions to avoid undue litigation and differing judgements of tribunals. Another problem will be to establishing a system of tax collection of Internet transactions. Efforts are being made to find solutions to these problems at various levels.

Money laundering is likely to become easier and safer with ecash. The virtual banking on Internet and tax heavens in the world offering high security access to digital cash is likely to make black money harder to trace, adding to the woes of tax-man. Consumer protection Use of WWW for soliciting business is becoming an important use of Internet. The contents of the web page need careful scrutiny to avoid possibility of misstatement to solicit business. With buyer and sellers located at such a far distance, it is not possible to follow the principle of 'let the buyer be aware'. With the differing consumer protection laws in different countries and absence of concept of permanent establishment in electronic commerce, tackling this problem is a serious challenge before the law makers. In the absence of consumer protection legislation, a few frauds by unscrupulous businessmen may shy away the customers from electronic commerce. The problem is likely to take more serious proportions in case of sale of financial instruments through Internet. The financial instruments arc sold on the basis of financial and other business information regarding the product and the issue. Any misleading statement made for a selected period of time in a day on the web page may not be easily noticed. Even if noticed by a few, it may not be easily established. Dispute settlement: In the absence of a clearly defined location of 'permanent establishment', jurisdiction of courts and 'law of the land' are likely to become blurred and cause difficulty in settlement of commercial disputes. Legal responsibility for e-mail: The judiciary in many countries is recognising the communication through Internet as evidence. In some cases, the companies were held responsible for e-mail created by employees during the reasonable execution of their duties. It has,

therefore, be come essential to have policies regarding the communication through Internet and maintenance of their records perhaps as religiously as is done in the case of other external communications by the company. 4.8 OPERATIONAL INTERNET The security and legal issues raised above are important unformidable. Marketing on Internet is likely to get a further when these stumbling blocks are removed and the trading on Internet becomes less risky and more convenient. On the basis of the experience of the companies that have used Internet in their marketing effort, following suggestions can be offered to marketing managers planning to enter into Internet marketing activity. (a) Get an early start: It is important that a beginning is made in SUGGESTIONS FOR MARKETING ON

this direction at the earliest. An early presence on the cybermarket would be a better strategy to attain perfection in the process. An early start is likely to offer benefits in terms of customers and personnel of the company getting necessary exposure and gaining confidence in the process. Thus, get started as early as possible. (b) Use (he interactive power: The unique feature of the

Internet is that it offers an interactive form of communication with the customers. This feature should be fully exploited by re-designing the communication materials to incorporate tools for interaction with customers. The old communication material may not be of much use as it would generally lack such features. (c) Involvement of senior managers: Involvement of senior

managers is the basic 'mantra' in the implementation of any new

technology An involvement of top managers in this process at the earlier stages would be very helpful in ensuring success,, (d) Do not isolate: There is a need to integrate digital marketing

effort with the non-digital marketing effort and the tendency to isolate the two should be avoided. In fact, the two types of marketing efforts are interdependent and this interdependence should be recognised. For example, the interest of the customer indicated during the web site surfing may be maintained and furthered by personal selling effort. The advertisement mailers and direct selling efforts may also highlight the availability of product information on web site to the customers. Recognition of the interdependence not only promotes sales but also avoids intra-enterprise conflicts. (e) Catch them young: According to a study of the companies

who have gained experience of web presence, it is better to adapt the skills in the younger staff to handle the web based selling effort. The reason is, perhaps, the willingness to learn and absence of pre conceived notion about the efficacy of personal selling effort, being more among the younger personnel than among the seniors. (f) Outsourcing: It may be necessary to outsource services for de signing and maintaining web presence as the development of skills in-house would take a lot of time and may lack the necessary expertise. Higher rate of turnover among IT professionals is another factor that favours outsourcing of web services. 4.9 ELECTRONIC MAIL: SMTP One of the most familiar network services is electronic mail. The TCP/IP protocol that supports electronic mail on the Internet is called simple mail transfer protocol (SMTP).

What is Electronic Mail?

Electronic mail is a widely used network service. It is a system for sending messages or files to other computer users based on mailbox addresses rather than a direct host-to- host exchange, and supports mail exchange between users on the same or different computers. Unlike other client-server applications, e-mail allows users to send anything from short notes to mail uses are as follows: Send a single message to one or many recipients. Send messages that include text, voice, video, or graphics. Send messages to users on networks outside the Internet. Send messages calling for a response from a computer program rather than a user. extensive files without worrying about the current availability of the receiving host. Some e-

E-mail design echoes the postal system. Addresses are used to identify both the recipient and sender of a message (return address). Messages that cannot be delivered within a specified amount of time are returned to the sender. Every user on the network has a private mailbox. Received mail is stored in the mailbox until the recipient removes or discards it. What makes electronic mail different from other message transfer services pro vided by the Internet is a mechanism called spooling, which allows a user to send mail even if a network is currently disconnected or the receiving machine is not operational, When a message is sent, a copy is placed in a storage facility called a spool. A spool resembles a queue with some fundamental differences. Messages in a queue are processed on a first-come, first-served

basis. Messages in a spool are processed on a first-come, firstsearched basis. Once in the spool, a message is searched every 30 seconds by a client process running in the background. The background client looks for new messages and not-yet-sent old messages and attempts delivery. If the client process is unable to deliver a message, it marks the message with the time of the attempted delivery, leaves it in the spool, and repeats the attempt at a later time. If all attempts at delivery fail, the message may be deemed undeliverable after several days and returned to the mailbox of the sender. A message is considered delivered only when both client and server agree that the recipient has seen and disposed of it Until then copies are kept in both the sending spool and the receiving mailbox.

Electronic Mall Addresses Electronic mail addresses consist of two parts. The first pan is the mailbox identifying name followed by an @ symbol and the domain name of the destination (e.g., Rocco@somecompany.org). At sites using protocols other than TCP/IP, the formats may differ. For example, you may see a mail address that looks like xxxx %yyyy@zzzz. Aliases: It is possible to forward messages to more than one recipient at a time by including several mailing addresses. However, in situations where frequent messages are sent to the same group of people, this process can become tedious and time-wasting. Many systems provide a solution called electronic mailing lists or mailbox groups. An e-mail facility called mail alias expansion allows one name (called an alias) to refer to an entirely different name or even to

multiple recipients. For example, the accounting department of a company might need to send frequent reports to the managers of all departments as well as the executive board. They can set up an electronic mailing list under art alias (e.g., bigwigs) that includes the e-mail addresses of everyone receiving those reports. When a report is distributed, the sender puts the alias as the recipient, but all members of the mailing list receive the transmission. Another advantage of aliases is that one person can have several mail names, including first and last names, maiden names, married names, nicknames, and job titles. Aliases are stored in a database accessed by an alias expansion program. Once a message has been sent to the spooler, the mail interface program passes the recipient name to the alias expander, which checks it against aliases stored in its database. If a match is found, the existing recipient address is mapped to its official address (or all of the individual addresses of the mailing list) before being sent on. if no match is found, it may mean that no alias exists or that the alias is not stored locally and will be found by the recipient system. The box labeled UA is the user agent. The user agent supports the user interface and provides an interface to the internals of the system. A user agent is like a good secretaryit goes to the mailbox to retrieve your incoming messages, mails your outgoing messages, and hands you the means to write messages (in this case, a word processor rather than pencil and paper). The boxes labeled MTA are the mail transfer agents, which serve as the mail system's interface with the network. SMTP defines the specifications for each of these processes using TCP/IP. 4.10 NETWORKS

A network is a set of devices (often referred to as nodes) connected by media links. A node can be a computer, printer, or any other device capable of sending and/or receiving data generated by other nodes on the network. The links connecting the devices are often called communication channels. Distributed Processing Networks use distributed processing, in which a task is divided among multiple computers. Instead of a single large machine being responsible for all aspects of a process, each separate computer (usually a personal computer or workstation) handles a subset. Advantages of distributed processing include the following: Security/encapsulation. A system designer can limit the kinds of infractions that a given user can have with the entire system. For example, a bank can allow users access to their own accounts through an automated teller machine (ATM) without allowing them access to the bank's entire database. Distributed databases. No one system needs to providestorage capacity for the entire database. For example, the World Wide Web gives users access to information that may be actually stored and manipulated anywhere on the Internet. Faster problem solving. Multiple computers working on parts of a problem con currently can often solve the problem faster than a single machine working alone. For example, networks of PCs have broken encryption codes that were presumed to be unbreakable because of the amount of time it would take a single computer to crack them.

Security through redundancy. Multiple computers running the same program at the same time can provide security through redundancy. For example, in the space shuttle, three computers run the same program so that if one has a hardware error, the other two can override it. Collaborative processing. Both multiple computers and multiple users may inter act on a task. For example, in multiuser network games the actions of each player are visible to and affect all the others.

Network Criteria

To be considered effective and efficient, a network must meet a number of criteria. The most important of these are performance, reliability, and security. Performance

Performance can be measured in many ways, including transit time and response time. Transit time is the amount of time required for a message to travel from one device to another. Kxsponse time is the elapsed time between an inquiry and a response. The performance of a network depends on a number of factors, including the number of users, the type of transmission medium, the capabilities of the connected hard wars, and the efficiency of the software.

Number of users, Having a large number of concurrent users can slow response time in a network not designed to coordinate heavy traffic loads. The design of a given network is based on an assessment of the average number of users that will be communicating at any one lime. In peak load periods, however, the actual number of users can exceed the average and thereby decrease performance. How a net work responds to loading is a measure of its performance. Type of transmission medium. The medium defines the speed at which data can travel through a connection (the data rate). Todays networks are moving to faster and faster transmission media, such as fiber optic cabling. A medium that can carry data at 100 megabits per second is ten times more powerful than a medium that can carry data at only 10 megabits per second. However, the speed of light imposes an upper bound on the data rate. Hardware. The types of hardware included in a network affect both the speed and capacity of transmission. A higher speed computer with greater storage capacity provides better performance. Software. The software used to process data at the sender, receiver, and intermediate nodes also affects network performance. Moving a message from node to node through a network requires processing to transform the raw data into transmittable signals, to route these signals to the proper destination, to ensure error-free delivery, and to recast the signals into a form the receiver can use. The software that provides these services affects both the speed and the reliability of a network link. Well-designed software can speed the process and make transmission more effective and efficient. Reliability

In addition to accuracy of delivery, network reliability is measured by frequency of failure, the time it takes a link to recover from a failure, and the network's robustness in a catastrophe. Frequency of failure. AH networks fail occasionally. A network that fails often, however, is of little value to a user. Recovery time of a network after a failure. How long does it take to restore ser vice? A network that recovers quickly is more useful than one that does not. Catastrophe. Networks must be protected from catastrophic events such as fire, earthquake, or theft. One protection against unforeseen damage is a reliable system to back up network software.

Security Network security issues include protecting data from

unauthorized access and viruses. Unauthorized access. For a network to be useful, sensitive data must be protected from unauthorized access. Protection can be accomplished at a number of levels. At the lowest level are user identification codes and passwords. A; a higher level are encryption techniques. In these mechanisms, data are systematically altered in such a way mat if they are intercepted by an unauthorize user, they will be unintelligible. Viruses. Because a network is accessible from many points, it can be susceptible computer viruses. A virus is an illicitly introduced code that damages the sys tern. A good network is protected from viruses by hardware and software designed specifically for that purpose.

4.11 APPLICATIONS In the short time they have been around, data communication networks have become an indispensable part of business, industry, and entertainment Some of the network applications hi different fields are the following: Marketing and sales. Computer networks are used extensively in both marketing and sales organizations. Marketing professionals use them to collect, exchange, and analyze data relating to customer needs and product development cycles. Sales applications include teleshopping, which uses order-entry computers or telephones connected to an order-processing network, and on-line reservation services for hotels, airlines, and so on. Financial services. Today's financial services are totally dependent on computer networks. Applications include credit history searches; foreign exchange and investment services, and electronic funds transfer (EFT), which allows a user to transfer money without going into a bank (an automated teller machine is a kind of electronic funds transfer; automatic paycheck deposit is another). Manufacturing. Computer networks are used today in many aspects of manufacturing, including the manufacturing process itself. Two applications that use net works to provide essential services are computer-assisted design (CAD) and computer-assisted manufacturing (CAM), both of which allow multiple users to work on a project simultaneously. Electronic messaging. Probably the most widely used network application is electronic mail (e-mail).

Directory services: Directory services allow lists of files to be stored in a central location to speed worldwide search operations. Information services. Network information services include bulletin boards and data banks. A World Wide Web site offering the technical specifications for a new product is an information service. Electronic data interchange (EDI). EDI allows business

information (including documents such as purchase orders, and invoices) to be transferred without using paper. Teleconferencing. Teleconferencing allows conferences to occur without the participants being in the same place. Applications include simple text conferencing (where participants communicate through their keyboards and computer monitors), voice conferencing (where participants at a number of locations communicate simultaneously over the phone), and video conferencing (where participants can see as well as talk to one another). Cellular telephone. In the past, two parties wishing to use the services of the telephone company had to be linked by a fixed physical connection. To days cellular networks make it possible to maintain wireless phone connections even while traveling over large distances. Cable television. Future services provided by cable television networks may include video on request, as well as the same information, financial, and communications services currently provided by the telephone companies and computer networks. 4.12 CATEGORIES OF NETWORKS

Today when we speak of networks, we are generally referring to three primary categories: local area networks (LANs), metropolitan area networks (MANs), and wide area networks (WANs). Which category a network falls into is determined by its size, its ownership, the distance it covers, and its physical architecture. 4.13 LOCAL AREA NETWORK (LAN) A local area network is usually privately owned and links the devices in a single office, building, or campus. Depending on the needs of an organization and the type of technology used, a LAN can be as simple as two PCs and a printer in some one's home office, or it can extend throughout a company and include voice, sound, and video peripherals. Currently, LAN size is limited to a few kilometers. LANs are designed to allow resources to be shared between personal computers or workstations. The resources to be shared can include hardware (e.g., a printer), software (e.g. an application program), or data. A common example of a LAN, found in many business environments, links a work group of task-related computers, for example, engineering workstations or accounting PCs. One of the computers may be given a large-capacity disk drive and become a server to the other clients. Software can be stored on this central server and used as needed by the whole group. In this example, the size of the LAN may be determined by licensing restrictions on the number of users per copy of software, or by restrictions on the number of users license to access the operating system. In addition to size, LANs are distinguished from other types of networks by their transmission media and topology. In general, a given LAN will use only "one type of transmission medium. The most common LAN topologies are bus, ring, and star.

Traditionally, LANs have data rates in the 4 to 16 Mbps range. Today, however, speeds are increasing and can reach 100 Mbps with gigabit systems in development. 4.14 METROPOLITAN AREA NETWORK (MAN) A metropolitan area network is designed to extend over an entire city. It may be a single network such as a cable television network, or it may be a means of connecting a number of LANs into a larger network so that resources may be shared LAN-to-LAN as well as device-to-device. For example, a company can use a MAN to connect the LANs in all of its offices throughout a city. A MAN may be wholly owned and operated by a private company, or it may be a service. provided by a public company, such as a local telephone company. Many telephone companies provide a popular MAN service called Switched Multi-megabit Data Services (SMDS). 4.15 WIDE AREA NETWORK (WAN) A wide area network provides long-distance transmission of data, voice, image, and video information over large geographical areas that may comprise a country, a continent, or even the whole world. In contrast to LANs (which depend on their own hardware for transmission), WANs may utilize public, leased, or private communication devices, usually in combinations, and can therefore span an unlimited number of miles.

A WAN that is wholly owned and used by a single company is often referred to as an enterprise network. 4.16 TEXT PROCESSING SYSTEMS Text processing systems are the most commonly used components of the office automation systems. This is so because a large proportion of office communication takes place in writing using words of a natural language. The proportion of written communication is higher in case of external communication. Text processing systems auto mate the process of development of documents such as letters, reports, memos, etc. They permit use of standard stored information to produce personalised documents. Such automation reduces keying effort and minimises the chances of errors in the document. Generally, the text processors are able to get information directly from the databases and spreadsheets and incorporate them into a document. Text processing systems may be assisted by the dictation systems. These systems consist of voice recognition systems 'trained' to recognise the voice of the executive. After 'training', these system's listen to the dictation of the executive and develop text on the text processor. 'Systems help in reducing the time spent keying in the text by the secretary after the text has been dictated on the Dictaphone. They also enable the executive to get the document ready at any time eliminating the dependence of the secretary. Thus, the documents can be produced any time in a day and not necessarily during the office hours. The text processor may be simple word processing systems or desktop publishing systems. The desktop publishing systems help in quick production of multiple copies of the document with quality printing. Such requirements are quite common in case of preparation

of agenda and background papers fix- meetings. Multiple copies may also be required for documenting various plans such as budgets, policies, rules, procedures, etc. The desktop publishing systems are often supported with laser printers, inkjet printers, scanners and other such devices for producing good quality documents. With the sharp fall in prices of these devices, the use of desktop publishing systems in offices is bound to increase. Text processing systems may be shared or may be part of personal information systems. 4.17 DOCUMENT MANAGEMENT SYSTEMS The computers based document management systems aim at capturing the information contained in documents, stored for future references and communicate the relevant parts to the users as and when required. These systems are linked to the other office automation systems such as text processors, electronic message communication systems, etc. These systems are very useful in remote access of documents that is almost impossible with manual document management systems. For example, a customer may have a complaint concerning delivery of goods not being in accordance with the delivery instructions in the order. The travelling executive would require access to the order document to establish that the customer had given no special instructions for delivery of goods. The computer based document management system would enable the executive to access the document through his note book computer connected to any telephone line and show it to the customer, his order document in his office. Even in the case of internal communication, document management systems, can prove to be very useful. For example, the loan application form filed in a branch of a bank can be accessed by the sanctioning officer for scrutiny at the head office or any office for scrutiny of loan proposals. The

electronic access of documents not only facilitates quicker access to documents but also reduces paper work as the need for multiple copies is eliminated. The storage of documents is on magnetic media and thus the storage space required for the purpose is reduced. With computer based document management systems, location of the executive becomes irrelevant for access to documents. Thus, these systems can be very useful in an office environment where travelling executives share work space in the office. With increasing cost of office space, computer based document access systems are likely to gain more popularity. Availability of Optical Character Readers (OCRs) soft ware has made computer based document management systems even more popular. These software packages convert the images of documents into text that can be used for further processing using any word processor. 4.18 MESSAGE COMMUNICATION SYSTEMS Business enterprises have been using a variety of

communication systems for sending and receiving messages. They include telephone, mail, facsimile(Fax), etc. The computer based message communication systems offer a lot of economy not only in terms of reduced time in sending or receiving the message but also in terms of reliability of the message and cost of communication. The three basic components of computer based message communication systems are: Electronic Mail Voice Mail Facsimile

Electronic mail: The difference between the normal mail interpersonal communication of information in the form of text and images as against the other

forms of interpersonal communication such as the telephone-e-mail is its non simultaneous communication wherein the presence of the receiver is not essential at the time of transmission. The mail has been used by business enterprises for long and is still one of the most popular non-simultaneous communication medium. However, the electronic mail has substantially changed the way messages are exchanged between individuals and business enterprises. The electronic mail, popularly called E-mail, is a computer based electronic mailing system for electronic transmission of information, including messages, documents and images between two or more individuals. The main features of E-mail are: a) Electronic transmission: The transmission of messages with

E-mail is electronic and message delivery is very quick, almost instantaneous. The confirmation of transmission is also quick and the reliability is very high. b) Online development and editing: The E-mail message can

be developed and edited online before transmission. The online development and editing eliminates the need for use of paper in communication. It also facilitates the storage or messages on magnetic media, thereby reducing the space required to store the messages. c) Broadcasting and rerouting: E-mail permits sending a

message, to a large number of target recipients. Thus, it is easy to send a circular to all branches of a bank using E-mail resulting in a lot of saving of paper. The E-mail could be rerouted to people having direct interest in the message with or without changing or and appending related information to the message. For example, the Email received by the marketing executive from a customer registering a complaint regarding quality of product may be rerouted to the quality control department for comments and action at that end.

d)

Integration with other information systems: The E-mail

has the advantage of being integrated with the other information systems. Such an integration helps in ensuring that the message is accurate and the information required for the message is accessed quickly. e) Portability: E-mail renders the physical location of the

recipient and sender irrelevant.' The E-mail can be accessed from any Personal Computer equipped with the relevant communication hardware, software and link facilities. A manager in the head office can access his E-mail messages while being in the branch located in a remote area or even at a vacation resort, using links such as telephone lines. f) Economical: The advancements in communication

technologies and competition among the communication service providers have made E-mail the most economical mode of sending messages. Since the speed of transmission is increasing the time cost on communication media per page is falling further, adding to the popularity of E-mail. The E-mail is proving to be very helpful not only for formal communication but also in informal communication within the business enterprise. The market information and personal opinions of the executives now find imprints in the E-mail messages to their bosses and peer groups. Communication in work groups can be substantially improved by proper use of E-mail facilities. However, the success of E-mail for improving intra-organisational communication will depend, to a large extent, on the work culture in the organisation. 4.19 FACSIMILE

Facsimile (Fax) is electronic communication of images of documents over telephone lines. The computer based fax technology automates fax communication and permits sharing of fax facilities. It uses special software and fax servers to send and receive fax messages using common communication resources. These servers have the ability to receive fax messages and automatically re route them to the intended recipient after viewing it at the central computer. Similarly, the managers in an enterprise can leave the fax message to the server which will send it to the intended recipient automatically. Computer based fax systems save executive time other wise spent in queues at the common fax facility, dialling and connecting with the fax machine of the intended recipient. These systems also help in reducing the cost of sending the message, as it is possible for the servers to dial during low tariff hours, automatically. The viewing facility also helps in controlling the problem of junk mail coming from different vendors. Weeding out such mail helps a lot in reducing the time required to go through the fax messages and helps in focusing on important messages only, by rerouting the less important ones to be handled at the lower levels. Of course, use of paper is also reduced with the help of these systems.

4.20 VOICE MAIL Voice mail is a variation of the E-mail. The voice mail transmits messages as digitised voice. The recipient of the voice mail has to dial a voice mail service or access the electronic mail box using the specified equipment and he can hear the spoken message in the voice of the sender. The secured type of voice mail service may require the recipient to enter identification code before the access is

granted to the stored information. Voice mail is very useful in information systems catering to the information needs of external entities. For example, customers may make queries regarding the status of execution of their orders using the voice mail service connected to the production information system of the business enterprise. 4.21 TELECONFERENCING AND VIDEO-CONFERENCING SYSTEMS Teleconferencing is conducting a business meeting involving more than two persons located at two or more different places. The teleconferencing helps in reducing the time and cost of meeting as the participants do not have to travel to attend the meeting. Teleconferencing may be audio or video conferencing with or with out use of computer systems. The computer based teleconferencing has the advantage of flexibility in terms of pre-recorded presentations and integration with other information systems. With the advancements in multi-media technologies, desk top teleconferencing systems are now available at affordable prices. These systems are based on Personal Computers featuring a digital camera and run on visual communication software. The communication links are still quite expensive making the desktop video conferencing useful only for selected applications. The meetings best suited for tele/video conferencing are those which are low in conflicts as they are not as effective as personal contact meetings. The effectiveness can, however, be improved by providing proper training to the users regarding the systems and the gestures that are part of the body language. The most common applications of computer based and teleconferencing training, budget include management technical communications meetings,

consultations, project review^ contract negotiations, etc.

4. 22 BENEFITS OF OFFICE AUTOMATION SYSTEMS The office automation systems, at one time considered trivial, are now the focus of attention due to the increasing cost of skilled man power. With the improvement in communication and multimedia technologies, the office automation systems would help in: Improving communication within an organisation and between organisations. Reduce the cycle time between preparation of messages and receipt of messages at the recipient's end. Reduce the costs of office communication both in terms of time spent by executives and cost of communication links. Ensure accuracy of communication flows. Of course, office automation systems, like any other

information system, must be subject to proper controls. The problems of junk E_ mail, offending mail, involvement of executives in communications unrelated to their nature of work, security and privacy of information are quite common. Control systems to tackle these problems are to be developed to get full benefits of the office automation systems.

UNIT-5
5.1 CLIENT- SERVER COMPUTING The application layer in TCP/IP is equivalent to the combined session, presentation, and application layers in the OSI model. There are many protocols defined at this layer, of which we cover only a few of the most popular. Before discussing specific protocols at the application level, we need to understand the concept of client-server at this level. One of the benefits of networks is the ability to distribute processing responsibilities. When a program at one location enlists the ser vices of a program running at another site, the system is called clientserver. An application program, in the role of client, issues a request for services to a second application program, in the role of server, which provides the requested service. All of the application programs in the TCP/IP protocol use the client-server paradigm. Domain Name System (DNS) A good example of a TCP/IP client-server application is the domain name system (DNS). Up to this point, the identification systems we have examined have all been designed with machines and software in mind, and so have used bit patterns and numbers. But the actual users of the Internet are people, and people prefer names to numbers. DNS id each host on the Internet with a unique name that identifies it as unambiguously as its IP address. Given the domain name, a program can obtain the IP address associated with it by engaging the services of a name server in a client-server session.

To create names that are unique, and at the same time decentralized and easy to change, the TCP/IP designers have chosen a hierarchical system made up of a number of labels separated by dots (e.g., chal.atc.thda.edu). A host can have any number of identifying labels to make its name unique as long as the length of the label does not exceed 63 characters. DNS is implemented using a tree in which each node represents one possible label. The right-most label in the name corresponds to the level of the tree closest to the root (here called the lowest), and the left-most label to the level farthest from the root (the highest). The tree is divided into three different domains: generic, country, and reverse. Generic Domain

The generic domain (also called the organization domain), divides registered hosts according to their generic behavior. Generic domain names, read left to right, start with the most specific information given about the host (e.g., the name of the workstation) and become more and more general with each label until they reach the rightmost label, which describes the broadest affiliation of the named host: the nature of the organization. Looking at the tree, we see that the first level of the generic domain convention allows seven possible three-character labels describing organization type: com. Commercial organization. edu. Educational institution. gov. Government institution. jut. International organization. int. Military group.

net. Network support center. org. Organizations other than those listed above. Each domain name corresponds to a particular IP address. To

find the address, the resolution application begins searching with the first-level label (the organization). As a match is found, a pointer leads to the next level and finally to the associated IP address. Country Domain

The country domain convention follows the same format as generic domain but uses two-character country abbreviations (e.g., us for U.S.A.) in abbreviations at place of the first the three-character level. Second-level organizational can be labels

organizational, or they can be more specific national designations. The United States, for example, uses state abbreviations as a subdivision of us (e.g., ca.us). The country domain version of the generic address. The address anza.cup.ca translates to DeAnza College in Cupertino in California in the United States. Reverse Domain When you have the IP address but need the domain name, you use the reverse domain functions of the DNS. To use reverse domain, you give the server the IP address. DNS appends in. addrarpa to the end. So, for example, 132.34.45.121 becomes 132.34.45.121 jn. addr.arpa. The system then starts from the top of the tree (arpa) and searches until it finds the number. Once the number is found, a pointer leads it to the associated domain name.

5.2 TELNET A second important and extremely popular TCP/IF application is TELNET, which is TCP/IP's client-server process for remote login. Remote login allows a user at one site to gain access to a computer at another site. As you can imagine, this brings up issues of security. TELNET protects the server against unlawful access by requiring would-be users to supply login and password identifiers. To use TELNET, a user invokes a TELNET client at his own site and establishes a connection with a TELNET server at the remote site. TELNET then relays the key strokes from the user's keyboard to the remote computer as if they had been typed at the remote computer. TELNET also carries the output of the remote computer back to the user's screen. Virtual Terminals

To bring about homogeneity between the user and the remote server, TELNET provides translation services between the two machines. The TELNET client transforms the output from the actual terminal to standard code. The information in the standard code is sent to the TELNET server in the remote host The TELNET server will transform this information into characters accepted by the remote host. In this process, the remote host is fooled into thinking that a terminal is locally connected to it. In other words, a virtual terminal (VT) is connected to the remote host. The concept of virtual terminals makes a complex process, if not simple, at least straightforward, and

relieves one of the great potential impediments to true universal connectivity: that of connecting multiple incompatible terminals to a single remote server. File Transfer Protocols Two application programs are used to transfer files from a server to a client host: trivial file transfer protocol (TTTP) and file transfer protocol (FTP). Trivial File Transfer Protocol (TFTP) The trivial file transfer protocol (TFTP). is the simpler of the two file transfer protocols, and is intended for applications that do not require complex interaction between client and server. TFTP allows a local host to obtain files from a remote host but does not pro vide, security or reliability. By restricting its services this way, TFTP is simpler to use and smaller to store than FTP. TFTP, does not require the reliability of a connection-oriented base protocol such as TCP and instead uses the fundamental packet delivery services offered by UDP. TFTP does, however, include some basic connection and error detection/retransmission features to ensure mat the file requested does indeed arrive. Because of TFTP's simplicity and small size, specific applications can be encoded into read-only memory, making it useful for hosts that lack the disk capacity to store more elaborate file transfer protocols. File Transfer Protocol (FTP) The file transfer protocol (FTP) is the standard mechanism provided by TCP/IP for copying a file from one host to another. FTP

messages are encapsulated in TCP, and are both reliable and secure. FTP uses the TELNET protocol and requires the user to sup ply login and password identifiers before transferring files. FTP differs from other client-server applications in that it establishes two connections (virtual circuits) between the hosts. One connection is used for data transfer, the other for control information. The control connection, as it is called, is used for commands, replies, and process updates. It uses minimize delay type of service (TOS), and remains on for the entire period of the exchange. While the data transfer is occurring across the data connection, the control connection is issuing such reassurances to the user interface as file transfer beginning, expected duration x minutes, data transfer complete, and x bytes transferred successfully. File Access testing NFS and RFC Network File System (NFS) The network file system (NFS) is a file access protocol. FTP and TFTP transfer entire files from a server to the client host. A file access service, on the other hand, makes file systems on a remote machine visible, as though they were on your own machine but without actually transferring the files. NFS allows you to edit a file on another machine exactly as you would if it were on your own machine. It even allows you to transfer files from the server to a third host not directly connected to either of you. Remote Procedure Call (RFC) NFS works by invoking the services of-a second protocol called remote procedure call (RPC).

RPC transfers the procedure call to another machine. Using RFC, local procedure calls are mapped onto appropriate RPC function calls. The NFS client formats the call for the RPC client and passes it along. The RPC client transforms the data to a format called external data representation (XDR) and provides the interface with the a TCP/IP transport mechanisms. At the remote host, the RPC server retrieves the call translates it out of XDR, and passes it to the NFS server. The NFS server relays the call to the remote disk, which responds as if to a local call and opens the file to the NFS server. The same process is followed in reverse order to make the calling application believe that the file is open on its own host. 5.3 ELECTRONIC DATA INTERCHANGE A fast-growing area of transaction processing is called

electronic data interchange, or EOT. This involves the electronic transmission of business transaction data over telecommunications links between the computers of trading partners (organizations and their customers and suppliers). Data representing a variety of business transactions (such as purchase orders, invoices, requests for quotations, and shipping notices) are electronically transmitted using standard document message formats. Thus, EDI is an example of the almost complete automation of the data entry process. Formatted transaction data is transmitted over telecommunications links directly between computers, without paper documents or human intervention. There are two forms of EDI. One method uses an electronic mailbox provided by a third party, usually a value-added telecommunications carrier. The other method is direct computer connectivity between trading partners, sometimes with the help of a clearinghouse organization, which provides bookkeeping services for the participants.

Companies

in

the

automotive,

chemical,

grocery,

and

transportation industries were the earliest users of this technology, but it has spread to many manufacturing and retailing companies. For example, the penetration of EDI within various industries in 1988 was estimated at: railroads, 90 percent; trucking, 75 percent; grocery, SO percent; and automotive, 35 percent. Some of the benefits of EDI are reductions hi paper, postage, and labor costs; faster flow of transactions; reductions in inventory levels; and better customer service. For example, decreases of 25 percent to 50 percent in the total time it takes to receive, process, package, and ship customer orders are reported. Annual savings of $ 300 million in the grocery industry and $12 billion in the textile industry are expected. RCA expects the cost of processing a purchase order to drop from $50 to $4, and EDT is estimated to save $200 per automobile in the auto industry. However, EDT is more than a way to increase efficiency, cut costs, and provide better service. In many industries, it has become an absolute business requirement. EDT is now a strategic application of information systems in many industries, where the message is" link up or lose out." or as IBM vice president Edward Lucente says, "Doing business without EDT will soon be like trying to do business without a telephone. No EDI, no business." Genera] Motors proved that point when it made EDI a requirement for its 20,000 suppliers in 1987. Experts predict that, by 1995, one third of all business documents will involve EOT. Thus, EDI promises to revolutionize data entry in many transaction processing systems while promoting strategic relationships Between industry trading partners. Batch Processing Transaction processing systems process data two basic ways: (1) batch processing, where transaction data is accumulated over a

period of time and processed periodically, and (2) real time processing, where data is processed immediately after a transaction occurs. Transaction processing systems still make heavy use of batch processing. However, the use of real time processing is growing, and it is expected to eventually become the primary form of transaction processing. In a batch processing system, transaction data is accumulated over a period of time and processed periodically. Batch processing usually involves: Gathering source documents originated by business

transactions, such as sales orders and invoices, into groups called batches. Recording transaction data on an input medium, such as magnetic disks or magnetic tape. Sorting the transactions in a transaction file in the same sequence as the records in a sequential master file. Processing transaction data and creating ah updated master file and a variety of documents (such as customer invoices or paychecks) and reports. Capturing and storing batches of transaction data at remote sites, and then transmitting it periodically to a central computer for processing. This is known as remote job entry, or RJE. In batch processing not only are the transaction data for a particular application accumulated into batches, but a number of different transaction processing jobs are run (processed) periodically (daily, weekly, monthly). The rationale for batch processing is that the

grouping of data and the periodic processing of jobs more efficiently uses computer system resources, compared to allowing data and jobs to be processed in an unorganized, random manner. Of course, this efficiency, economy, and control are accomplished by sacrificing the immediate processing of data for end users. Example In a typical example of batch processing, the banking industry usually accumulates all checks deposited during the day into batches for processing each evening. Thus, customer bank balances are updated on a daily basis and many management reports are produced daily. A batch processing system where transaction data in the form of batches of deposited checks is captured each day by MICR reader/sorters, which read the data recorded in magnetic ink on the bottom of each check. The transaction data is then processed using a check processing application program that updates customer and other databases and produces a variety of customer documents and management reports. Batch processing is an economical method when large volumes of transaction data must be processed, It is ideally suited for many applications where it is not necessary to update databases as transactions occur, and where documents and reports are required only at scheduled intervals. For example, customer statements may be prepared on a monthly basis, whereas payroll processing might be done on a weekly basis. However, hatch processing has some real disadvantages. Master files are frequently put o date between scheduled processing, as are the periodic scheduled reports that are produced. Also, immediate updated responses to inquiries cannot be made. For these reasons, more and more computer applications use realtime

processing systems. However, batch processing systems are still widely used, and some of their disadvantages are overcome by using realtime processing for some of their data processing functions.

Real Time Processing Realtime processing systems process transaction da-1

immediately after they are generated and can provide immediate output to end users. In full-fledged realtime processing systems, data is processed as soon as it is originated or recorded, without waiting to accumulate batches of data. Data is fed directly into the computer system from online terminals, without being sorted, and it is stored online in direct a file, and databases are always up to date since they are updated whenever data is originated, regardless of its frequency. Responses to end users' Inquiries are immediate, since information stored on direct access devices can be retrieved depends differentiating almost on batch instantaneously. summary of the Realtime important processing capabilities

telecommunications networks of online terminals and computers. A processing and realtime processing. An example of a realtime processing system is shown in Figure 9.8. Note how POS terminals are connected by telecommunications links to a computer for immediate entry of sales data and control responses (such as customer credit verification). The online direct access customer, product, and sales databases are all immediately updated to re transactions. The application programs required for sales transaction processing, database updates, and inquiry/response processing are stored on direct access devices until needed. Finally, employees can use telecommunication links to their workstations to

make inquiries and receive displays concerning customers, sales activity, inventory status, and so on. Levels of Realtime Processing

Realtime processing is frequently called online processing, since an online capability is required in realtime processing systems. However, use of this term can be misleading because batch processing systems can use online remote job entry devices and online direct access files in the proc of batches of data. Other terms used include online transaction processing (OLTP) or online realtime (OLRT) processing. Part of the reluctance to use the term realtime stems from its former narrow meaning as promoted by the U.S. Department of Defense. In that context, data not only had to be processed immediately, but the results of processing had to be instantly available to control an ongoing process. In the past, that definition could be used to describe only a limited number of applications, typically process control, military, and spacecraft systems. However, advances in computer hardware and software have made a realtime capability applicable to many of the functions of modern information systems. In this context, realtime processing means that, not only is input data processed immediately, but output results are available fast enough to meet the immediate information needs of end users. Many modem information systems can easily meet this criterion, whether they rely on microcomputer or mainframe computer systems. Some of the semantic differences in this area arise from the fact that there can be different combinations of realtime and batch processing capabilities, depending on the information system functions to be performed. Thus, many current information systems are combinations of batch and realtime processing. Again, a pertinent example is the

banking industry, which typically updates checking accounts, on a daily batch basis, but uses realtime processing to allow immediate responses to inquiries concerning customer bank balances stored on online direct access storage devices. Inquiry/response systems. The main function of an inquiry system is in formation retrieval. The user of a realtime inquiry system wishes a quick response to a request for information, such as the current balance in a particular bank checking account. Data entry systems. The main function of a data entry system is the immediate but temporary collection and recording of transaction data for processing at a later date. Thus, the realtime data entry system is de signed to perform only collection, conversion, and storage activities, leaving processing activities to a batch processing system. For example, some retail stores use online pointof-sale terminals to capture and record sales data on magnetic tape or disk during the day for remote batch processing at night. File processing systems. File processing systems perform all of the activities of information systems except output. Thus data is collected, converted, manipulated, and stored, resulting in an immediate and continual updating of files. The output activity may be performed by subsequent batch processing, which produces reports and other output, or by a realtime inquiry system, which interrogates the files. For example, customer files could be updated immediately by POS terminals, but customer invoices and statements could be printed only on a periodic basis. Full capability systems. A full capability realtime processing system can provide immediate and continuous performance of all information system activities. For example the reservation systems of the major airlines are full capability systems, since they process

passenger reservations in real time using online terminals at airline offices, travel agencies, and airports. Process control systems. A particular type of full capability realtime sys tern is the process control system, which not only performs all information system activities but, in addition, uses its information output to control an ongoing physical process. Examples arc industrial production processes in the steel, petroleum, and chemical industries. Advantage and Disadvantage Realtime processing systems provide immediate updating of files and immediate responses to user inquiries. Realtime processing is particularly important for applications where a high frequency of changes must be made to a database during a short time to keep it updated. Only the specific records affected by transactions or inquiries need to be processed, and several databases can be processed or updated concurrently. Realtime processing has its disadvantages. Because of the online, direct access nature of realtime processing, special precautions must be taken to protect the contents of databases. Thus, many realtime systems use magnetic tape files as control logs (to record all transactions made) or as backup files (by periodically making a magnetic tape copy of a file). Also, more controls have to be built into the software and processing procedures to protect against unauthorized access or the accidental destruction of data. Thus, the many advantages of realtime processing must he balanced with the extra costs and security precautions that are necessary. However, most computer-using firms are willing to pay this price, since the use of realtime. processing continues to increase in modern information systems. 5.4 ENTERPRISE RESOURCE PLANNING SYSTEMS

Since MIS has traditionally been based on inputs from transaction processing they have carried on the legacy of being built around different types of transactions. In view of this, organisation structures have an important bearing on the design of MIS. Information, under MIS, is provided in the form of reports that would be required for different departments. The modules of MIS would, generally, be on the lines of the type of departments included in the organisation structure. The increasing relevance of flexibility in the processes to reorient them to the changing business environment, have made the MIS less relevant. With business process reengineering becoming the buzz word of today, there is a need to change the entire approach towards business processes. The new approach should consider the following premises to develop the information systems. 1. 2. Business processes influence bottom line. Organisational units, sometimes, become impediments in the flow of information. Inter-departmental communication, is, the first victim of the increasing size of organisations. 3. Communication plays an important role in bringing about flexibility in the enterprise. The promptness in the flow of information is critical in better resource utilisation. 4. Integration of different business functions such as production, marketing and finance can help in cost reduction and customer orientation of business processes. With the advancement in networking technology a new type of information system called the Enterprise Resource Planning (ERP) System has emerged. ERP system integrates all the processes of the

organisation with customer satisfaction and plans the management of the resources of an enterprise. These .sol lions help in focusing on production capacities, managing logistics and working out 'financial consequences of each decision rather than just computing costs. The basic philosophy of the ERP systems is that business processes are to be integrated at all levels, treating all the resources of the enterprise as common resource meant primarily to cater to the changing needs of customers. Recognising that the customer needs keep changing, .ERP systems offer adaptability to the changing needs at an improved speed of response. Structure of ERP system In order to understand how the integration of different functions is achieved and response time is reduced by improved intra enterprise communication, let us have a look at the schematic diagram of a typical ERP system. As may be noticed, the entire process begins with sales prospecting and once it is successful sales order maintenance process takes over. The sales order processing is directly linked to the inventory system, work order maintenance and accounts receivable modules, thereby integrating marketing function with production as well as finance. There is integration of all activities such as shop floor control, production planning, production scheduling, procurement of inputs and inventory tracking with the sales activity. The Manufacturing Resource Planning (MRI) is linked with the sales activity through the inventory system. The integration of business processes improves the speed of adaptability to change in market situation. Production takes place as per the sales order received and in the light of the inventory available. The reverse may happen in the absence of ERP systems. A higher degree of integration can also help in reducing inventory levels and the 'Just in lime' approach can be successfully

used to reduce inventory levels to the optimum without sacrificing the manufacturing efficiency or customer satisfaction. ERP systems can also be quite effective in establishing links between the customer and each employee of the company on one side and vendors of the company on the other side leading to better appreciation of the problems of each other and improved relations. Customer problems and complaints can be attended to promptly. 5.5 BENEFITS OF ERP SYSTEMS The ERP systems are becoming an important part of the IT strategy of business enterprises. A fairly large number of Indian Companies have also opted for ERP, in view of the potential benefits from them. Some of the major benefits of ERP systems are as follows: Focus on processes: ERP systems are business process oriented systems. They focus on the activities of business processes. As a result, business goals are clearly articulated. ERPs enable the enterprises to focus on customers needs. Flexibility: ERP systems add flexibility to business processes by automating the process itself, rather than automating some functions in the process. Since most of the important processes are automated, there is greater amount of flexibility in the use of resources of the enterprise in different ways and for different purposes. For example, bringing out a new packing of smaller size for cooking oil would not only require changes in the production but also in billing, shipping and marketing processes. The required changes are executed quickly with the help of ERP system as all the concerned processes are automated and integrated to each other. In fact, in SAP, a popular ERP package, there are more than 700 processes that are automated and integrated with each other.

c)

Reduced

cycle

time:

ERP

systems

integrate

various

processes with the help of advanced communication links. The transfer of information between the processes is almost automatic and instantaneous. This reduces the cycle time in the process. In processes such as inventory management, debtors realisation, customer billing, shipping, etc. minor reduction in cycle time has considerable impact on the cost of operations. Hindustan Lever Limited has linked its 55 depots all over the country to its distributors who replenish their stocks on a daily basis, substantially reducing their inventory levels. d) Improved communication: One of the major benefits of ERP

system is establishment of an enterprise-wide communication plan. As a result, there is less resistance to proposed changes due to easy access to information regarding the imperatives for change. Critical success factors in implementation of ERP system ERP system are expensive' solutions and require a lot of money and time to implement. These systems influence almost all the day-to-day operations in the enterprise and implementation is a challenging job requiring a cautious approach. Some of the critical success factors in implementation of ERP system are: Discipline: Integration and automation of processes assume a high degree of discipline on the part of those involved in these processes. Since ERPs involve both integration and automation of processes, a high degree of discipline is expected in the organisation implementing it. For example, SAP (an ERP software package) uses the First-In-First-Out (FIFO) method of inventory movement and valuation. In one of companies using SAP the forklift operator left the materials in the first empty bin he saw instead of putting them into bins that became empty first. After sometime, the suggestions to pick up materials from the bin specified by SAP could not be implemented,

as they were still empty. On the other hand, the bins that were to be filled with materials were already full resulting in chaos in the material handling process. Thus, adherence to the procedures plays an important role in the success of ERP system. Change in work culture: Willingness to re-engineer processes and sharing of information as a habit are the two basic requirements of work culture in ERP implementing enterprises. Therefore, the 'implementation blues' are less serious in enterprises that have favourable work culture. Top management support: Implementation of ERP system requires support of the top management and co-operation of all the members of the work-groups involved in the process. Presently, the ERP systems being offered in India by different vendors are quite expensive and designed in the light of environments more relevant to developed markets.. Perhaps local vendors would be more useful for Indian companies and customized, solutions will have to be developed module by module to be integrated one by one. Another problems with ERP system of today is that they primarily focus on operations rather than planning of resources. 5.6 INTERNET WORKS When two or more networks are connected, they become an internet work, or internet (see Figure: in the figure, the boxes labeled R represent rooters). Individual networks are joined into internet works by the use of internetworking devices. These devices which include routers and gateways, are discussed else wherte in this book.The term internet (lowercase i) should not be confused with the Internet (uppercase I). The first is a generic term used to mean an interconnection of networks. The second is the name of a specific worldwide network.

5.7

VALUE ADDED NETWORKS Value added networks is a techniques in data transmission. Let

us first discuss about the definition of value added Network. The messages to be sent are broke into Packets and send each packet from its originating point to its final destination without delay. The messages is reconstituted at the final point. Under this form packets from many different messages may share a communication line with the result of high line utilisation and a reduction for users in the cost of sharing the line. These types of networks are called "value added networks" because the carriers gets basic leased lines from an existing carrier and adds value by sharing lines with packet switching mini computers. There is also another way of defining value ..dded networks. It is a network using the communication services of other commercial carriers, using hardware and software that permit enhanced telecommunication services to be offered. VAN is also "n acronym for virtual area network. Type of VANS There are 2 types of VANS Internet base (This requires no additional software)

One that require proprietary software. Let us discuss in specific about electronic data interchange

(EDI). VAN (IT) is private network provides (sometimes called as turkey communications line), that is lined by a company to facilitate electronic data interchange (EDI) as provide other network services. With the arrival of world wide web some companies found it more cost efficient to move their data over the internet instead of paying the minimum monthly fees and per character chares found in typical value added network contacts. In response contemporary value added network provides now focus on offering EDI translation, encryption secure email management reporting and other extra services to their customers to gain the market value of value added network which found its slide after the innovation of world wide web. Electronic data interchange is a concept and is not a tool^but a strategies. An electronic data interchange requires. Computer Modem EDI software. Electronic data interchange has two types of hardware to examine. Hardware for computing - PC - DOS or windows Hardware for communication - Your modem There are certain EDI VAN Locates FACNET DOD certified VANS Commercial VAN DLA's DAASC VANS

VALUE ADDED SERVICES Let us discuss about the values added services.

FAX to EDI Email Scanning on bulletin boards On line review / entry (Data translation) Historical Pricing Information

Comparison of VAN Volume Low=1-10 transactions / month Medium 10 -60 transactions / month High > 60 Service EDI Fax VAS VAN (Full service) Price High / Unit Cost Medium / Unit Cost Low / Unit cost

In VAN larges are based on amount of data sent or received. 5.8 A TELECOMMUNICATION NETWORK MODEL Before we discuss the use and management of

telecommunications, we should understand the basic concept of a telecommunications network. Generically, a communications network is any arrangement where a sender transmits a message to a receiver over a channel consisting of some type of medium. It consists of five basic categories of components: Terminals, such as video display terminals and other end user workstations, of course, any input/output device that uses telecommunications networks to transmit or receive data is a

terminal, including micro computers, telephones, office equipment, and the transaction terminals. Telecommunications processors, which support data

transmission and reception between terminals and computers. These devices, such as modems, multiplexers, and front-end processors, perform a variety of control and supper functions in *a telecommunications network. For example, they convert data from digital to analog and back, code and decode data and control the accuracy and efficiency of the communications flow between computers and terminals in a telecommunications network. Telecommunications channels and media over which data are transmitted and received. Telecommunications channels use combinations of media, such as copper wires, coaxial cables, fiber optic cables, microwave systems, and communications satellite systems, to interconnect the other components of a telecommunications network. Computers of all sizes and types are interconnected by telecommunications networks so that they can carry out their information processing assignments. For; example, a mainframe computer may serve as a host computer assisted by minicomputers serving as "front-end" computers in managing the activities of end user microcomputers in a telecommunications network. Telecommunications control software consists of programs that reside in host computer systems, communications control computers, and end user computers. They control networks. telecommunications input output activities and manage the functions of telecommunications

No categories

matter of

how

large must

and be at

complex work to

real

world an

telecommunications networks may appear to be, these five basic components support organization's telecommunications activities. This framework can thus be used to help end users understand the various types of telecommunications networks in use today.

UNIT-6
6.1 E-COMMERCE The two opening vignettes illustrate a new .way of conducting business electronically, using networks and the Internet. These are examples of electronic commerce (EC), in which business transactions take place via telecommunications networks. The Happy Puppy case illustrated a business-to-consumer (B2C) (customer) transaction, whereas Intel's case dealt with business-to-business (B2B) transactions. The Opening vignettes, and especially Intel's case, point to some issues that in volve implementation of EC. These issues are discussed in subsequent chapters. For example: How to deal with the introduction of a new way of doing business Selling to individual customers versus to corporations The economic impacts, especially on competition The extranet as a B2B infrastructure The role of the intermediaries The interaction of EC and supply chain management Improving customer service The differences between EDT and the extranet Advertisement on popular sites Electronic commerce could become a significant global

economic element in the next century. The infrastructure for EC is networked computing, which is emerging as the standard computing environment in business, home, and government. Networked computing connects several computers and other electronic devices

by

telecommunication

networks.

This

allows

users

to

access

information stored in several places and to communicate and collaborate with others from their desktop computers. Although some people still use a stand-alone computer exclusively, the vast majority of people use computers connected to a global networked environment known as the Internet, or its counterpart within organizations, called an intranet. An intranet is a corporate network that functions with Internet technologies, such as browsers, using Internet protocols. Another computer environment is an extranet, a network that links the intranets of business partners over the Internet. This new breed of computing is helping large numbers of organizations, private and public, in manufacturing, agriculture, and services, not only to excel but also frequently to survive. An interesting example is Egghead Software. Why are companies resorting to EC? The reason is simple. Information technology (IT) in general and EC in particular have become the major facilitators of business activities in the world today. Electronic commerce is also a catalyst of fundamental changes in the structure, operations, and management of organizations. DEFINITIONS Electronic commerce is an emerging concept that describes the process of buying and selling or exchanging of products, services, and information via computer networks in eluding the Internet. Kalakota and Whinston define EC from 'these perspectives: From a communications perspective, EC is the delivery of information, products/ services, or payments over telephone lines, computer networks, or any other electronic means.

 From a business process perspective, EC is the application of technology to ward the automation of business transactions and work flow. From a service perspective, EC is a tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery. From an online perspective, EC provides the capability of buying and selling, products and information on the Internet and other online services. The term commerce is viewed by some as transactions conducted between business partners. Therefore, the term electronic commerce seems to be fairly-narrow to some people. Thus, many use the term e-business. It refers to a broader definition of EC, not just buying and selling but also servicing customers and collaborating with business partners, and conducting electronic transactions within an organization. According to Lou Gerstner, IBM's CEO: "E-business is all about cycle time,-speed, glob alization, enhanced productivity, reaching new customers and sharing. knowledge across institutions for competitive advantage." In this book we use the term electronic commerce in its broadest scope, which is basically equivalent to e-business. PURE VERSUS PARHAL EC Electronic commerce can take many forms" depending on the degree of digitization of the product (service) sold, the process, and the delivery agent (or intermediary). Choice at created a model that

explains the possible configurations of these three dimensions. A product can be physical or digital, an agent can be physical or digital, and the process can be physical or digital. These create eight cubes, each of which has three dimensions. In traditional commerce all dimensions are physical (lower left cube), and in pure EC all dimensions are digital (upper right cube). All other cubes include a mix of digital and physical dimensions. If there is at least one digital dimension we will consider, the situation EC (but not a pure one). For example, buying a book from Amazon is not pure, because the book is delivered by FedEx. However, buying software from Egghead is pure EC because the delivery, payment, and agent are digital Electronic commerce uses several technologies ranging from EDI to email. For example, buying food from a vending machine using a smart card can also be viewed as EC. THE EC FIELD The Framework of EC

Many people think EC is just having a Web site, but EC is much more than that. There are dozens of applications of EC such as home banking, shopping in online stores and malls, buying stocks, finding a job, conducting an auction, and collaborating electronically on research and development projects. To execute these applications, it is necessary to have supporting information and organizational infrastructure and systems. The EC applications are supported by infrastructures, and their implementation is dependent on four major areas people, public policy, technical standards and protocols, and other organizations. The EC management coordinates the applications, infrastructures, and pillars. It can be viewed as a framework for understanding the relationships among the EC components and for conducting research

in the field. In this book we will provide details on the applications, infrastructures, issues of the pillars, and management considerations. Less attention is devoted to the fast-changing infrastructure. 6.2 CLASSIFICATION OF EC APPLICATIONS .

Applications of EC are divided into 3 categories 1. Buying and selling goods & services. These are usually referred to as electronic markets. 2. Facilitating inter and intra-organization flow of information, communication and'" collaboration. These are sometimes referred to as inter- organizational systems. 3. Providing customer service.

ELECTRONIC MARKETS

A market is a network of interactions and relationships where information, products, services, and payments are exchanged. When the marketplace is electronic, the business center is not a physical building but rather a network-based location I where business interactions occur. As can be seen in the figure, the electronic market is the place where shoppers and sellers meet The market handles all the necessary transactions, including the transfer of money between banks. In electronic markets, the principal participantstransaction handlers, buyers,brokers, and sellers, are not only at different locations but seldom even know one an other. The means of interconnection varies among parties and can change from event to event, even between the same parties.

INTERORGANIZATIONAL INFORMATION SYSTEMS AND ELECTRONIC MARKETS An IOS involves information flow among two or more

organizations. Its major objective is efficient transaction processing, such as transmitting orders, hills, and payments using EDI or extranets. All relationships are predetermined; there is no negotiation, just execution. In contrast, in electronic markets, sellers and buyers negotiate, submit bids, agree on an order, and finish the execution on- or offline. Inter organizational systems are used exclusively for B2B applications, whereas electronic markets exist in both the B2B and B2C cases. INTERORGANIZATIONAL INFORMATION SYSTEMS Scope

An IOS is a unified system encompassing several business partners. A typical IOS will include a company and its suppliers and/or customers. Through IOS, buyers and sellers arrange, routine business transactions Information is exchanged over communications networks using prearranged formats, so there is no need for telephone calls, paper documents, or business correspondence. In the past, lOSs were delivered on proprietary communication links. Now, however, many IOSs are moving to the Inter net, mainly through extranets. Types of Interorganizational Systems 1. The term IOS describes a variety of business activities, some of which are used in non-EC-related activities. The most prominent types of inter-organizational systems are as follows: 2. Electronic data interchange (ELf), which provides secured B2B connection over value-added networks (VANs).

3.

Extranets, which provide secured B2B connection over the Internet (chap ter7).

4. 5. 6.

Electronic funds transfer. Electronic forms. Integrated messaging-delivery of e-mail and fax documents through a single electronic transmission system that can combine EDI, e-mail, and electronic forms.

7.

Shared databases-information stored in repositories is shared between -trading partners and is accessible to all. Such databases are often used to re duce elapsed time in communicating information between parties over extranets. Supply chain management-cooperation between a company as well as arranging cooperative activities. The sharing is mainly done

and its suppliers and/or customers regarding demand forecasting, inventory management, and orders fulfillment can reduce inventories, speed shipments, and enable just-in-time manufacturing, 6. 3 CLASSIFICATION OF THE EC FIELD BY THE NATURE OF THE TRANSACTIONS A common classification of 'EC 'is by the nature of transaction. Tile following types are distinguished: Business-to-business (B2B). Most of EC today is of this type. It includes the IOS transactions described 'earlier and electronic market transactions between organizations.

 Business-to-consumer (B2C). These are retailing transactions with individual shoppers. The typical shopper at Amazon.com is a consumer, or customer. Consumer-to-consumer (C2C). In this category consumer sells directly to consumers. Examples are individuals selling in classified ads (www.classified2000.com) and selling residential property, cars, and so on Advertising personal services on the Internet and selling knowledge and expertise is an- other example of C2C. Several, auction sites allow individuals to put items up for auctions. Finally, many individuals are using intranets and other organizational internal networks to advertise items for sale or services. Consumer-to-business C2B). This category includes individuals who sell products or services to organizations, as well as individuals who seek sellers, interact with them, and conclude a transaction. Non business EC. An increased number of nonbusiness institutions such as academic institutions, not-for-profit organizations, religious organizations, social organizations, and government agencies are using various types of EC to reduce their expenses (e.g. improve purchasing) or .to improve, their operations and customer-service, (Note that in the previous categories one can usually replace the word business with organization.) Intra business (organizational) EC. In this category we include all internal organizational activities, usually performed on intranets, that involve exchange of information. Activities can range goods, services, or selling corporate from

products to employees to online training and cost-reduction activities.

Electronic markets, on the other hand, can be associated with either B2B or with B2C. 6.4 THE ELECTRONIC MARKETING PROCESS For a trade to occur between a buyer and seller, a certain process must occur. Obviously, if the buyer is an organization or a repeat customer, some of the steps may be changed or eliminated. Later, we deal with the major, steps of this process, as well as with "the specific products and services of electronic markets 6.5 A BRIEF HISTORY OF EC Electronic commerce 'application's started:- in the' early 1970s, with such innovations as electronic fund transfers (EFT). However, the extent of the applications was limited to large corporations, financial institutions, and a few daring small businesses. Then came EDI which expanded from financial transactions to other transaction processing and enlarged the participating companies from financial institutions to manufacturers, retailers, services, and so on. Many other applications followed, ranging from stock trading to travel reservation systems. Such systems were described as telecommunication applications and their strategic value was widely recognized. With the commercialization of the Internet in the early 1990s and its rapid growth to millions of potential customers, the term electronic commerce was coined, and EC applications expanded rapidly. One reason for the rapid expansion of the technology was the development of networks, protocols, software, and specifications. The other reason was the increase in competition and other business pressures. From 1995 to 1999 we have witnessed many innovative applications ranging from advertisement to auctions and virtual reality experiences. Almost every mediumand large-sized

organization in the United States already has a Web site. Many are very extensive; for example,-in 1999 General Motors Corporation offered 18,000 pages of information that included 98,000 links to its products, services, and dealers. INTERDISCIPLINARY NATURE OF EC Electronic commerce, being a new field, is just developing its theoretical or scientific foundations. It is clear that EC is based on several disciplines. The major disciplines of EC with some samples of the issues with which they are concerned follow: Marketing. Many issues of marketing offline are relevant to online EC- for example, cost benefits of advertisements and advertisement strategic. Other issues are unique to EC, ranging from online marketing strategy to interactive Computer sciences. Many of the issues listed in the infrastructure box of figure 1.2, such as languages, multimedia, and networks, fall into the discipline of computer sciences. Intelligent agents play a major role in EC as well. Consumer behavior and psychology. Consumer behavior is the key to the success of B2C trade, but so is the behavior of the sellers. The relationship between cultures and consumer attitude in electronic market is an example of a research issue in the field. Finance, The financial markets and banks are one of the major participants in EC. Also, financing arrangements are part of many online transactions. Issues such as using the internet as a substitute for a stock exchange and fraud in online stock transactions are a sample of the many topics of the field.

Economics. Electronic commerce is influenced by economic forces and has a major impact on world and country economies. Also, theories of micro and macronomics need to be considered in EC planning, as well as the economic impacts of EC on firms. Management information systems (MIS). The information systems department is usually responsible for, the deployment of EC. This discipline covers issues ranging from systems analysis to system integration, not to mention planning, implementation, security/and payment systems, among others. Accounting and auditing. The back-office operations of electronic transactions are similar to other transactions in some respects, but different in others. For example, auditing electronic transactions presents a challenge for the accounting profession; so does the, development of methodologies for cost-benefit justification. Management. Electronic commerce efforts need to be managed properly, and because of the interdisciplinary nature of EC, its management may re quire new approaches and theories. Business law and ethics. Legal and ethical issues are extremely important in EC, especially in a global market A large number of legislative bills are pending, and many .ethical, issues are interrelated with legal ones, such as privacy and intellectual property. Others. Several other disciplines are involved in various aspects of EC to a lesser extent - for example, linguistics (translation in international trades), robotics and sensory systems, operations research/management science, statistics, and public policy and administration. Also, EC is of interest to engineering, health care, communication, and entertainment publishing. In this book we cover various disciplines' involvement in EC.

6.6 THE FUTURE OF EC In 1996, Forrester Research Institute predicted that B2C would he a $6.6 billion business in 2000, up from $518 million in 1996. Then they revised the figure to $20 billion, and the prediction keeps growing. In 1997, about $10 billion worth of B2B transactions were conducted over the Internet Predictions on the total size of EC vary. For 2002, total online shopping and B2B transactions are estimated to be in the range of $500 billion to $3 trillion. Some EC applications, such as auctions and online stock trading, are growing at a rate of 15 percent to 25 percent per month, and the number of Inter net users worldwide is predicted to reach 750 million by 2008. As many as 50 percent of Internet users are predicted to be online shoppers. One indication of the prospect of EC is the price of EC-related stocks on the Internet. For example, on November 12, 1998, the price of a share of AcTel surged from $2 to $31 in one day (more than 1,250 percent) after AcTel developed a high-speed Internet connection. A day later, the shares of the Inter net community Theglobe.com soared on their, first day of trade by 606 percent. Most EC companies, such as Amazon.com, are not making a profit They are expanding operations and generating sales growth. It is believed that by 2002-most of the major EC companies will start to generate sizable profits. Is EC just another buzzword or is it real? Is real because of its potential benefits. 6.7 BENEFITS OF Few innovations in human history encompass as many potential benefits as EC does. The global nature of the technology, low cost, opportunity to reach hundreds of mil lions of people (projected within 10 years), interactive nature variety/of possibilities,

and

resourcefulness

and

rapid

growth

of

the

supporting

infrastructures (especially the Web) result in*many potential benefits to organizations individuals, and society. These benefits are just starting to materialize, but-they- will increase significantly as a EC expands. It is not surprising that some maintain that, the EC revolution is just as profound as the change that came with the industrial revolution Benefits to Organizations The benefits to organizations are as follows: Electronic commerce expands the marketplace to national and 'international markets. With minimal capital outlay, a company can easily and quickly locate more customers, the best suppliers, and the most suitable business partners worldwide. For example, in 1997, Boeing Corporation reported a savings of 20 percent after a request for a proposal to manufacture a sub system was posted on the Internet. A small vendor in Hungary answered the request and won the electronic bid. Not only was the subsystem cheaper, but it was delivered quickly. Electronic processing, commerce decreases and the cost of creating,

distributing,

storing,

retrieving

paper-based

information. For example, by introducing an electronic procurement system, companies can cut the purchasing administrative costs by as much as 85 percent. Another example-is benefit payments. For the U.S. federal government, the cost of issuing a paper check is 43g. The cost of electronic payment is 2 Ability for creating highly specialized businesses. For example, dog toys which can be purchased only in pet shops or department and discounte stores in the physical world, arc sold now in a specialized www.dogtoys.com.

Electronic

commerce

allows

reduced

inventories

and

overhead by facilitating pull-type supply chain management. In a pulltype system the process starts from customer orders and uses just-intime manufacturing. The pull-type processing enables expensive customization of products and services which provides competitive advantage to its implemented. A classic example is Dell Computer Corp. Electronic commerce reduces the time between the outlay of capital and the receipt of products and services. Electronic commerce initiates business processes

reengineering projects. By changing processes, productivity of salespeople, knowledge workers, and administrators can increase by 100 percent or more. Electronic commerce lowers telecommunications cost-the Internet is much cheaper than VANs. Other benefits include improved image, improved customer service, new found cycle paper, business delivery partners, time, to access simplified increased processes, productivity, reduced compressed eliminating and

expediting

information,

transportation costs, and increased flexibility. Benefits to Consumers The benefits of EC to consumers are as follows: Electronic commerce enables customers to shop or do other transactions 24 hours a day, all year round, from almost any location.

Electronic commerce provides customers with more choices; they can select from many vendors and from more products. Electronic commerce frequently provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons. In some cases, especially with digitized products, EC allows quick delivery. Customers can receive relevant and detailed information in seconds, rather than days or weeks. Electronic commerce makes it possible to participate in virtual auctions. Electronic commerce allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences. Electronic commerce facilitates competition, which

results in substantial discounts. Benefits to Society The benefits of EC to society are as follows: Electronic commerce enables more individuals to work at home and to do less traveling for shopping, resulting in less traffic on the roads and lower air pollution. Electronic commerce allows some merchandise to be sold at lower prices, so less affluent people can buy more and increase their standard of living.

Electronic

commerce

enables

people

in

Third

World

countries and rural areas to enjoy products and services that otherwise are not available to them. This includes opportunities lo learn professions and earn college degrees. Electronic commerce facilitates delivery of public services, such as health care, education, and distribution of government social services at a reduced Cost and/or improved quality. Health-care services, for example, can reach patients in rural areas. 6.8 LIMITATIONS OF EC The limitations of EC can be grouped into technical and nontechnical categories, Technical Limitations of EC The technical limitations of EC are as follows: There is a lack of system security, reliability, standards, and some communication protocols. There is insufficient telecommunication bandwidth. The software development tools are still evolving and changing rapidly. It is difficult to integrate the Internet and EC software with some existing applications and databases.

Vendors

may

need

special

Web

servers

and

other

infrastructures, in addition to the network servers. Some EC software might not fit with some hardware, or may be ircompati ble with some operating systems or other components. As time passes, these limitations will lessen or be overcome; appropriate planning can minimize their impact. Non Technical Limitations Of the many nontechnical limitations that slow the spread of EC, the following are the major ones, according to a survey conducted by Internet Week (1998). Cost and just ification (34.8 percent bf the respondents). The cost of developing EC in-house can be very high, and mistakes due to lack of experience may result in delays. There are many opportunities for outsourcing, but where and how to do it is not a simple issue. Furthermore, to justify the system one must deal with some intangible benefits (such as improved customer service and the value of advertisement), which are difficult to quantify. Security and privacy (17.2 percent). These issues are especially important in the B2C area, especially security issues which are perceived to be more serious than they really are when appropriate encryption is used. Privacy measures are constantly improved. Yet, the customers perceive these issues as very important, and, the EC industry has a very long and difficult task of convincing customers that online transactions and privacy are, in fact, very secure. Lack of trust and user resistance (4.4 percent). Customers do not trust an unknown faceless seller (sometimes they do not trust

even known ones), paperless transactions, and electronic money. So switching from physical to Virtual stores may be difficult. Other limiting factors Lack of touch and feel online. Some customers like to touch items such as clothes and like to know exactly what they are buying., Many legal issues are as yet unresolved, and government; regulations, and standards are not refined enough for many circumstances. Electronic commerce, as a discipline, is still evolving and -changing rapidly. Many people are looking for a stable area before they enter into it. There are not enough support services. For example, copyright clearance centers for EC transactions do not exist, and high-quality evaluators, or qualified EC tax experts, are rare. In most applications there are not yet enough sellers and buyers for profitable EC operations. Electronic commerce could result in a breakdown of human relationships. Accessibility to the Internet is still expensive and/or

inconvenient for many potential customers. (With Web TV, cell telephone access, kiosks, and constant media attention, the critical mass will eventually develop.) Despite these limitations, rapid progress in EC is taking place. For example, the number of people in the United States who buy and sell stocks electronically increased from 300,000 at the beginning of 1996 to about 10 million in fall 1999. As experience accumulates and technology improves, the ratio

of EC benefits to costs will increase, resulting in a greater rate of EC adoption. The potential benefits may not be convincing enough reasons to start EC activities. Much more compelling are the business drivers that may force companies to en gage in EC, such as the case of Egghead Software. The Driving Forces of Electronic Commerce To understand why EC is becoming so popular, jt is worthwhile to examine today's business environment, the pressures it creates on organizations, the responses used by organizations, and the potential role of EC.

6. 9 THE NEW WORLD OF BUSINESS Market,-economical, societal, and technological factors are creating a highly competitive business environment in which customers are the focal point Furthermore, these factors can change quickly, sometimes in an unpredictable manner. Therefore, companies need to react: frequently and quickly to both the problems and the opportunities resulting from this new business environment Be. cause the pace of change and the degree of uncertainty in tomorrow's competitive environment are expected to accelerate, organizations will be operating under increasing pressures to produce more and faster, using fewer resources. Boyett and Boyett (1995) emphasize this dramatic change and describe it with a set of business pressures or drivers. They maintain that in order to succeed (or even to survive) in this dynamic world, companies must take not only traditional actions such as lowering cost and closing unprofitable facilities (as in the case of Egghead Soft, ware) but also innovative activities such as customizing products, creating new products, or providing superb customer service. We refer to the traditional and the innovative activities, some "of which are interrelated, as critical response activities. They can be performed in some or all of the processes of the organization, from the daily routine processing of payroll and order entry to strategic activities such as the acquisition of a company. They can also occur in what is known as the extended supply chain, namely in the process of interaction among a company and its suppliers, customers, and other partners, such as in the cases of Intel and Wal-Mart A response can be a re action to a pressure already in existence, or it can be an initiative that will defend an organization against future pressures. It can also be an activity that exploits an opportunity created by changing conditions. Many response activities can be greatly

facilitated by EC. In some cases EC is the only solution to these business pressures. The relationship among business pressures, organizational responses, and EC is shown in Figure 1.5, which illustrates a model of the new world of business. The business drivers create pressures on organizations. Organizations respond with activities supported by IT in general and EC in particular. Now, let's examine the components of the model in more detail. BUSINESS PRESSURES To understand the role of EC in today's organizations, it is useful to review the major business environmental factors that create pressures on organizations. The business environment refers to the social, economic, legal, technological, and political actions that affect business activities. In this book, the business pressures are divided into the following categories: market, societal, and technological. ORGANIZATIONAL RESPONSES To help you understand the impact of the business pressures on organizations, we will use a classic management framework originally developed by Levitt, later modified by Scott-Morton, and further modified by the authors, to reflect the role of IT in general and EC in particular. Organizations are composed of five major components, one of which is IT (including EC)and they are surrounded by an environment that also includes EC. The five components are in a stable condition, called equilibrium, as long as no significant change occurs in the environment or in any of the components. However, as soon as a significant change occurs, the system becomes unstable, and then it is necessary to ad just some or all of the internal parts. As you can see in the figure, the internal components are interrelated.

For example, a significant change in an organization's strategy may create a change in the corporate structure. Similarly, the introduction of EC, either in the environment (e.g.. by a competitor) or the initiation of EC in the company itself, creates a change. Unstable organizations may be unable to excel or even survive; therefore, organizations need to engage in critical response activities. However, traditional response activities may not work in todays environment, so many old solutions need to be modified, supplemented, or eliminated, as in the case of Egghead Software. Organizations can also take proactive measures to create a change in the marketplace. Such activities include exploiting opportunities created by the external drivers. Organizations' major responses are divided here into five categories: strategic systems for competitive advantage, continuous improvement efforts, business process reengineering (BPR), business alliances, and EC. Several responses can be interrelated; they can be found in more than one category. Electronic commerce can also facilitate the other categories as will be shown later. Strategic Systems Strategic systems provide organizations with strategic

advantages, thus enabling them to increase their market share, better negotiate with their suppliers, or prevent competitors from entering into their territory. There is a variety of EC supported strategic systems. An example is FedEx's overnight delivery system and the company's ability to track the. status of every individual package anywhere in the sys tern. Most of FedEx's competitors have already mimicked the system. So, FedEx moved the system to the Internet. However, the competitors quickly followed, and now FedEx is introducing new activities.

Continuous Improvement Efforts Many companies continuously conduct innovative programs in an attempt to improve their productivity and quality. For example, Dell Computer tikes its orders electronically and immediately moves them via Enterprise Resources Planning software (from SAP Corp.), into the just-in-time assembly operation. Intel is tracking its products' consumption in 11 of its largest customers, using its extranets, almost in real time, and determining production deliveries accordingly. However, continuous schedules and improvement

programs may not be adequate in all occasions all the times. Strong business pressures may require a radical change. Such an effort is referred to as business process reengineering (BPR). 6. 10 BUSINESS PROCESS REENGINEERING Business process reengineering refers to a major innovation in the organization's structure and the wait conducts the business. Technological, human, and organizational dimensions of a firm may all be changed in BPR. More than 70 percent of all large U.S. companies claim to be doing reengineering of some sort. Information technology and especially EC play a major role in BPR. For example, EDI facilitates rapid paperless transactions that enable companies to reduce some departments by as much as 80 percent. Electronic commerce provides flexibility in manufacturing, permits faster delivery to customers and supports rapid and paperless transactions among suppliers, manufacturers, and retailers. The major areas in which EC supports BPR are as follows:

 Reducing cycle time and time to market Reducing the business process time (cycle time) is extremely important for increasing productivity and competitiveness. Similarly, reducing the time from the inception of an idea until its implementationtime to marketis important because those who can be first on the market with a product, or who can pro vide customers with a service faster than competitors, enjoy a distinct competitive advantage. Extranet-hased applications can be used to expedite the various steps in the process of product or service development, testing, and implementation. Empowerment of employees and collaborative work. Giving employees the authority to act and make decisions on their own is a strategy used by many organizations as part of their BPR. Empowerment is related to the concept of self-directed teams. Management delegates authority to teams who can execute the work faster and with fewer delays. Information technology allows the decentralization of decision making and authority but simultaneously supports a centralized control. For example, the Internet and intranets enable empowered employees to access data, information, and knowledge they need for making quick decisions. Networked expert systems can give advice to team members whenever human experts are not available. As a matter of fact, selling knowledge on the Internet is becoming an important EC activity. Knowledge management. Employees can access organizational know-how via their company's intranet. Some knowledge bases are open to the public for a fee over the Internet, generating income. Customer-focused approach. Companies are becoming

increasingly customer oriented. In other words, they must pay

more attention to customers and their preferences and reengineer themselves to meet consumer demands. This can be done in part by changing manufacturing processes from mass production to mass customization. In mass production, a company produces a large quantity of identical items. In mass customization, items are produced in a large quantity but are customized to fit the desires of each customer. Electronic commerce is an ideal facilitator of mass customization. Business alliances. Many companies realize that alliances with other companies, even competitors, can be beneficial. For example, General Motors, Ford, and Chrysler created an extranet with their suppliers. There are several types of alliances, such as sharing resources, establishing permanent supplier-company relationships, and creating joint, research efforts. One of the most interesting types is the temporary joint venture, in which companies form a special organization for a specific, limited-time mission. This is an 'example of a virtual corporation, which could be a common business organization in the future. A more permanent type of business alliance that links manufacturers, suppliers, and finance corporations is known as keiretsu (a Japanese term meaning a permanent business alliance). Similarly, supply chain management is facilitated by extranets. . This and other types of alliances can be heavily supported by EC technologies ranging from EDI to electronic transmission of maps and drawings. Impact of ICC: Everything Will lie Changed The field of EC is relatively new; as such, little statistical data or empirical research is available. Therefore, the discussion in this section is based primarily on"' experts' opinions, logic, and some actual data. The discussion here is also based in part "ii the work of

Bloch and Segev (1998), who approached the impact of EC from avalue added point of view. Their model (shown in Figure 1.8) divides the impact of EC into three major categories: EC improves direct marketing. EC transforms organizations, and EC redefines organizations. IMPROVING DIRECT MARKETING Traditional direct marketing i done by mail order (catalogs) and telephone (telemarketing). In 1998, $75 b in sales were estimated in the United States. In 1998, direct marketing via computers (B2C) reached about S2 billion in the United States. This figure is small, but it grew more than 1,000 percent in less than four years. Bloch Ct al. suggest the following EC impacts: Product promotion. Electronic commerce enhances promotion of products and services through direct, information-rich, and interactive contact with customers. New sales channels. Electronic commerce creates a new distribution channel for existing products, thanks to its direct reach of customers and the bi directional nature of communication. Direct savings. The cost of delivering information to customers over the Internet results in substantial savings to senders (when compared with non- electronic delivery or deliver) via VAN systems). Major savings are also realized in delivering digitized products (such as music and software) versus physical delivery. Reduced cycle time. The delivery of digitized products and services can be reduced to seconds. Also, the administrative work related to physical delivery, especially across international borders, can be reduced significantly, cut ting the cycle time by more than 90 percent. One example is TradeNet in Singapore,

which

reduces

the

administrative

time

of

port-related

transactions from days to minutes. Customer service. Customer service can be greatly enhanced by enabling customers to find detailed information online (for example, FedEx allows customers to trace the status of their packages). Also, intelligent agents can answer standard e-mail questions in seconds. Finally, human experts' ser vices can be expedited using help-desk software, for example. Brand or corporate image. On the Web, newcomers can establish corporate images very quickly. What Amazon.com did in three years took traditional companies generations to achieve. Corporate image means trust, which is necessary for direct sales. Traditional companies such as Intel, Disney, WalMart, Dell, and Cisco use their Web activities to affirm their corporate identity and brand image. 6. 11 OTHER MARKETING-RELATED IMPACTS Customization Electronic commerce provides for customization of products and services, in contrast to buying in a store or ordering from a television, which is usually limited to standard products. Dell Computers Inc. is a success story of customization. Today, you can configure not only computers but also cars, jewelry, gifts, and hundreds of other products and services (travel and insurance, for example). If properly done, one can achieve mass customization that provides a competitive advantage as well as increases the overall demand for certain products and services. Advertisement

With direct marketing and customization comes a 'one-to-one or direct advertisement, which is much more effective than mass advertisement. This creates a fundamental change in the manner in which advertisement is conducted not only for online trades but also for products and services that are ordered and shipped in traditional ways. The entire concept of advertisement is going through a fundamental change due to EC. Ordering Systems Taking orders from customers can drastically be improved if it is done online and^ fewer mistakes are made. When taken electronically, orders can be quickly routed to the appropriate orderprocessing site. This saves time and reduces expenses so sales people have more time to sell. Also, customers can compute the cost of their orders, saving time for all parties involved. Markets Traditional markets are being changed by EC. The physical market disappears as does the need to deliver the goods to the marketplace. In a marketspace, which is an electronic market, goods are delivered directly to buyers when purchasing is completed making markets much more efficient. For those products that are digitally basedsoftware, music, and information the changes will be dramatic. Already, small but powerful software packages are delivered over the Internet. This fundamentally affects packaging and greatly reduces the need for historical distribution models. New selling models such as shareware, freeware, and pay-asyou-use, are emerging to maximize the potential of the Internet.

Although these models have emerged in particular sectors, such as software and publishing industries, they will eventually pervade other sectors. New forms of marketing will also emerge, such as Web-based advertising, linked advertising, direct e-mail, and an increased emphasis on relationship (interactive) marketing. Many other activities can improve sales, as we will see throughout the text. For ex ample, customer's convenience is greatly enhanced (any place, any time), availability of products and services is much greater, and .heaper products are offered (e.g., Book-AMillion discounts books online up to 50 percent). All these provide EC with a competitive advantage over the traditional direct sales methods. Furthermore, because the competitive advantage is so large, EC is likely to replace many non direct marketing channels. Some people predict the "fall of the shopping malls," and many retail stores and brokers of services (stocks, real estate, and insurance) are labeled by some as "soon to be endangered species." As is discussed throughout the book, the role of marketing channels, whole salers, retailers, intermediaries, and storefronts may be dramatically changed by EC. 6. 12 TRANSFORMING ORGANIZATIONS Technology und Organizational Learning Rapid progress in EC will force companies to adapt quickly to the new technolop and offer them an opportunity to experiment with new products, services, and processes. Companies will have to immediately learn the new technologies. Learning may be followed by strategic and structural changes. These changes may transform the

way in which business is done, such as in the case of Egghead Software described earlier. Bloch et al. believe that if this assertion is true, it will have a large and durable impact on the strategies of most organizations. Therefore, it is critical that these organizations quickly become familiar with the technology. The learning curve of mastering such technologies and understanding their power to reshape customer relationships is steep and cannot be achieved overnight. It is often an iterative process, requiring organizations to try new offerings and rearrange them according to customer feedback. In a similar fashion, new, technologies require new

organizational approaches. For instance, the structure of the organizational unit dealing with EC might have to be different from the conventional sales and marketing departments. To be more flexible and responsive to the market, new processes must be put in place. For instance, to deal with the authorization of publishing corporate information on the internet. This type of corporate change must he planned and managed. Before getting u right, organizations might have to struggle with different experiments. Changing Nature of Work The nature of work and employment will be transformed in the Digital Age; it is already happening before our eyes. Driven by increased competition in the global marketplace, firms are reducing the number of employees down to a core of essential staff and outsourcing whatever work they can to countries where wages are significantly less expensive. The upheaval brought on by these changes is creating new opportunities and new risks and forcing us into new ways of thinking about jobs, careers, and salaries.

The Digital Age workers will have to become very flexible. Few of them will have truly secure jobs in the traditional sense, and all of them will have to be willing and able to constantly learn, adapt, make decisions, and stand by them. They will as likely work from home as in an office. The Digital Age company will have to prize its workers as its most valuable asset, it will have to constantly nurture and empower them and provide them with every means possible to expand their knowledge and skill, base. REDEFINING ORGANIZATIONS New Product Capabilities Electronic commerce allows for new products to be created and/or for existing products to be customized in innovative ways. Such changes may redefine organizations' missions arid the manner in which they operate. Electronic commerce also al lows suppliers to gather personalized data on customers. Building customer profiles, as well as collecting data on certain groups of customers, can be used as a source of information for improving products or designing new ones. Mass customization, as described earlier, enables

manufacturers to create specific products for each customer, based on his or her exact needs. For example, Motorola gathers customer needs for a pager or a cellular phone, transmits them electronically to the manufacturing plant where they are manufactured, along with the customer's specifications (like color and features), and then sends the product to the customer Within a day. Dell Computers, JCPenney, and Levi s use the same approach. Using the Web, customers can design or configure products for themselves. For example, customers cardesign their T-shirts, furniture, cars jewelry, and even a Swatch

watch. Using mass customization methods, this is done at a retail-like price or only slightly higher.

New Business Models These changes affect not only individual companies and their products but entire industries. This will lead to the use of new business models, based on the wide availability of information and its direct distribution to consumers. One such model is the new kinds of intermediaries, such, as in the case of Chemdex, extranet creator for the biochemistry market. As a matter of fact, we have seen many new businesses that provide Web services ranging from banner exchanges to product comparisons. Also, traditional intermediaries redefine their role in order to survive. IMPACTS ON MANUFACTURING Electronic commerce, as is shown later, is changing

manufacturing systems from mass production to demand-driven and possibly customized, just-in-time manufacturing. Furthermore, the production systems are integrated with finance, marketing, and other functional systems;-as well as with business partners and customers, as illustrated in Intel's case. Using Webbased ERP systems (supported by software such as SAP R13), orders that are taker, from customers can be directed to designers (who use computer-aided design) and/or to .the production floor, within seconds. Production cycle time is cut by 50 percent or more in many cases, especially when production is done in a different country from where the designers and engineers are located. Companies like IBM, General Motors, General Electric, and Being are assembling products for which the components are

manufactured in many locations. Sub-assemblers gather materials and parts from their vendors, and they may use one or more tiers of manufacturers. Communication, collaboration, and coordination become critical in such multitier systems. Using electronic bidding, assemblers get sub- assemblies 15 percent to 20 percent cheaper than before and 80 percent faster (e GE case in chapter 6). Furthermore, such systems are flexible and adaptable, allowing for fast changes with minimum cost. Also, costly inventories that are part of mass production systems can be minimized. IMPACT ON FINANCE AND ACCOUNTING Electronic commerce requires special finance and accounting systems. Most notable are the payment systems. Traditional payment systems are ineffective or inefficient for electronic trade. The use of the new payment systems such as electronic cash is complicated because it involves legal issues and agreements on international standards. Nevertheless, electronic cash is certain to come soon, and it will change the manner in which payments are being made. In many ways, electronic cash, which can be backed by currency or other assets, represents the biggest revolution in currency since gold replaced cowry shells. Its diversity and pluralism is perfectly suited to the Internet. It could change consumers' financial lives and shake the foundations of financial systems and even governments. Payment systems involve security issues, inter institutional transfer of funds, and much more.

Executing an electronic order triggers an action in what we call the back office, Back office transactions include buyer's credit checks, product availability checks confirmation, movements in accounts payable and receivable, billing, and much more, These activities must be efficient and fast so the electronic trade will not be slowed down. An example is trading stocks online. In most cases orders are executed in less than three seconds and the trader can find a confirmation online immediately. Speaking of online trading, it is interesting to note that today individual investors have substantial free information at their fingertips. This information cost users tens of thou. sands of dollars just three years ago. With commissions of less than $10 per trade, many individuals are taking their money from mutual funds and trying to trade on their own Day trading is becoming a big success for some Several EC activities are fairly complex involving an intermediary EC software company paying and receiving banks and so on Payments of commissions to all par ties, for every transaction, are part of such systems, and they need to be planned for and made secure. HUMAN RESOURCE MANAGEMENT TRAINING, AND EDUCATION Electronic commerce, is changing the manner in which people are recruited, evaluated, promoted, and developed. The intranets play a major role in this transformation. Training and education will be different Distance learning online is exploding providing opportunities that never existed before Companies are cutting training costs by 50 percent and more and virtual courses pro grams, and universities are mushrooming. New distance learning systems can offer two-way-video, on-thefly interaction, and application sharing. Such systems provide for interactive remote instruction systems, which link sites over a highspeed intranet. For example, at Old Dominion University in Virginia,

Telechnet systems use broadcast satellite technology with terrestrial audio feedback from students and e-mail to connect the main campus to 23 community colleges as well as government and industrial sites. More than 3,400 students were enrolled in the 1998 spring semester. City University of Hong Kong is teaching an interactive MBA program on the Internet and interactive television as of 1999. At the same time, corporations are finding that distance learning may be a ticket to survival because changing environments, new technologies, and continuously changing procedures make it necessary for employees to be trained and retrained constantly. Putting It All Together Companies today are using the Internet, intranets, and extranets in an integrated manner to conduct various EC activities. The hypothetical company Toys Inc. has an intranet for conducting all its internal communication, collaboration, and dissemination of information and accessing data bases. The company uses an extranet to cooperate with its large business partners (e.g., suppliers, distributors, non corporate retail stores, liquidators). In addition, the company is connected to the toy industry extranet which includes other manufacturers, professional associations, and large suppliers. The company may be networked to additional extranets. For example, some major corporations may allow Toys Inc. to connect to their intranet, via their own extranets. Toys Inc. is also connected with its banks and other financial institutions (loan providers, stock issuers) over a highly secured EDI that runs on a VAN. The company is also using the VAN-based EDI with some of its largest suppliers .and other business partners. An Internet-based EDI is used with smaller business partners that are not on the corporate EDI or

extranet. The company communicates with others on the regular Internet Many companies are moving toward a similar network

configuration. Today, it is almost impossible to do business without being connected through an EDI extranets, and the Internet to the business partners. The remaining chapters of the book are divided into four parts that are related to the scope of EC. 6. 13 MANAGERIAL ISSUES Many managerial issues are related to EC. Some introductory issues follow: 1. Is it real? The first question that comes to the mind of those not involved in EC is "Is it real?" We do believe that the answer is definitely "yes." Just ask anyone who has experienced home banking, online stock purchasing, or buying a book from Amazon. An interesting tip was given by Randy Mott, Wal-Mart's CIO: "Start EC as soon as possible; it is too dangerous to wait". 2. How to evaluate the magnitude of the business pressures. The best approach is to solicit the expertise of research institutions, such as Gartner Group or Forrester Research, which specialize in EC. Often, by the time you deter mine what is going on it may be too late. The big certified public accounting companies may be of help. (Price Waterhouse and Andersen Consulting provide considerable EC information on their Web site.) Management especially needs to know what is going on in its industry.

3. What should be my company's strategy toward EC? There are three basic strategies: lead, wait, or experiment together what aspect of EC to outsource, and how to handle resistance to change. 4. What is the best way to learn EC? Start with this book. It provides a comprehensive treatment of the EC field and points to many support resources. It has a supportive Web page with many links to major EC resources. You may be astonished to learn how much information already exists on EC. It is not a bad idea to create a task force dedicated to EC in your organization. 5. What ethical issues exist? Organizations must deal with ethical issues of their employees, customers, and suppliers. This may be difficult because what is ethical in one company or country may be unethical in another. Ethical issues are very important because they can damage the image of an organization as well as destroy the morale of its employees. The use of EC raises many ethical issues, ranging from the surveillance of e-mail to the potential invasion of privacy of millions of customers whose data are stored in private and public databases. Because EC is new and rapidly changing, there is little experience or agreement on how to deal with EC-related ethical issues. 6.14 WEB SITE MANAGEMENT The World Wide Web is repository of information spread all over the world and linked together. The WWW uses the concept of hypertext In a hypertext environment, information is stored in a set of documents. The documents are linked together using the concept of pointers. An item can be associated with another document using these pointers. The

reader who is browsing through a document can move to other documents by choosing (clicking) the items that are linked to other documents. A hypertext available on the Web is called a page. The main page for an organization or an individual is known as a homepage. Information about one specific subject can be undistributed or distributed. In the first case, the whole information may consist of one or more Web pages on the same server. In the second case, the information is made of many pages distributed on different servers. Uniform Resource Locator (URL) If a client needs to access a Web page, it needs an address. To facilitate the access of documents distributed all over the world, WWW uses the concept of locators. The uniform resource locator (URL) is a standard for specifying any kind of information on the Internet. URL defines only three things: method, host computer, and pathname. Method The method is the protocol used to retrieve the document. There are several different protocols that can retrieve a document, among them gopher, FTP, Hi IP, news, and TELNET. The host is the computer at which the information is located. However, the name of the computer can be an alias. Today, Web pages are usually stored in computers given alias names that usually begin with www. Path

Path is the pathname of the file where the information is located. Note that the path can contain slashes that separate directories from subdirectories and files in the UNIX operating system.

Browser Architecture There arc many commercial browsers that interpret and display a Web document Almost all of them use the same architecture. The browser is usually is made of three parts: controller, client programs, and interpreters. The controller gets input from the keyboard or the mouse and uses the client program to access the document After the document has been accessed, the controller uses one of the interpreters to display the document on the screen. The client program can be one of the methods (protocols) described before such as HTTP, FTP, gopher, or TELNET. The interpreter can be HTML, CGI, or Java, depending on the type of document. Documents in the World Wide Web can be grouped into three broad categories. The category is based on the time when the contents of the document are determined Static Documents Static documents are fixed-content documents that arc created and stored in a server. The client can only get a copy of it; in other words, the contents of the file are determined when it is created, not when it is used. Of course, the contents can be changed in the server, but the user cannot change it. When a client accesses the document, a copy of the document is sent. The u->c. can then use a browsing program to display the document.

HTML Hypertext markup language (HTML) is a markup language for writing Web pages. It is called a markup language because the only thing it does is let the browsers format the Web pages. The idea came from the book publishing industry. Before a book goes for its final printing, a copy editor reads the manuscript and puts a lot of marks on it. These marks tell the designer how to format the text. For example, if the copy editor wants part of a line to be printed in boldface, he or she draws a wavy line under that part; if the copy editor wants a part of the line to be in italics, he or she draws a straight line under it. Let us explain the idea with an example. In HTML, to make a part of the text to be displayed boldface, we must include the beginning and ending boldface markup tag in the text. The two marks, <B> and </B>, are instructions for the browser. When the browser sees these two marks, it knows that the text must be boldface. A markup language like HTML allows us to embed formatting instructions in the file itself. The instructions are stored with the text. In this way, any browser pan read the instructions and format the text according to the workstation being used. One might ask why we do not use the formatting capabilities of word processors ; nd create text that is already formatted and save this formatted text. The answer is tnat different word processors use different techniques or procedures for formatting the text. For example, imagine that a user creates formatted text using a Macintosh computer and stores it in a Web page. A user who is using an IBM computer is not able to receive the Web page because the two computers are using different formatting procedures.

Using HTML lets us use only ASCII characters for both the main text and format ting instructions, in this way, every computer can receive the whole document as an ASCII document. The main text can be used as the data, and the formatting instructions can be used by the browser to formal the data.

Dynamic Documents Dynamic documents do not exist in a predefined format Instead, a dynamic document is created by a Web server whenever a browser requests the document. When a request arrives, the Web server runs an application program that creates the dynamic document The server returns the output of the program as a response to the browser that requested the document Because a fresh document is created for each request, the contents of a dynamic document can vary from one request to another. A very simple example is get ting the tune and date from the server. Time and date are types of information that are dynamic. They change from moment to moment The client can request that the server run a program such as die date program in UNIX and send the result of the program to the client CGI Common gateway interface (CGI) is a standard for building dynamic Web documents. It is a model in the sense that it defines the type of language to be used in preparing the document Today, most of the CGI programs have been created using shell scripts in UNIX. Note that the browser in the client machine does not have to know anything about running the script The script is run at the server site. Active Documents Dynamic documents are produced when they are called. However, they are produced at the server she, not the client site. For

many applications, we need the program to be run at the, client site. These are called active documents. For example, imagine we want to run a program that creates animated graphics on the screen. The program definitely needs to be run at the client site, where the animation must take place. In this case, the program is created, compiled, and stored at the server site. However, when the client needs it, it requests a copy. A copy of the program, in binary form, is sent to the client The interpreter at the client site is responsible for running the program. JAVA To enable the use of active documents, Sun Microsystems, Incorporated has defined a technology and a language called Java. Java is a combination of three components: programming language, runtime environment, and a class library. The programming language is used to create programs at the server site. It is an object-oriented language that has many similarities to C++. The runtime environment component is used at the client site to run the program in binary form. The class library is a collection of predefined objects to make object-oriented programming easier. Java uses the term applet to define an active document program. The term distinguishes active programs from regular programs.

MODEL QUESTION PAPER Course Paper Time Marks : : : : M.B.A 3.1 Management Information System 3 Hours 100 Max ( 5 x 8 = 40 Marks ) PART- A * Answer any Five Questions 1. 2. What is feasibility study? How it is used in MIS? Trace the evolution of IS? Explain how it grew with the growth in management? 3. 4. For an example of your choice, explain DSS? Compare and contrast the Online and Off line processing systems? Give examples. 5. What is Value added network? How it is useful for normal running of business? 6. Explain the growth of Internet? Compare it with Extranet and Intranet? 7. 8. Compare LAN, VAN and MAN? Give their applications? Trace the recent developments in IT? How it is beneficial to business? (4x 15 = 60 Marks)

PART -B * Question No.15 is compulsory * Answer any Three among question 9 to 14. 9. Explain SDLC with an example? Demonstrate the inter linkages amongst the elements of SDLC? 10. Classify the IS? Explain the focus, scope and importance of each sub-division of IS? 11. MIS in Indian organization is different from that in MNCs Critically examine. Justify your results with examples. 12. Demonstrate how the communication systems help in

establishing business systems? 13. Elaborate any one ERP system? Compare it with other ERP systems? 14. Explain various elements of e-commerce systems? Highlight the difficulties faced by a manager in establishing the e-commerce system? Compulsory 15. Develop a MIS for a petro-chemical major which encounters problems of transport strike, labour trouble?